How Blue Dart is navigating challenges in a slowing economy
MUMBAI : Blue Dart Express Ltd’s revenue and profitability trajectory is struggling to take off, squeezed by rising competition, sluggish market demand and the additional burden of increased costs from recent aircraft additions. Its FY24 consolidated revenue growth stood at just about 2%, with volume remaining lacklustre. This is a stark contrast to the 17% growth seen in FY23.
The company's performance in the June quarter (Q1FY25) mirrored the sluggish off-season, with revenue year-on-year (y-o-y) growth at 8.5%. However, the upcoming festive season offers a glimmer of hope. As the season kicks in, Blue Dart expects capacity utilization of its new aircraft to improve.
Currently, the utilization rate of the two new freighters is 75-80%, just below the break-even level of 85-90%. Reaching optimal utilization levels could boost efficiency and margins. Also Read: L&T Tech has outlined an ambitious growth plan. But it's off to a slow start. The company added two new aircraft to tap into the growing demand in tier-II and tier-III cities, where it sees long-term growth potential.
These new aircraft have allowed Blue Dart to replace third-party volume with in-house operations, reducing the share of third-party cargo from 20-25% to 10-11%. New routes, such as Guwahati, are beginning to ramp up and should gain momentum. Meanwhile, the surface express segment, which now contributes 30% of Blue Dart’s revenue, is emerging as a key growth driver.
In Q1FY25, the surface express segment saw strong growth compared to air volumes. Further, e-commerce remains a significant growth engine, accounting for one-fourth of the company's total revenue. Despite its potential, surface logistics is fiercely competitive, and that can continue to
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