The Importance Of Cargo To Carriers Like IndiGo

As the pandemic caused structural shifts in the aviation industry, IndiGo has been capitalizing on one major change. The low-cost giant’s foreign cargo business has been booming through the pandemic, as international airlines remain restricted. This has made the sector important to IndiGo’s recovery and will play a role in the future too.

IndiGo is the largest domestic cargo operator and is gaining ground internationally too. Photo: Getty Images

Big business

In a statement to ET Now, IndiGo CEO Ronojoy Dutta spoke about the opportunities in the cargo market. In particular, he discussed the shifting trends towards narrowbody cargo aircraft from traditional widebodies and the huge opportunity this opens up for Indian carriers.

Cargo has been in the spotlight since the pandemic hit last March. With foreign airlines suspending services or restricted from flying to India, Indian carriers have grown their market share significantly. IndiGo has been a big beneficiary of this too, flying hundreds of cargo-only flights and even ordering four Airbus A321P2Fs (passenger-to-freighters) for its future operations.

IndiGo is planning to add its first dedicated freighter aircraft in early 2022 to meet demand. Photo: Airbus

Despite being a growing cargo market, foreign airlines account for a massive 90% of international cargo capacity in India previously. However, the pandemic has created a structural shift and offered a chance for Indian carriers to claw back some of this share. In a statement, Dutta said,

“Cargo has been one of our success stories, we think it is a structural shift again. There is a 90% of Indian traffic that needs to be brought back to Indian carriers, especially 50% of it.”

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Important

IndiGo’s cargo business has been bustling since last year. In addition to high-yielding international freight, the carrier has also been flying cargo domestically. This is largely done in the belly of passenger aircraft, leveraging IndiGo’s sprawling route map. In particular, the low-cost giant has transported the most COVID-19 vaccines across the country thanks to its network.

However, it’s not only IndiGo reaping the benefits of the shifting cargo market. Rival SpiceJet, which had its own dedicated freighter fleet before the pandemic, saw its freight revenues jump five-fold year-on-year. This prompted SpiceJet to add several widebodies to its freighter fleet, but they have since been dropped.

SpiceJet’s cargo business has helped it survive the pandemic and not go bankrupt. Photo: Getty Images

However, there is a risk in expanding cargo capacity too quickly. In a statement to Runway Girl, Dutta warned that while cargo yields might be impressive right now due to the pandemic, there is a risk of overcapacity once flights are restored to international levels. Yields have already begun to flatten in the summer of 2021, as more carriers offer capacity.

Despite this, IndiGo believes that the freight business is viable with a long-term plan and will see growth even after the pandemic. This likely pushed the carrier to order its own dedicated freighters, making it the second passenger airline in India to do so. If this holds true post-COVID remains unknown.

What do you think about IndiGo’s outlook on the cargo market? Let us know in the comments!

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