No-frills airline SpiceJet announced the launch of its dedicated air cargo services today and inducted its first freighter aircraft in Delhi, a Boeing 737-700. To be called SpiceXpress, the new service will kick-off operations on September 18, and will initially cover Delhi, Bengaluru, Amritsar, Guwahati, Hong Kong and Kabul. This new unit will operate as a separate business unit under SpiceJet Limited.
"With our proven operational capability, this is an extension of our 'belly cargo' service to a 'dedicated freighter' with Boeing 737 aircraft. We are very excited about the tremendous potential the logistics industry offers. There is a huge untapped market for air cargo services in India and a player like SpiceJet - with its low cost structure - is best suited to address this need," Ajay Singh, Chairman and Managing Director, SpiceJet, said in a statement.
The airline said that the first four freighters are scheduled to be inducted by March 2019. With that, its cargo capacity would go up to 900 tonnes a day in a phased manner, up from about 500 tonnes daily at present. SpiceJet currently offers cargo capacity on its passenger aircraft fleet of 36 Boeing and 22 Q400s operating across 47 domestic and 7 international destinations. According to the company, the added capacities will enhance its existing cargo competence to 60 domestic destinations by the end of this year. By 2022, it aims to further ramp up to 150 destinations across India, Asia and Europe.
Much like SpiceJet's commercial passenger aircraft fleet, the airline's freighters fleet will consist of Boeing 737 aircraft, which will be operated on an incremental direct operating cost model. The airline SpiceJet plans to utilise common pool of resources like pilots, engineers, ground staff and airport infrastructure for SpiceXpress.
"The freighter aircraft will be acquired on pure operating leases and haven't incurred any major CAPEX, while the ground operations will be either self-handled by the existing SpiceJet ground infrastructure or shall be outsourced till we develop a certain scale of operations," said Singh.
SpiceXpress will address time and temperature-sensitive shipments across verticals, like letters and credit cards under banking, and blood, organs, and medicines under pharma. "Other shipments would include automobiles, apparels, consumer electronics, e-commerce and live animals. Besides, the airline will also ship perishables like farm fresh fruits and vegetables to the Middle East," the airline said in a release, adding that among its key features, the new service will offer Priority Based Delivery, Hour Based Delivery, Priority Cargo and Personalised Services (PSS).
SpiceJet's announcement comes at a time the air cargo traffic in the country is poised to mushroom 60% over the next five years. Furthermore, the domestic logistics industry, which provides employment to more than 22 million people, is growing at a compounded annual growth rate of 7.8% since 2013 and is expected to be worth $215 billion in the next two years.
"Eyeing the huge growth potential in both domestic and global markets, fuelled by the ever increasing e-commerce boom, SpiceJet aims to shore up SpiceXpress's existing capacity, transforming it into a full scale freighter cargo service," said the airline.