India Air Cargo Market Strategy

In 2023, India Air Cargo traffic was 2.22 million metric tons. This market has been driven by the increasing demand for e-commerce, pharmaceuticals, and perishable goods that require fast delivery. The rise in international trade and the growing emphasis on supply chain efficiency have also fueled market growth.

The market is dominated by major players such as Blue Dart Aviation, SpiceXpress, Air India Cargo, and IndiGo Cargo. These players dominate the Indian air cargo market due to their extensive network, reliable service, and strong logistical infrastructure, enabling efficient handling and timely delivery of goods across the country.

In 2021, Adani Airports made significant investments, including a payment of ?2,440 crore to the Airports Authority of India (AAI) to take possession of the six airports including Chhatrapati Shivaji International Airport in Mumbai & airports in Lucknow and Jaipur. This investment reflects the group's commitment to developing and managing airport infrastructure effectively.

Mumbai dominates the market share of freights by airports in FY'23 due to its strategic location as a major trade hub and its well-developed infrastructure, which supports high volumes of both international and domestic cargo. The city's connectivity and access to key markets further enhance its prominence in the freight sector.

India Air Cargo Industry Analysis:

India Air Cargo Market Growth Drivers:

Value Added Service to Consolidator and Airline: India's air cargo volume reached 3.14 million metric tonnes in 2023, reflecting a robust demand for air freight services. The value-added services include providing documentation, Dangerous Goods (DG) support, supervision, and last-mile delivery across key Indian airports like Mumbai (BOM), Lucknow (LKO), and Ahmedabad (AMD), with potential expansion to other airports.

Air Side Transportation: In India, where major airports are operating at or near capacity, efficient airside logistics are critical. Terminal operators can ease congestion and improve efficiency by providing airside transportation services for critical items like Aircraft on Ground (AoG) spares and domestic cargo from Storage and Cargo Terminal (SACT) to the apron (the area where aircraft are parked, loaded, or unloaded).

Satellite Storage Facility: Satellite storage facilities located at the apron side are used to hold offloaded cargo that is awaiting the next available connecting flight. This service is particularly important in scenarios where immediate onward transportation is not available, ensuring that cargo remains secure and accessible. Indian government has invested heavily in airport infrastructure, with an outlay of USD 18 billion under the National Infrastructure Pipeline (NIP) for airport expansion and modernization.

India Air Cargo Market Challenges:

Stakeholder Collaboration: Efficient air cargo operations in India rely on robust collaboration among key stakeholders, including government authorities, airports, airlines, and freight forwarders. This teamwork is essential for overcoming bureaucratic challenges that can slow down logistics processes. By working together, these entities can streamline operations, reduce administrative bottlenecks, and enhance overall efficiency.

Capacity Constraints: India's busiest airports, such as Delhi and Mumbai, face significant challenges due to limited aircraft capacity and tight scheduling, especially during peak seasons. These constraints lead to airport congestion and cargo delays, impacting the efficiency of air cargo operations. The high demand during these periods strains available resources, causing backlogs and delays in handling and transporting goods.

India Air Cargo Market Government Initiatives:

National Civil Aviation Policy (2016): The policy established the Air Cargo Logistics Promotion Board, aimed at driving growth in the air cargo sector through measures like reducing dwell times (the time cargo stays at an airport) and improving coordination among various ministries. Additionally, the policy introduces Service Delivery Modules (SDMs) and an Air Cargo Community System (ACCS) to streamline operations and minimize delays.

Krishi UDAN 2.0 (2020): Krishi UDAN 2.0 offers waivers on Parking, Landing, TNLC, and RNFC charges for domestic freighters and passenger-to-cargo aircraft at selected Airports Authority of India (AAI) airports. The focus is on promoting air cargo services in North-East India, hilly, and tribal regions. These incentives aim to reduce operational costs, making it more economically viable for airlines to transport agricultural products by air from these less accessible regions.

India Air Cargo Competitive Landscape:

• Blue Dart Aviation
• SpiceXpress
• Air India Cargo
• IndiGo Cargo
• FedEx Express

SpiceXpress Partners with Star Air: In 2024, SpiceXpress has entered into a partnership with Bengaluru-based Star Air to manage belly space capacity in Star Air's fleet. This collaboration will enhance SpiceXpress's domestic network by adding nine new destinations, increasing its reach from 39 to 48 locations. The partnership aims to improve door-to-door delivery and strengthen the air cargo infrastructure in underserved regions of India.

IndiGo CarGo Signs Interline Agreement: In 2024, IndiGo has entered into an extensive interline agreement with Air France KLM Martinair Cargo, aiming to enhance delivery accuracy and efficiency across their networks. This partnership is expected to improve cargo services and expand IndiGo's reach in the air cargo market.

India Air Cargo Future Market Outlook:

The India Air Cargo Market is poised for significant growth, driven by a combination of factors including the expansion of e-commerce, increased pharmaceutical exports, and substantial government investment in infrastructure.

Future Market Trends:

Increased Adoption of Digital Technologies: In the coming five years, the Indian air cargo market is poised for significant transformation driven by the widespread adoption of advanced digital technologies such as blockchain, IoT, and AI. These technologies will play a critical role in streamlining operations, enhancing transparency, and improving security across the cargo handling process.

Expansion of Regional Cargo Hubs: The Indian air cargo market is also expected to witness a significant expansion of regional cargo hubs, particularly in tier-2 and tier-3 cities. This development is aligned with the government’s focus on enhancing connectivity under initiatives like the UDAN (Ude Desh Ka Aam Nagrik) scheme. The establishment of new cargo terminals in these emerging cities will facilitate faster movement of goods, reduce congestion at major airports, and promote regional economic growth.