Home » Aviacargo: Foreign Airlines dominate India’s international air cargo, controls 95% market share due to lack of capacity

Aviacargo: Foreign Airlines dominate India’s international air cargo, controls 95% market share due to lack of capacity

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Foreign carriers

Foreign carriers are dominating India’s international air cargo market due to lack of aircraft capacity to freight cargo out of the country.

According to cnbctv18.com, India’s air cargo traffic volume is estimated to have stood flat in FY23 over the previous fiscal at 3.14 million tonne, much below 3.5 million tonne recorded in FY19. Industry players say total cargo volumes are almost the same for two consecutive fiscals as demand is yet to bounce back to pre-COVID levels.

Of the FY23 cargo volumes, 1.84 million tonne was international cargo (both exports and imports) and the remaining 1.30 million tonne was domestic.

Significantly, a lion share of the shipments in and out of India was taken by the foreign air operators, who command around 94-95 percent of the market while the remaining 5-6 percent is cornered by the Indian air operators and that too is carried out through airlines like Air India and Vistara that have wide-body planes, which offer larger belly space compared to a narrow-body plane.

READ: Aviacargo: The first cargo-focused airport in China launched with first international route

So what’s leading to this huge gap?
Lack of dedicated wide-body freighter aircraft appears to be the key reason for Indian cargo airlines not being able to fly to long and ultra-long haul destinations.
This is where foreign players come into the picture and dominate the domestic air cargo space.

Apart from carrying cargo in the belly space, there are dedicated foreign freight carriers such as FedEx with over 400 freighter aircraft, UPS having 290 & DHL with 215. Some of the gulf carriers like Qatar and Emirates also have dedicated cargo planes with 27 and 11 freighters respectively flying across global destinations.
Against this, Indian carriers together have only 14 dedicated freighters in the country and all of them are narrow-body planes, implying that they can’t fly to destinations like the United States and Europe.

READ: News: Hong Kong Airport ranked number one in Top 10 busiest cargo airports globally, as cargo volumes decrease by 6.7% at 117 million metric tonnes in 2022 – ACI report

Domestic players complain of not being provided a level playing field to compete with such foreign giants. They allege that an Indian air cargo operator has to pay a hefty customs duty for leased aircraft registered in India. Moreover, Indian cargo airlines are not allowed to operate aircraft that are over 20 years old but at the same time foreign airlines can fly into India with aircraft that are much older than 20 years.

These issues apart, the domestic industry wants the government to create dedicated cargo airports to handle all kinds of cargo and introduce a unified customs policy across airports for faster clearance of shipments.

At the same time, they also want the government to bring a trans-shipment policy to ease the transport process and make India an international hub for air cargo transport.

The government has set an ambitious target of taking air cargo volumes to 10 million tonne by 2030.

Industry representatives say to achieve this target they need policy support to get newer players into the air cargo market and help existing players expand their capacity.

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