8 minute read
Will iam Bo ulter, Chief Commercial Officer
In the wake of the coronavirus crisis, Willia m Bo ul ter the country’s largest airline had struggled hard to perform better by taking various measures like cost optimisation, efficient H ow we may best summarise the current state of the global air cargo industry. How is the industry reacting and responding to it? fleet management, maintaining liquidity, ensuring levelled cargo capacity and experimenting with new network and revenue Cargo demand has been buoyant on models. William many routes, owing to the lack of the Bo ulter , Chief normal passenger aircraft belly space, Commerc ial Officer , and has supported our cargo-in-cabin IndiGo CarGo in an charters, where with some minor equip exclusive interaction ment and procedural changes we have with Ritika Arora Bhola, been able to carry significant payloads emphasises on the on our A320/321 passenger aircraft. challenges faced by the
In general, global air cargo demand airline and strategies is down by roughly 50 per cent year-onadopted to sail through year due to the various economic factors, this difficult situation. He etc. and India broadly follows the same also elaborates on the trend. However, the passenger aircraft company’s plans to reach international flights have further fallen out to more international by upwards of 90 per cent, driving a dramatic collapse in the amount of belly space available for cargo. Hence, this has stimulated many airlines to convert their destinations, to drive more cargo traffic and leverage capacity building options. pax aircraft to fly cargoin the main cabin as well as in the belly too. IndiGo did this in early April and now has around ten aircraft which have the necessary We remain very bullish on equipment to carry ‘cargo-in-cabin’. What initial challenges you the future of Indian aviation faced due to lockdown and other consequent measures? This is a very difficult time for the world ruptions, we reported a net loss of 28 domestic charters, and repatriation economy in general and for the travel billion rupees during the first quarter. flights to transfer stranded citizens, sector in particular. The aviation sector which also contribute to our cargo result. has been through many ups and downs Can you give us an overview of We have flown over 1000 cargo charter in its history, but we can all agree that your flight operations in the wake flights from June-August 15, 2020. this crisis is unprecedented in its impact. of the crisis?
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The last few months have been very Our cargo line of business was performSince the lockdown was imposed, difficult for the aviation industry gener ing extremely well in any case, but then passenger aircraft were being ally, as operations were grounded from went to a new level with the carriage of used as freighters. How difficult or March 25 to May 24, except for charter essential supplies and medicines in the easy was it to load/unload cargo in and cargo flights. As the Government early weeks of the lockdown. passenger aircraft? Tell us about allowed partial resumption of flights We learned valuable lessons about the techniques implemented for starting May 25, 2020, we resumed op the demand and scope for cargo which successful operations. erations with much fewer flights than will definitely serve us well for aug This is a new product, and as all prodour pre-COVID capacity. For Q1 FY20- menting our cargo operations in the ucts have a certain developmental cycle, 21, we ended the quarter at about one months ahead. With currently 10 aircraft we had it too. Initially, there were chal fourth of our original capacity and we completely devoted to cargo, we plan to lenges with the volume of cargo we hope to slowly build this up in a phased continue with ‘cargo in cabin’ operations could carry on these flights, but we re manner in the coming months. Due to even once we resume our full schedule. worked our strategy and were able to these on-going COVID-19 related dis We are operating international and turn this into our advantage.
Within the end of the first month of cargo charter operations, our team had broken the record of the highest tonnage carried on a Airbus A320 passenger air craft. Thereon, we never looked back; we kept breaking our own record every time. The current highest volume carried on our cargo charter A320 is 20,212 kgs.
Can you describe your carrier’s own business contingency plans? Do you have a crisis tool kit? Crisis processes, resources are in place and understood? We at IndiGo CarGo were working with only belly capacity during pre-COVID times, however with the pandemic situ ation, this has changed rapidly. We had to adapt quickly to the emerging de mands. The team worked tirelessly together to build a cargo charter product from ground up.
