SpiceJet to diversify into freighter service with modified Boeing 737

Plans to cash on boost in cargo business to open alternate revenue stream

Ajay Singh-owned SpiceJet is diversifying into the air cargo business, and will be the first among Indian airlines to start a dedicated freighter plane service. The airline, which will be using Boeing 737-800 BCF for freighter operations, will get its first plane in July.

“We plan to start operations by July between the metro cities. Gradually we will be spreading the business to other cities including international destinations,” a senior SpiceJet official said.

Sources said that retrofitting work in aircraft is underway at Boeing’s facilities in Shanghai and at Israel Aerospace Industries. “Two planes have already undergone conversion and will be joining our fleet by third week of July,” the Spicejet official said. The airline plans to have 20 freighter planes by 2022.

Through its freighter conversion program, US aircraft manufacturer Boeing transitions passenger airplanes into freighters. “The seats of the plane are removed creating space for cargo. Modifications also include installing a large main-deck cargo door, a cargo-handling system and accommodations for up to four non-flying crew members or passengers.

The 737-800BCF carries load of upto up to 23 tonnes and has a range of 2,000 nautical miles (3,750 km) which according to SpiceJet will help them to venture in new international markets. “The international destinations are still in planning stage but certainly we will expand gradually,” the official said.

The 737-800BCF freighter also offers operators newer technology, lower fuel consumption and better reliability than other standard-body freighters.

A boost in e-commerce sales has increased the prospect of air cargo business in India. But while logistics pure play cargo players like Blue Dart operates six dedicated freighter planes, most of India's air cargo capacity is limited to belly space in commercial airlines, all of which are seeing a surge in cargo income.

The largest Indian airline, IndiGo, which operates 153 A320 planes, earned Rs 8,761 million from cargo operation in FY 16-17. Rating agency Icra said in a recent report, that air cargo volumes are expected to grow by 60 per cent over the next five years. 

"Growing e-commerce, improving air connectivity across small airports in the country and growth in GDP are expected to result in growth in air cargo traffic. Infrastructure bottlenecks remain a major constraint to the growth prospects of air cargo and the same need to be addressed," Icra sector head for corporate ratings, Harsh Jagnani, said.

However, sector analysts warned that SpiceJet’s diversion may be a costly affair at a time when airlines are tackling the dual problem of a high fuel price and weaker currency. “Freighter business is a very tough sector, it’s extremely seasonal and logistics company like FedEx, Blue Dart which have expertise in such business makes life tougher. Getting into captive model with major e-commerce players like Amazon and Flipkart will help,” said an airline executive.

Veterans of the air cargo industry said that SpiceJet will initially face the hurdle to fill up space as other than high value items, the road and water mode is preferred. “Filling up space will be a challenge. Business between India and the neighbouring countries is not so robust to support dedicated freighter operations,” an executive of a air cargo company said.