The Indian air cargo industry is growing at a steady pace after recovering from the impact of the Covid-19 pandemic. Freight traffic increased by 3.2 per cent in 2022-23 as compared to 2021-22, indicating a marginal growth compared to the significant jump of 27 per cent in 2021-22 over 2020-21. The air cargo industry is driven by high demand in allied sectors such as e-commerce, pharmaceuticals, manufacturing, electronics and agriculture. Activities in these sectors are being driven by government schemes like Make in India, UDAN 5.0 and Krishi UDAN 2.0. However, the most recent trends in overall air cargo traffic during the April-September period of 2023-24 reflect a decline of 0.1 per cent over the corresponding period in 2022-23 due to a 2.8 per cent drop in domestic traffic, while international traffic had a balancing effect with a positive growth of 1.9 per cent. Future growth can be facilitated by the establishment of more advanced air cargo terminals, expansion of belly cargo capacity by airlines, higher induction of dedicated cargo freighters, more collaborations with logistics and e-commerce companies, and technological integration for enhanced operations.
Developments in air cargo terminals
At present, Indian airports have a total air cargo handling capacity of approximately 6.5 million tonnes (mt). The Ministry of Civil Aviation, the Airports Authority of India (AAI) and its subsidiary AAI Cargo Logistics and Allied Services (AAICLAS) have set a goal to further boost air cargo activity in the country through infrastructural developments, including setting up new cargo terminals (integrated, multimodal and dedicated), augmenting and expanding existing terminals and developing cargo transshipment hubs. At present, there are 72 domestic and 30 international air cargo terminals in India. The country’s cargo movement is heavily concentrated at the joint venture airports, which are responsible for 64 per cent of domestic cargo traffic and 79 per cent of international cargo traffic. However, they witnessed a 2.1 per cent decline in cargo traffic in the April-September period of 2023-24 compared to the corresponding period of 2022-23.
Many airports have also undertaken major terminal construction work in 2023 by integrating modern cargo-handling equipment and state-of-the-art technology to ensure smooth operations. For instance, an import cargo terminal was launched at Cochin International Airport in October 2023 with a cargo handling capacity of 0.2 million tonnes per annum. Further, a cargo terminal was also inaugurated at Durgapur airport in West Bengal in August 2023, expected to handle 25,000 tonnes of cargo in the next eight to 10 years. Similarly, Mangaluru International Airport launched an integrated cargo terminal in May 2023, spanning an area of 1,891 square metres. The terminal is capable of handling 9,000 tonnes of international and domestic cargo per annum. Another notable achievement is the inauguration of Air Cargo Logistics Centre III at the Indira Gandhi International Airport, Delhi, in February 2023, making it a cargo transshipment hub between Bangladesh and other global destinations. It will now cater to cargo demand from diverse sectors such as logistics, e-commerce and manufacturing.
Growth in airline cargo handling capacity
Indian airlines are tapping the air cargo potential by expanding their freight operations. In 2022, their cargo traffic reached 92 per cent of the pre-Covid levels. Moreover, the market share in cargo traffic has increased for most airlines over the past four years, from 2019 to 2022, including IndiGo, Bluedart, Vistara, Air Asia and Akasa Air, with IndiGo emerging as the market leader in the air cargo industry. This has been achieved by increasing its belly cargo capacity, inducting new dedicated cargo freighters and/or converting passenger aircraft into cargo-only aircraft. According to 2022-23 statistics, the bulk of air cargo (about 81.5 per cent) is handled through belly cargo as compared to dedicated cargo freighters (18.5 per cent). However, there has been an increase in the induction of dedicated cargo fleets supporting long-haul transportation, growing from five dedicated freighters during pre-Covid times to approximately 28 at present.
Large airlines such as Air India and IndiGo have led this growth. In July 2023, Air India placed an order for 70 wide-body aircraft to provide non-stop connections for cargo export to international markets, and IndiGo started operations of its first dedicated freighter for the movement of general and e-commerce cargo (CarGo) in November 2022. Furthermore, aircraft manufacturers are playing a crucial role in meeting the air cargo demand. In August 2023, Airbus delivered its Beluga aircraft to Hyderabad International Airport. It is one of the world’s largest cargo aircraft, capable of transporting oversized air cargo. Similarly, Boeing has announced plans for passenger-to-freight conversions. In March 2023, it was reported that it would set up a facility in India to convert B737 passenger aircraft into dedicated cargo aircraft.
Shift to air cargo by logistics and e-commerce players
Indian third-party logistics and express logistics players are expanding operations to provide air cargo service, providing comprehensive logistics and supply chain management solutions. They facilitate fast delivery of perishable goods and high-value fragile items over long distances via air cargo without the need for extra packaging, helping them achieve time and cost optimisation. Some of these players are also expanding their presence to international markets. For instance, Mahindra Logistics Limited announced the commencement of cargo charter operations in the Middle East in May 2023. It plans to augment freight forwarding services for electronics, consumer durables, and pharmaceutical and engineering goods, with headquarters in Dubai.
The growth of e-commerce is further pushing the envelope for business opportunities. According to the International Air Transport Association (IATA), e-commerce held a market share of approximately 15 per cent of air cargo volumes in 2019, which continues to expand. E-commerce players such as Amazon India and Swiggy are also entering the air cargo market. Amazon India launched Amazon Air in January 2023, utilising the cargo capacity of two Boeing 737-800 aircraft operated by Quikjet Cargo Airlines. Each aircraft is expected to ship thousands of packages daily and fly across Hyderabad, Bengaluru, Delhi and Mumbai. Moreover, omnichannel logistics is also being explored through drone-based last-mile deliveries. For instance, Shiprocket is collaborating with Skye Air, a software-as-a-service-based drone delivery solutions provider, to deliver shipments across India. Similarly, Swiggy has initiated middle-mile and business-to-business operations through drones. With this, it will extend its operations across several locations, including Mumbai, Delhi, the National Capital Region, Bengaluru, Hyderabad and Goa.
Innovations in technology
Innovative technologies are revolutionising air cargo operations in terms of efficiency enhancement and seamless movement with minimal wastage, including handling temperature-sensitive cargo such as pharmaceutical and biotechnology goods. The GMR Hyderabad Air Cargo Terminal is India’s first exclusive facility for pharmaceutical goods and is temperature controlled. It received the Good Distribution Practices certification from the World Health Organization in July 2023.
Cargo management system is another initiative being undertaken to digitalise operations at airports. It was implemented at Mopa International Airport in Goa by Kale Logistics Solutions in February 2023. This system, known as GALAXY, will allow end-to-end digital processing of all domestic cargo operations at the airport. It streamlines operations, from cargo acceptance to loading and departure, managing domestic inbound cargo from flight arrival and overseeing cargo delivery at the warehouse.
Future outlook
According to the government, air cargo volumes are projected to increase from 6.5 mt in 2023 to 10 mt by 2030. Further, according to IATA, airfreight traffic is expected to grow at a compound annual growth rate of 7.5 per cent between 2019 and 2025. This would be supported by multiple factors such as overall macroeconomic growth with a rising GDP, increased focus on dedicated freighters, demand for e-commerce and upcoming cargo terminals. Moreover, the Ministry of Commerce and Industry targets an exponential jump in exports of goods and services, aiming for a growth of $2 trillion by 2030. Air cargo would be a key enabler in achieving this goal. For this, AAICLAS plans to achieve a 6 per cent year-on-year growth in air cargo volumes and 33 new domestic cargo terminals are planned to be established by 2024-25. Additionally, Indian airlines are expected to double their fleet capacity to around 1,100 aircraft by 2027.
Shubhangi Goswami