We have had our own share of chal lenges as this was a new product, but the team met these challenges with a proac tive approach helping iron out any contingencies. The process laid out for the cargo charters are robust and have been built with room to continuously evolve and improve as per the market require ments. We have a very well trained and committed operations team who are now experts in handling these cargo charters.
Kindly share the efficient strategies the airline has adopted to sail through this difficult hour. Apart from having successfully operated our cargo line of business throughout the pandemic, we have been continu ously taking measures towards reducing our unit costs even further, making our fleet more efficient, ensuring our capac ity is right sized to the market, and experimenting with new network and revenue models. Below are some initia tives taken by us at IndiGo: Cost optimisation
Negotiating better prices and terms with our partners.
Not giving out any dividends this year and placing discretionary ex penses on hold.
Continuing to substitute NEO for the older CEO aircraft to increase cost ef ficiency, and prioritising flying our
NEOs over the older CEOs.
We had to undertake measures such as salary cuts and leave without pay; but unfortunately, these cost savings are clearly not enough to offset the decline
in revenues. After carefully assessing and reviewing all possible scenarios, we had to bid a painful adieu to around 10 per cent of our workforce, in order to sustain our business opera tions. We created a ‘6E Care package’, which includes notice pay, severance pay, medical insurance, travel allow ance to tide over the uncertainties emanating from this decision. Maintaining liquidity Measures like returning of older CEOs and taking deliveries of NEO aircraft, freezing of supplementary rentals and conversation with various suppliers to provide more favourable credit terms, will help in main taining liquidity. We are looking to raise finance against the various unencumbered assets of IndiGo. We expect these mea sures to help us generate additional liquidity of `30-40 bn. Additionally, the board of directors have approved raising up to `4,000 crore through a qualified institu tional placement.
Kindly elaborate on your plans to reach out to more international destinations, cargo traffic and capacity building operations. While we are the airline of choice for cargo to the Asian and Middle East des tinations, our distinguished services have made our customers wanting us to partner with them for newer destina tions like Tashkent, Almaty, Bishkek, Moscow and Cairo. These are new sec tors which we have won because of the goodwill we generated by successfully building a reliable cargo charter product.
Our next focus is to continue sup porting our farmers and manufactures in tier II and III cities to connect and sell their produce to international destina tions, by giving them thorough connections and tailor-made solutions.
How do you look at India as a trade and investment destination? Do you think India has a potential to become a manufacturing hub?
The crisis that we have been living under has not only given us the difficult timings that we all are coping with, but it has also unleashed the potential that was hidden somewhere, and we believe that India as a country has the ability to emerge as one of the most efficient man ufacturing hubs today.
India, undoubtedly, shares values and interests that align closely with those of Western countries and their business interests. Moreover, the coun try has a massive and intelligent entrepreneurial talent, a hefty marketplace and flourishing private enterprise and numerous start-ups. Additionally, the supply shortage and uncertainly in the long term due to the pandemic has led various global companies to shift their units outside China. It is good news that a lot of global companies are considering India as a potential manufacturing hub and may find a permanent home here. Can you already draw conclusions for 2020? The year 2020 has certainly been a difficult one which has given many challenges to almost every industry. For airlines, the difficulties have been espe cially stronger as it is one of the most fragmented industries in the world, with far too many players scrambling to out do each other for growth and market share, and this pandemic situation has put us all in a situation where there is a race for the survival of the fittest.
However, we remain very bullish on the future of Indian aviation. All the underlying elements of rapid growth continue, and I think we have barely scratched the surface in terms of what is possible for the future. Undoubtedly, there are certain structural problems, but we are making steady progress. Perhaps, being the most difficult time for all of us, this year has also allowed us to explore the uncharted and emerge stronger with more result driven strategies in place.
What are the areas air cargo professionals globally need to keep an eye on and put up a unified front? In an unpredictable environment, we must focus on the changing market dy namics and how we can support our end customers, by continuously building tailor-made solutions which help make their lives easier and augmenting their efforts to build a successful business.