Aviation Diaries Day 2

Aviation is not just about carrying passengers; it’s also about carrying cargo. 

India transports around 3.7 million tonnes of cargo annually; the government aims to increase this to 10 million tonnes by 2030. This translates to a CAGR of around 22%. Last year the growth rate was merely 7%. This underlines the need for a major push from the government if they wish to achieve their target. The government has recently taken proactive measures to boost growth, like upgrading infrastructure to support warehousing and streamlining customs protocols to increase the ease of doing business. Furthermore, existing airports are being upgraded to handle increased traffic and reduce congestion for both cargo and passenger airplanes. 

Air cargo is majorly used for perishable goods and medicines, where speed is of the essence. Cargo was also less sensitive to the pandemic compared to the passenger segment, as throughout the pandemic air cargo played a major role to transport essential medicines and medical equipment. Air cargo was pivotal to support the financial performance of airlines when the revenue from passengers was negligible. 

As of 2024, 80% of air cargo volumes were concentrated at 4 airports: 

1.Delhi (31%)

2.Mumbai (25%)

3. Bangalore (14%)

4. Chennai (10%)

This is because these airports have the capacity and infrastructure to handle such large quantities. But with new airports being constructed at Tier 2 cities, goods need not be transported to major hubs and can be transported directly or close to the point of production. This will significantly reduce distribution costs for exporters.

Now, air cargo has another battle to fight (aka headwind)…..The Trump tariffs. The tariffs will reduce exports, and in turn reduce the demand for cargo to transport goods. Only time will tell, to what extent will this cause problems for the aviation sector.

Until then, Stay tuned for Day 3 to learn more!

Authored By Laksh Karrn Ranglani