News / India's air cargo market flying as volumes hit record high

Photo: IndiGo

India’s air cargo market is proving a lucrative bet for freighter operators and other supply chain stakeholders as volumes rebound after Covid.

Shipments in and out of Indian airports were up 7% year on year, to 3.4m tonnes in fiscal year 2023-24 that ended in March, according to new data from the Airport Authority of India (AAI).

Countrywide volumes hit an all-time high in March, to some 330,000 tonnes, up from 293,000 tonnes in February.

Even more significantly, international loads at Indian airports  spiked 10%, year on year, the e-commerce boom driving the expansion alongside export/import gains from new digital manufacturing verticals.

Data indicate a steady turnaround for the Indian air cargo industry, recovering from the downturn in fiscal 2020-21 when cargo volumes slumped to 2.47m tonnes from a pre-Covid high of 3.56m tonnes reported for 2018-19.

Industry optimism has also been raised by the government embarking on a programme to expand air cargo volumes to 10m tonnes by 2030, powered by large-scale infrastructure development and export policy reforms.

Airlines out of India have positioned themselves to capitalise on the opportunity, and the largest domestic carrier, IndiGo, is devising new business strategies for its CarGo arm.

The low-cost airline recently inked a deal to acquire 30 wide-body A350s, which it claimed would significantly boost its ability to handle palletised cargo. CarGo International CCO Mark Sutch told The Loadstar: “Having successfully built a 350,000-tonne-a-year business on an essentially all-narrowbody fleet, we now enter a new stage of cargo development and growth.”

He added that the cargo-handling prowess boost would help India develop as a transhipment hub, as volumes grew.

According to Mr Sutch, the growth in international volumes out of India was, in some part, driven by the Red Sea crisis and the resulting shift from ocean to air, which, he noted, “of course, brought more benefits to carriers with a reach to Europe and the US”.

IndiGo already has three dedicated freighters, with a fourth expected to join its cargo fleet this year. The latest order sees deliveries scheduled to start from 2027, and builds on the fleet expansion unveiled last June covering 500 Airbus aircraft.

Vineet Malhotra, co-founder and director of Mumbai-based Kale Logistics Solutions, told The Loadstar the air cargo spike had been more pronounced on the India-Europe corridor, which he said had seen a staggering 40% increase this year.

“The surge in air cargo volumes is propelled by a confluence of factors – disruptions in maritime routes due to the Red Sea crisis, a marked boost in e-commerce activities and a noticeable surge in demand along specific tradelanes,” he said, adding: “These dynamics are augmented by evolving aviation policies and pro-industry government initiatives.”

Tata Group-owned Air India is also in the midst of a massive makeover, increasing competition in the buoyant aviation market. In addition to fleet upgrades, Air India recently set up a code-share arrangement with the largest Japanese carrier, All Nippon Airways.

Additionally, Tata’s recent diversification into electronics manufacturing for Apple iPhones and semiconductor chips adds another layer of potential cargo opportunities for the carrier in the long term.

Meanwhile, Indian apparel exporters are voicing growing concern over air freight capacity problems at Delhi Air Cargo, a consequence of Bangladesh transhipment flows through the airport via a government-to-government cross-border trade arrangement.

In the year since this bilateral deal kicked in, Delhi Airport has handled some 8,000 tonnes of Bangladesh ready-made garment (RMG) cargo.

Given the repercussions at the expense of local trade growth, Indian industry groups are pressing the government to reconsider this proactive trade facilitation.