Global logistics players spot potential in the Indian air cargo market


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Jul 31, 2023

Global logistics players spot potential in the Indian air cargo market

India’s budding cargo-only airlines are attempting to consolidate their

India's budding cargo-only airlines are attempting to consolidate their operations as the industry sees signs of strong capacity demand, propelled by a wave of global shipper nearshoring.

SpiceXpress, which parent SpiceJet spun off last month, has won a $100m investment from UK-based SRAM & MRAM Group.

"This investment should help SpiceXpress to grow and expand and provide a more streamlined and efficient service," said chair and MD Ajay Singh.

SRAM & MRAM is a diversified group which believes the Indian air freight market has significant growth potential as the economy expands. Chairman Sailesh Lachu Hiranandani said: "We see excellent growth opportunities in the logistics and cargo space.

"In a short time since its inception, [SpiceXpress] has shown exceptional growth in the nascent air cargo market and we see tremendous potential for the company in India's fast-growing cargo and logistics market."

The cargo partnership followed a debt-to-equity swap SpiceJet concluded with aircraft lessor Carlyle Aviation Partner, as part of long-running strenuous efforts to pare down its heavy debt burden. This conversion meant a 7.5% stake gain for the Miami-based company in the Indian low-cost carrier.

Air freight capacity aggregator Teleport is another player looking to grab a slice of the promising Indian market.

The logistics arm of Malaysia's Capital A Berhad, formerly AirAsia Group, Teleport has reached a strategic collaboration with Delhi-based Pradhaan Air Express, with its converted A320 freighter – an Astral Aviation aircraft leased through Vaayu Group.

"As a young cargo airline, this partnership is a major step towards achieving our goal," said Nipun Anand, co-founder and CEO of Pradhaan.

Kenya's Astral believes there is opportunity in India: CEO Sanjeev Gadhia told CH Aviation that Astral is keen to take a stake in Pradhaan. "We are looking at maybe taking a stake in the airline in the next couple of months," he said. He added that he was also evaluating A321s and A330-300(P2F)s for the new carrier.

The capacity sharing with Teleport is expected to cover connections between India and South-east Asia. Pradhaan operated its first international service to Hanoi in December. And, as Pradhaan gears up to add a second Astral A320P2F, this alliance could prove a useful bet for steady revenue streams, as express logistics heavyweights, including DHL, UPS and FedEx, continually beef up services out of India.

Indeed, forwarders and other industry stakeholders remain bullish on the Indian air cargo market. Joy John, director of sea and air freight at Mumbai-based Jet Freight Logistics, told The Loadstar: "With manufacturing growing at an unprecedented pace, demand for air freight capacity in India is bound to increase.

"The investments by Foxconn in Indian units and the new declarations regarding SpiceJet and Pradhaan in cargo verticals are steps directed towards that market outlook."

It's not just homegrown air carriers: CMA CGM Air Cargo has announced it will serve Mumbai with four weekly flights from May 12 with an A330F aircraft.

Suneet Gupta, global head of cargo community systems at Kale Logistics Solutions, noted that the expansion of airport networks – from the current 148 to 220 by 2025 – would make India one of the world's fastest-growing aviation markets.

"The Indian air cargo market generated some 2.2m tons of traffic, with 30% generated out of the domestic segment," Mr Gupta told The Loadstar. "International cargo traffic has not yet recovered to pre-pandemic levels, but domestic movement has, driven mainly by express and e-commerce."

However, several Indian passenger carriers still face financial struggles, including SpiceJet. The budget airline is facing court action over unpaid lease dues, with Ireland-based Aircastle the latest aggrieved party to seek bankruptcy proceedings on a $8.5m default tied to four leased B737-800s aircraft.

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