Indian Road Network Expansion Competition to Domestic Air Cargo Sector

The transportation landscape of India is evolving, and the Indian government’s ambitious drive to enhance the country’s road infrastructure may just be too competitive for the domestic air cargo sector. Mark Sutch, Chief Commercial Officer (Cargo) at IndiGo, recently highlighted this impending shift, underscoring the growing cost-effectiveness and time efficiency of ground transportation.

Citing the example of the Delhi-Mumbai Expressway, he said that India’s extensive road network expansion is poised to alter the logistics and transportation industry profoundly. Sutch expressed that as the road infrastructure improves, the advantages of transporting goods by land become increasingly apparent. This development signals a potential shift in preference from air to road freight, especially for routes that are becoming more accessible and efficient through better road connectivity.

IndiGo, a dominant player in India’s aviation market, is currently facing underutilization of its cargo capacity. The airline’s rapid expansion to 2,000 flights a day has outpaced cargo demand, with only about 60% of its total cargo capacity being utilized. Sutch emphasized the need to optimize this capacity, stating, “We are looking at, purely incrementally, if we can get some very reasonably priced cargo on these IndiGo flights (with low demand right now).” In 2023, IndiGo transported 261,852 tonnes of domestic cargo, reflecting an 11.42% year-on-year growth. Despite this growth, the challenge remains to fill the capacity on routes with lower cargo demand.

The Delhi-Mumbai corridor exemplifies the evolving dynamics of transportation logistics. IndiGo operates 280 flights per week on this route, making it the busiest for the airline. However, with the anticipated improvements in the road network, the cost and efficiency benefits of road transportation could overshadow air freight. This shift could have significant implications for airlines heavily dependent on cargo revenue from such busy sectors.

Sutch added, “One of the big bottlenecks we have at the moment is our airport infrastructure. If you go around and look at the cargo side, it (improvement) is not quite much.” He highlighted the space-related constraints that continue to hamper the efficiency of cargo operations at airports. Addressing these bottlenecks is crucial for the air cargo sector to remain competitive in the face of improving road transport options.

As India continues to bolster its road infrastructure, the air cargo sector must adapt to the changing landscape. The government’s success in building roads presents both a challenge and an opportunity for the industry to innovate and evolve.

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