E-tail's Massive Boost To Domestic Cargo

Intra-India air cargo has a huge potential but challenges to growth exist. Till infrastructure is ramped up or created in Tier-2 or Tier-3 cities, the e-commerce business will continue to use surface transport.

Jayant Sinha, Minister of State for Civil Aviation in India said in Parliament that the air freight handled at Indian airports had grown by over 20 times from 0.08 million metric tonnes (MMT) in 1972-73 to 2.5 MMT in 2014-15. However, little attention has been paid to domestic air cargo. Not too long ago Aviation Minister Ashok Gajapathi Raju said that the country’s air cargo sector was likely to grow at nine per cent over the next few years and had pointed out, rather disappointedly, that though domestic air cargo had huge potential – largely due to the regional connectivity plan that the government was pushing that would play a major role in the growth of air cargo, “Somehow the jigsaw puzzle never got put together. At least there is an attempt to put it together. Let's see where it will take us,” Raju said. Simply put, what he meant was: Why had domestic air cargo not grown? Most of the country’s domestic cargo rides in aircraft bellies and there are only two domestic players operating dedicated freighter services: Blue Dart and Quikjet.

Intra-India air cargo then is on a high. An ASSOCHAM-Yes Bank study pointed out that domestic cargo has registered a growth of 8 per cent at a CAGR during FY07-17, while international cargo grew at 6.2 per cent annually during the same period.

While air cargo in India contributed about 20 per cent of airlines’ revenues, the potential is huge. And, over the last couple of years, the opportunities of growth has increased manifold: the liberalisation of the economy, airlines charting out new routes, reforms in government policies and advanced technology. However, the domestic air cargo sector in the country remains fragmented and faces challenges – the foremost among them being the lack of connectivity: problems occur in connecting cargo volumes of Tier-2 and Tier-3 cities with major cities for air transportation that lack appropriate cargo infrastructure.