Airlines may find respite in cargo operations during lockdown

NEW DELHI:  As uncertainty and pessimism remains over resumption of passenger flight services amidst the Covid-19 pandemic, home-grown airlines are ramping up freight services. According to an industry executive, cargo operations have become the only source of revenue (barring the controversial advance booking) for airlines as demand for essentials such as medical gear and consumables in India and outside remains high at the moment.

If the government allows private airlines to participate in the world’s largest evacuation plan — bringing home over 2.50 lakh Indians stuck abroad in phases — it will help them improve financials. As of now, only Air India has been asked to fetch the passengers on payment basis. Those taking the special flights will be charged between Rs 12,000 and Rs 1,00,000.

On the rise of cargo operations, Urvisha H Jagasheth, research analyst at Care Ratings, said it is quite likely that airlines would increase their cargo operations in the near future, as that is the quickest form of freight transportation and pilots are readily available.

“The pandemic has augmented reverse migration of workers, which has led to a shortage of truck drivers, thus interrupting the whole logistical supply chain in terms of road transportation. This could encourage the Centre to shift a part of its reliance on freight transport to the aviation sector and ensure quick delivery,” he said. 

SpiceJet recently said it intends to increase the number of aircraft flying (cargo+cargo on seat) to more than 50 per cent and the number of pilots flying to 100 per cent over the coming weeks. Similarly, IndiGo said on Monday that it has made operational three international cargo flights from Singapore and Maldives.

At the moment, it is difficult to estimate earnings from cargo operations as some of them are done free of cost. The executive quoted above said that airlines have now started monetising the operations to meet their fixed expenses. 

For Indian operators, the focus may easily shift back to passenger services once the restrictions are lifted. “The economic impact of operating cargo flights doesn’t seem to be too significant... In the short-to-medium term, focus might still be on reviving passenger demand,” said Sameer Wadhwa, partner, Deloitte India.

Grounded and uncertain

Passenger flight services are suspended till May 17, with no clarity on whether it would be allowed to fly from May 18. According to CAPA, Indian airlines excluding market leader IndiGo will need to raise a minimum of $2.5 billion to survive the grounding due to the lockdown.