A massive amount of new belly capacity is set to descend on India’s air cargo sector, on top of dedicated freighter or cargo-only networks already on the cusp of development.

Domestic low-cost carrier IndiGo is to buy 500 aircraft from Airbus a $50bn deal that follows Tata Group-owned Air India’s recent order for 470 aircraft from Airbus and Boeing.

And local industry sources have told The Loadstar Air India is also close to inking a deal to buy five freighters, likely from Airbus. The source said: “We expect an official announcement next week.”

According to sources, the Tata executives steering Air India believe the country’s e-commerce growth will drive increased demand for express parcel services.

For IndiGo, the latest acquisitions will complement the 480 aircraft already on order with Airbus – together comprising a mix of A320/321 Neos and A321XLRs, with deliveries stretching into the next decade.

CEO Pieter Elbers, an ex-KLM veteran, said the latest aircraft order, its biggest ever, would cement IndiGo’s position in the Indian market as the economy expanded.

However, some question whether the Indian cargo industry is sizeable enough to be placing multibillion-dollar bets on the market.

On the freighter front, IndiGo has adopted a nuanced approach, driven by India’s muted growth in air cargo imports/exports last fiscal year. This was also noted by Mark Sutch, IndiGo’s cargo CCO, in a recent interview with The Loadstar.

And Vineet Malhotra, co-founder and director at Kale Logistics Solutions, also noted a sustained cargo-focus by IndiGo.

“Even though IndiGo had been moving freight on its network by exploiting belly capacity, the carrier took an ambitious decision to introduce passenger-to-freight (P2F) jets,” Mr Malhotra told The Loadstar. “As the airline’s international network and frequencies grow, there is an opportunity for it to build world-class cargo products using both its A321 freighters and extensive belly capacity.

Joy John, director of sea and air freight at Mumbai-based freight forwarder Jet Freight (JFL), said IndiGo’s fleet expansion bodes well for the Indian cargo trade, while Vaibhav Vohra, MD at Delhi-based forwarder Continental Carriers, said airline fleet expansions tied in with the Indian government’s policy initiatives and infrastructure development.

“This will generate ample opportunities for cargo service providers to enhance customer experience and upgrade service solutions on both domestic and international routes.”

Trade and Transport Group MD Frederic Horst said the addition of more A320/321 Neos would particularly help IndiGo expand its domestic air cargo market leadership. He said: “On international lanes, the majority of air cargo traffic moves on freighter aircraft and the bellies of wide-body passenger aircraft. So, the Airbus passenger narrowbodies will have a much lower impact there.”

But industry reports generally favour India’s potential for growth. Boeing’s World Air Cargo Forecast 2022-2041 suggests India’s domestic air cargo trade will expand significantly, at 6.9% a year, over the next two decades, while the latest Trade and Transport Group report put Indian air cargo traffic at 2.2m tonnes in 2022, and estimates it will reach 2.5m tonnes this year.

While it remains to be seen how the capacity boost will play out in a market dominated by Gulf carriers, there is no denying that competition for market share will heat up.

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