Indian air cargo volumes to witness new highs in FY2025: ICRA

The overall air cargo volumes are likely to witness growth of around 9-11 percent YoY to around 3.6-3.7 million tonnes in FY2025, supported by 11-13 percent expansion in international and four-six percent growth in domestic cargo.

The international cargo volumes have seen a muted YoY rise of one percent in H1FY2024 on the back of the slowdown in the global economy and geo-political conflicts, according to the latest update from rating agency ICRA. "However, the international cargo volumes have seen a healthy expansion of 18 percent in H2FY2024 amid the Red Sea crisis, which started in October 2023. Consequently, the seaborne cargo traffic was impacted, which in turn benefitted international air cargo traffic."

Vinay Kumar G, Vice President & Sector Head - Corporate Ratings, ICRA says: “The cargo volumes were relatively less impacted due to Covid in FY2021 compared to passenger traffic. Moreover, the recovery was relatively swift with cargo volumes recovering to 95 percent of pre-Covid levels in FY2022 compared to 55 percent in passenger traffic. This was supported by higher growth in international cargo on account of the export of Covid-related vaccines and higher merchandise exports in FY2022.

"While the growth in cargo volumes has slowed down during the FY2023-H1FY2024 period, it has bounced back handsomely in the last 12 months, since the start of the Red Sea crisis. The international cargo volumes have increased by 18 percent YoY and 20 percent YoY during the first five months of FY2025, and are expected to increase by a further 11-13 percent YoY to touch new highs in FY2025.”

Yearly Trends In Cargo Traffic (in '000 tonnes)

ICRA’s outlook on airport infrastructure is stable with revenues of ICRA’s sample set (Airports Authority of India, Delhi, Hyderabad, Bangalore and Cochin International airports) likely to grow by around 12-14 percent YoY in FY2025, supported by the sustained improvement in both domestic and international passenger traffic, increase in tariffs at some of the major airports and ramp-up in non-aeronautical revenues, the update added.

"With healthy profitability margins, the debt coverage metrics are expected to remain comfortable with DSCR and interest cover above two times and four times, respectively in the medium term, despite higher interest outgo with the commercialisation of the capex programme at some of the key airports. The credit profile of airport operators is projected to remain strong, supported by healthy accruals and comfortable liquidity,” adds Kumar.