Indian Air Cargo Market to Fly High with Market Liberalization, Finds Frost & Sullivan
Mumbai, India - Indian Air cargo has remained at negligible levels, in comparison to the global standard, due to various factors such as cost, type of cargo and infrastructure. This is set to change in the next three to four years with the Indian economy on a solid growth trajectory and the liberalization of the aviation sector. India is also set to emerge as a cargo hub, due to geographic location between SE Asia and EU nations.
New analysis from Frost & Sullivan (http://www.aerospace.frost.com), Analysis of Indian Air Cargo Market, finds that the total air cargo (domestic and international) was about 1.77 million tonnes in 2007-08 and is expected to grow at a compound annual growth rate of about 8.3 percent by 2013.
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“Increasing globalization, integration of the world economy, and the strengthening of India in the IT service provider space has resulted in a booming Indian economy, supporting a thriving global economy,” say Frost & Sullivan Analysts Arun Narayanan and Chethan Kambi. “This has increased the aggregate demand and is an important driver for air cargo services.”
The market will get a further boost with the recent raise of the FDI limits allowing up to 74 percent stake in Indian cargo airlines, as this will bring in the much-needed capital and global best practices to the Indian air cargo industry. Proactive and favorable government policies will greatly encourage investments in the air cargo industry and facilitate the setting up of the required amenities and infrastructure. It will also help establish multi modal cargo hubs for quick and efficient transportation of cargo.
Market participants will need to focus on establishing integrated air cargo complex, including warehouse, and storage facilities across the country. They also need to work towards ensuring improved aviation facilities for cargo handling and increasing the fleet of freighter aircraft in India. There needs to be improved road and rail connectivity to and from the cargo hubs to ensure a well developed and efficient feeder network.
“International cargo traffic is concentrated on the three key international gateway airports – Mumbai, Delhi, and Chennai. With the development of supporting infrastructure in the new Greenfield airports, Bangalore and Hyderabad, and with also the proposed air cargo hub at Nagpur, higher cargo traffic is expected from these airports as well. Although international air cargo traffic is much higher than the domestic traffic, the latter offers greater potential for Indian investors, since regulations prevent foreign airlines from competing in the domestic air cargo market. This is the segment to watch for growth, given the current robust growth in Tier 2 towns and the need for increased connectivity for cargo movement between the Tier 2 cities and cargo hubs” observes, Ratan Shrivastava, Director Aerospace and Defence Practice.
“On an average, the air freight traffic growth has been significantly higher than the gross domestic product (GDP) growth rate and this trend has been rising over the years,” observes Narayanan in the study. “This is the result of an increasing use of the aerial mode to transport freight, particularly perishables and time-sensitive products. The policy framework of the government in this sector, notably the liberal bilateral agreements, open-sky policy for air cargo, relaxation of foreign direct investment (FDI) limits etc. has also helped in generating higher traffic growth.”
Analysis of Indian Air Cargo Market is part of the Aerospace Growth Partnership Service program, which also includes research in the following markets: Indian Air Cargo Market, Indian Commercial MRO Market, and Indian Airport Infrastructure Market. All research services included in subscriptions provide detailed market opportunities and industry trends that have been evaluated following extensive interviews with market participants.
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