India’s E-Commerce Boom Is Taking Off. Literally
(Bloomberg) -- India’s booming e-commerce industry just got an ally: the first cargo service by a commercial airline.
SpiceJet Ltd. is starting a dedicated freighter business to ship goods from consumer electronics to apparel and fresh farm produce as an increasing number of online shoppers visiting Amazon.com Inc. to Flipkart Online Services Pvt. demand same- or next-day deliveries. The carrier will also transport organs for medical purposes, besides letters and credit cards, it said in a statement on Monday.
“We think that the time has come for dedicated freighter aircraft,” Ajay Singh, chairman and co-founder of SpiceJet, said inside the company’s first cargo plane -- a converted Boeing Co. 737 jetliner -- in New Delhi. “There’s an e-commerce boom happening in the country.”
The airline, which almost collapsed in 2014 because of an intense fare war among carriers fighting to lure the Indian flyer, is diversifying into retail and cargo businesses to shield itself in a market where ticket prices can barely cover rising costs. Singh, who regained control of the company in 2015 and helped revive it, is eyeing an e-commerce market in which research firm eMarketer says sales may double to $72 billion by 2020.
SpiceJet will add four converted Boeing 737 jets this year, and may add as many as six more in 2019, Singh said. The service is set to start next week. Singh’s foray into cargo comes at a time growth in the sector is slowing in Asia Pacific, the largest freight-flying region, mostly driven by risks from protectionist measures, according to the International Air Transport Association.
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