Air India mulls inducting freighters to scale up its cargo business

Air India does not currently have any freighters, unlike IndiGo and SpiceJet; all the cargo it transports is carried in the belly space of its passenger planes

Air India is looking to scale up its cargo business, and is exploring the possibility of inducting freighters, in a bid to gain market share. The Tata Sons-owned airline, which boasts a 118-plane strong fleet, recently ordered 470 aircraft. Unlike IndiGo and SpiceJet, it doesn't possess any freighters — planes that purely fly cargo. It transports freight in the belly space of its Boeing and Airbus passenger aircraft.

“We are exploring the possibility of inducting freighter capacity into the network, both directly and in collaboration with partners,” Air India said in an emailed response, adding that cargo revenue is “expected to be a significant part of the revenue mix” of the airline. It did not share any revenue figures.

The airline has also refreshed its cargo department. Ramesh Mamidala, who until recently was the chief cargo officer at Adani Airports Holding, has taken charge as head of cargo business at Air India.

New revenue management practices have been introduced to boost sales, and bids have been invited to upgrade the logistics management system to drive automation, bookings, and customer engagement.

“We have already witnessed considerable growth in our cargo revenues over the past year. This will continue to grow with all the initiatives, as also the growth in belly-hold capacity, as we expand our international wide-body network,” the airline said in an emailed response.

In the financial year ending March 31, 2022, rival SpiceJet earned Rs 1,943 crore from its cargo and logistics business — around 30 per cent of its total revenue from operations. In nine months till December 2022, this came down to Rs 564 crore, which was 8.4 per cent of the total revenue from operations. Aviation market leader IndiGo does not give a separate break-up of cargo revenue in its financial results.

Nearly a decade ago, Air India flew Boeing 737 freighters, but these were sold off to cut down losses. Air India had converted six 737 passenger planes into freighters, three of which were carrying out charter flights for India Post. It also used to operate four Airbus A310 freighters, but these, too, were sold off.

In the domestic market only around 20 per cent freight is carried in freighters, with the majority flown in the belly space of passenger planes. About 40 per cent of all cargo handled at Indian airports is domestic, and the rest is international.

Foreign airlines corner 80-85 per cent of international cargo to or from India, with airlines from West Asia holding the lion’s share. International expansion by Air India and other airlines, plus addition of freighters, will help Indian carriers increase their share of international freight, say experts.