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The air transport industry in India contributes around $30 billion annually to India’s GDP. It directly employed more than 390,000 people while supporting another 570,000 in the supply chain as per a July 2016 study carried out by the Air Transport Action Group (ATAG).  Air cargo transportation drives economic and social growth and accelerates global trade. An estimated value of 35% of global trade is carried by air though it accounts for less than 1% by volume. It has been supporting e-commerce with global majors like Amazon and Uber, who are now taking up their own freight operations while initiating plans to use next-gen Vertical Take-Off and Landing (VTOL) aircrafts for their aggregation and door-to door distribution operations.

Why airways?

Sudipta Bose, Proprietor, Bose Enterprise, an import export firm based in Kolkata uses air cargo a lot. He told BE, “Air freight, the most expensive form of logistics is used by importers and exporters due to urgency or for high value goods.”

Arindam Singha, a leading milk products trader based in Kolkata, supplies cottage cheese, paneer and other milk products to the eastern regions of India, especially Tripura. He told BE, “I use the airways while transferring my products because these are perishable in nature. It takes only 45 minutes to transfer my products to Tripura by air. In our country, transfer of goods through roadways and railways is very time consuming. It becomes especially tricky for edible perishable items.”

Growth

Air cargo handled at Indian airports grew by more than 20 times from 0.08 MMT in 1972-73 to 2.5 MMT in 2014-15. International cargo comprises of 60% of total air cargo handled in India and grew at 15.6% in 2017-18. Domestic express industry is a key constituent of the Indian express industry and has an estimated worth of Rs.17,000 crore. International express is estimated to contribute Rs.5000 crore (23% by value) to the Indian express industry.

Diversification

Passenger airlines like IndiGo and SpiceJet are eyeing cargo transportation to boost their income as revenue from passenger flights remain stressed due to excessive competition and an ongoing economic lull. In an interview to media, an IndiGo executive had stated, “To start with, we are looking at perishable cargo like crabs from Chennai, fish from Kerala and betel nuts from Kolkata.”

Challenges

Amit Dutta, Regional Manager, Supply Chain Solution, East, DTDC Express Limited, said that his company transports a variety of products through air, ranging from garments, small machine tools and consumer products among various other things in India and abroad. When asked about the challenges faced by him during air cargo transportation, he told BE, “During air transportation, sometimes if the load is high, goods are off loaded. Sometimes, if the weight of a single item is more than 100 kg, we are not able to transport the cargo by air.”

Bose said, “The Central Board of Indirect Taxes and Customs (CBIC) is willing to implement different rules and regulations to make faster movement of goods. However, in our view the system is not updated and there is lack of infrastructure.”

Harsh Arora, Business Head, BVC Logistics deals with the transportation of high value goods like jewelleries narrated BE, the challenges faced by him during transportation of these goods. “Providing strong rooms at the airports will solve most our issues as the values of our goods are very high but the volume is small. We need vaulting facilities at the airports but it is not available in most of the airports and therefore we are not able to cater to a lot of regions. The government can push for infrastructural developments at the airports for the growth of this industry”. Arora is of the opinion that high value business needs air freight more than railways or roadways. “Jet is out of business as it cannot fulfill the needs and IndiGo is taking its place”, he added.

Government policy

In its national air cargo policy, the Indian government seeks to make India among the top five air freight markets by 2025. It is also emphasising on creating air transport shipment hubs at all major airports over the next six years. 

The National Integrated Logistic Policy (NILP) focuses on increasing the capacity of storage and warehousing and other value-added services. Deepak Jerath, Director, Transzone Logistics, told BE, “About 60% of the logistics of our country is carried through road transportation which is double the international benchmark. NILP have plans to shift this towards rail and seaways. This will reduce the lead time, will be better for the environment and also be cost effective.”