Page 32 - ITLN January - February 2025

Industry Report
Indian Air Cargo

are not currently in the palletised cargo
space even though they compete head-
to-head on all routes. “Therefore there
are certain commodities and shippers
that will not use IndiGo for cargo
operations,” he said.
“Our unrivalled network from India
to overseas destinations, often from
Tier 2 cities, means we have a unique
network, frequency and product
offering,” he added.

Overreliance on key airports,
belly capacity
However, this growth is not without 90% of India’s air cargo
its challenges. International traffic is handled through
constitutes two-thirds of the total 6 airports. That is a
volumes handled at Indian airports,
underscoring the need for balanced far greater degree of
development of both domestic concentration than in
and international cargo handling markets like the US or
capabilities. The Indian air cargo China which creates
sector faces structural challenges bottlenecks and limits
that could constrain its potential. scalability.
Even while IndiGo intends to focus
on Tier 2 cities, a key concern is the Frederic Horst
over-reliance on a few major airports. Trade and Transport Group
Currently, 90 percent of Indian air freighter fleets. “The lack of Indian
cargo is handled at six airports, a level registered wide-bodied freighters
of concentration that risks creating means that over the next five years,
bottlenecks as volumes rise. the Indian exporters will be relying on
Frederic Horst, Managing Director mostly foreign registered freighters,”
of Trade and Transport Group, points said Hughes.
out the scalability risks. “This creates Padmanabhan of CRISIL highlighted
bottlenecks and limits scalability,” a different dimension of increased
Horst warned, adding that diversifying capacity and his concern about the
cargo handling capabilities across more competition, freight prices and yields
locations would mitigate this risk. in the market. “The belly freight cargo
The sector’s dependence on belly has traditionally been cheaper and
capacity over dedicated freighters is hence helped the airlines to compete
another critical issue. The Trade Data with pure freighters, if the competitive
Service report highlights this as a intensity increases, this could prompt
unique feature of the Indian air cargo freighters to drop their prices,” he said.
market, noting that while narrowbody Logistics hubs, airports, Meanwhile, Abidi emphasised
aircraft generally carry little freight and warehouses were financial sustainability, warning of
in other markets, Indian operations stretched to their limits, overcapacity risks. “Heavy investment
average 2-3 tonnes per flight. and many processes had in expanding infrastructure without
Hughes elaborated on the risks tied to shift offline, ushering aligning with demand projections could
to this dependency. “India’s reliance a surge of manual lead to lower profitability,” she explained,
on foreign-registered freighters adding that strategic partnerships
could pose a risk if these assets are intervention and lack of between airports and logistics operators
redeployed elsewhere for higher transparency. could offset these risks.
returns,” he cautioned. Joyce Tai On the same line, Kachhap
He also stressed the need for Indian Freightos noted that investing in cargo
carriers to expand their widebody operations presents substantial
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