Air India eyes 20% share in air cargo biz in 2-3 years

As part of its strategy, the airline plans to engage with companies in the telecom, electronics, and pharmaceutical industries that are key users of airlines to ferry products.

The airline is also working on sector-specific packages and looking at long-term arrangements with large companies. Air India’s market share in the international cargo space was about 8% in 2019. “There is a change of strategy in line with the expanding fleet of wide-body aircraft. The airline is looking to establish direct channels. Discussions are taking place with big exporters as well. Electronics is one sector where there is potential and preliminary talks have taken place with companies along with telecom and pharmaceuticals," one of the officials aware of the development said on condition of anonymity.

The cargo capacity of the full-service carrier is set to get a boost as brand-new Airbus A350 aircraft joins the airline’s fleet by the end of the year. The airline, which currently has 124 aircraft, recently received approval from the Indian civil aviation regulator for its Rolls Royce-powered A350s and will now start preparing for the induction of the wide-body aircraft.

The airline plans to induct six new Airbus A350s, five leased Boeing B777-LR, and nine other Boeing B777-ER by the end of the current fiscal year, increasing its wide-body fleet by 30%.

“The airline has also implemented changes in the cargo handling processes and is preparing the infrastructure to manage sector-specific cargo as well. Equipment is being bought to cater to niche needs of a sector such as pharmaceuticals. Gradually, pharma is also a sector that can become significant for Air India in cargo," a second executive said on condition of anonymity.

Air India is also working on increasing its market share in the domestic and international passenger space to 30% in the next five years.

A spokesperson for Air India did not respond to queries sent by Mint.

According to data from the Airports Authority of India, all operational airports handled 3.2 million tonnes of freight in FY23, with 60% catering to the international segment and the remaining to domestic. The government further aims to increase the cargo handling by Indian airlines to 10 million tonnes by 2030, and Air India is expected to contribute a sizeable portion of that, the second executive added.

In February, the airline ordered 470 new aircraft, including 70 wide-body aircraft. The new wide-body aircraft include 40 A350, 20 Boeing B787, and 10 Boeing B777. In addition, the airline also planned to induct 11 B777 family aircraft on lease. “Belly cargo will increase more than double in the next 2-3 years," the second official added.

A wide-body aircraft can typically carry close to 40 tonnes of cargo on its own with a full flight in the belly space. In contrast, a narrow-body aircraft can carry around 3-5 tonnes of cargo depending on the range and passenger load.

“India does around 60-65% international cargo to domestic for the entire throughput, and if that number must substantially go up in the international front, you need an anchor carrier. We have missed an anchor airline in this country all this while. Hong Kong has Cathay, Singapore has Singapore Airlines, Dubai has Emirates, we haven’t had one like that of this proportion, and I think Air India fits into that role," said Murali Ramachandran, president - India and South East Asia, Celebi Aviation.

Until its grounding in April 2019, Jet Airways was the largest Indian airline in the international cargo handling segment, with a 49% share among Indian carriers and 10% overall in 2018. The airline handled 180,647 tonnes of international cargo in 2018, while the figure for all Indian airlines stood at 370,830.4 tonnes. Air India remained in second position with a 37% share at 137,835 tonnes.

In 2019, Air India became the largest Indian carrier in overseas cargo, with a 53% share, but the actual cargo carried was 133,035 tonnes. With a strong promoter backing the airline and the only airline in India with a pipeline of wide-body planes, it is expected that the airline will be able to increase the overall share of Indian airlines in the cargo segment.

In 2019, Indian and foreign carriers carried 1.6 million tonnes of cargo from and to India, out of which Emirates was the largest player with a 13.6% stake, followed by Qatar Airlines, Cathay Pacific and Air India. The share of Air India stood at 8%, with 133,035 tonnes of cargo carried to and from India in 2019.

In line with global players, the airline has also changed its old policies and is now providing a uniform platform to a wide range of cargo agents as compared to a preferential approach earlier.

“Air India has direct flights to almost 45 destinations. People want to use Air India. Earlier, policies were not right. They were only trying to promote one or two agents, but now it is a rationalized policy. Rates are also competitive. They have changed a lot of cargo staff, the new team has come, new ideas, new policies, they have really started focussing a lot on cargo and are coming in a big way to capture the Indian cargo market," said Vipin Vohra, chairman of Continental Carriers Group of Companies.

anu.sharma@livemint.com