Post Date : April 12, 2022
In a world full of chaos and distress, the air cargo industry emerged as a key revenue generator for Indian airlines. And, now it is set to take off as an ascendant industry of globalized India. As industry shareholders cheer for the success of the air cargo segment, they join hands to support the industry by leveraging e-commerce, exports, regional connectivity, and technology. With this cover story, we bring you an elaborate view of the sector’s journey towards revival.
Long been relegated under the shadows of passenger airlines, despite a strong eight percent growth from the past decade, the Indian air cargo finally caught the market spotlight during the pandemic. With passenger flights grounded, as a precautionary measure to curb the spread of the COVID-19 virus, passenger traffic went down by 70% in 2020, and the financially crashing airlines found solace by focusing their efforts towards the cargo operations, which comparatively flourished on the back of pharma, perishables and e-commerce transportation. With dedicated freighter, cargo-in-cabin and passenger to freight conversions, and freight charters, the cargo kept moving both domestically and internationally.
Although a sweet spot for the aviation industry, the air cargo industry also faced its’ fair share of challenges.
Air cargo at Indian airports was 3.56 million metric tonnes in 2018-19 which dipped to 3.33 million metric tonnes during 2019- 20 as a result of the economic downturn due to COVID-19. Out of 3.33 MMT, the share of international air cargo was 2 MMT.
“Main challenges faced in 2021, were due to impact of COVID. Each country had a different policy when it came to regulations for operating flights, quarantine, and testing, which did have a major impact on the airline industry as the changing regulations affected the movement of crew. Also, the safety of the crew was a major concern impacting the airlines operating to regions that had seen a spike in COVID cases. Major airports in the world did face inefficiencies surrounding ground handling infrastructure with labor shortages, in addition to the disruption of road feeder services (RFS) capacity, due to lack of drivers,” Malcolm Dsouza, Director India, Chapman Freeborn says, adding that in this regards India faced comparatively fewer disruptions.
The increasing freight and fuel rates further add to the strain severely impacting the profitability of the cargo flights. Speaking on the same lines, V. Chandra Kumar, Chairman and Managing Director, Active Freight Logistics, says, “Initially, we had seen resistance to high freight rates.”
Kamesh Peri, CEO at Celebi Delhi Cargo, also identifies the increase in freight and fuel rates as a posing challenge, especially with the ongoing Ukraine and Russia war, which is forcing the carriers to avoid Russia and Ukraine airspace.
He further highlights the lack of dedicated freighter airlines as a plausible challenge faced by the industry at the onset of the pandemic.
He also says, “Economic outlook, increasing customer expectations, and changing regulations: all are redefining the handling, storage, and distribution of goods transported by air, which consequentially impacts the cargo facilities. Therefore, changes are needed in the business models, architectural and process designs, deployed technologies, and workforce skill sets.”
The fierce competition from ocean freight – offering more capacity while being less expensive – and the increasing air freight rates due to the Ukraine – Russia conflict and closer of airspace are also causing turbulence in cargo flights.
Shekhar Mohanty, Head Cargo, AirAsia India, identifying the reopening of passenger business as a pressing matter for the cargo industry says, “While we welcome the reopening of passenger business, cargo space will inevitably be taken up by passenger baggage and will have an impact on the amount of cargo that can be uplifted for the flights. Also as a major chunk of air cargo moves on the passenger flights and hence cancellations impact the cargo movement.”
Facing the challenges ahead and ready for what’s to come next, the air cargo industry being true to its nature is expected to show resilience and move towards revival.
Air Cargo leads the recovery of the global freight market
As per the latest industry insights, the industry which was foreseen to have a turbulent flight owing to challenges has been leading the recovery of the global freight market leaving behind the sea freight market, which was earlier expected to make a faster recovery and drive industry growth.
Yashpal Sharma, Managing Director, Skyways Group believes that in doing so, the quick innovation done by the airlines has helped a great deal. He says, “Air cargo quickly innovated by using the current passenger flights as freighters (P2C) and also a few airlines permanently converted some of their pax flights to freighters and got the additional capacity to move goods. Although we are yet to hit pre-COVID capacity, the months ahead look promising.”
While the air cargo industry is overcoming challenges with continuous innovation, ocean freight has been faced with new constraints almost every second month, stopping it from scaling up operations in quick time.
“Improvement in regional air connectivity has become essential in fostering the growth of the
air cargo industry. The growth of the sector can also be attributed to a slew of regulatory reforms in the past few years by the government.”
~ Satyaki Raghunathan, Chief Strategy and Development Officer, BLR Airport
“Even though it is relatively expensive, if an e-commerce company has based the fulfillment of their brand promise on fast delivery—then air cargo is key to their success.”
~ Willy Boulter, Chief Commercial Officer, IndiGo
This is an abridged version of the original story that was published in the April edition of the Logistics Insider magazine. To read the complete article, click here.