Stunted Growth

As transportation of cargo by air is expected to be speedy and time saving, delays due to inadequate infrastructure are not only irksome but also financially discomforting for the client. The general consensus is that Indian aviation infrastructure is ill-equipped to handle the efflux of goods that traverse through its airports.

Undoubtedly, India is not only the leading economy in South Asia but also the international trade hub in the region. Approximately two-thirds of the international traffic that moves in and out of the region passes through India. Facilitated by its strategic location between South East Asia and Europe, the Indian economy is on a growth trajectory and the policy on liberalisation of the aviation sector presents an opportunity to propel India into a global cargo hub. Yet despite all the favourable economic indicators, the Indian air cargo industry remains stunted.

A few years ago, the decision to raise the foreign direct investment (FDI) cap from 49 to 74 per cent in the air cargo sector generated considerable interest amongst airlines in India, notably Air India, Jet Airways and Kingfisher as also amongst international players FedEx, Malaysia Airlines and Australia-based HeavyLift Cargo Airlines. Despite the opportunity, Indian cargo carriers, with the exception of Blue Dart, have proved to be short-lived primarily on account of infrastructural inadequacies and internal issues.

International cargo traffic into, out of, and through India, is concentrated at three major international freight gateways—airports at Mumbai, Delhi and Chennai. With the development of infrastructure at the Greenfield airports like Bengaluru and Hyderabad and with the planned air cargo hub at Nagpur, higher cargo traffic is expected from these airports as well. Although international air cargo traffic is much higher than domestic traffic, the latter offers greater potential for Indian investors since regulations prevent foreign airlines from competing in the domestic sector. This is the segment to watch for growth, given the increase in the number of Tier-II cities and the need to connect these with the hubs. However, infrastructural woes are aplenty, discouraging air cargo operations in India.

Impediments to Growth of Air Cargo

In April this year, cargo movement in and out of Delhi Airport suffered delays by as many as 10 to 12 days due to construction and renovation work by ground handler Celebi and Delhi International Airport. The Federation of Indian Exporter Organisations (FIEO) termed the disruptions as “image denting” and called upon the government to step in. FIEO Vice-President and Regional Chairman J.K. Jain said that the exporters were facing heat from their customers who had the impression that there was "always something wrong with India’s systems". As transportation of cargo by air is expected to be speedy and time saving, delays due to inadequate infrastructure are not only irksome but also financially discomforting for the client. Sadly, the general consensus is that Indian aviation infrastructure is ill-equipped to handle the efflux of goods that traverse through its airports. According to Bernard Asare, Director, Air Traffic Management Strategy and Business Development, ITT Corporation, “Air traffic congestion in India and globally is the result of outdated technologies and operational procedures not keeping up with rapidly changing aviation industry dynamics.” Air traffic continues to grow while air traffic management systems employ archaic technologies leading to undesirable congestion in India’s airspace and airports. While air traffic growth is manifest in other parts of the world as well, the problem in India is more pronounced because of lack of the capacity to handle the massive growth in traffic.