Indian Air Cargo Market to Fly High with Market Liberalization, Finds Frost & Sullivan
negligible levels, in comparison to the global standard, due to various
factors such as cost, type of cargo and infrastructure. This is set to change
in the next three to four years with the Indian economy on a solid growth
trajectory and the liberalization of the aviation sector.
to emerge as a cargo hub, due to geographic location between
New analysis from Frost & Sullivan (http://www.aerospace.frost.com),
Analysis of Indian Air Cargo Market, finds that the total air cargo (domestic
and international) was about 1.77 million tonnes in 2007-08 and is expected
to grow at a compound annual growth rate of about 8.3 percent by 2013.
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“Increasing globalization, integration of the world economy, and the
booming Indian economy, supporting a thriving global economy,” say Frost &
aggregate demand and is an important driver for air cargo services.”
The market will get a further boost with the recent raise of the FDI
limits allowing up to 74 percent stake in Indian cargo airlines, as this will
bring in the much-needed capital and global best practices to the Indian air
cargo industry. Proactive and favorable government policies will greatly
encourage investments in the air cargo industry and facilitate the setting up
of the required amenities and infrastructure. It will also help establish
multi modal cargo hubs for quick and efficient transportation of cargo.
Market participants will need to focus on establishing integrated air
cargo complex, including warehouse, and storage facilities across the
country. They also need to work towards ensuring improved aviation facilities
for cargo handling and increasing the fleet of freighter aircraft in
There needs to be improved road and rail connectivity to and from the cargo
hubs to ensure a well developed and efficient feeder network.
“International cargo traffic is concentrated on the three key
international gateway airports –
development of supporting infrastructure in the new Greenfield airports,
higher cargo traffic is expected from these airports as well. Although
international air cargo traffic is much higher than the domestic traffic, the
latter offers greater potential for Indian investors, since regulations
prevent foreign airlines from competing in the domestic air cargo market.
This is the segment to watch for growth, given the current robust growth in
Tier 2 towns and the need for increased connectivity for cargo movement
between the Tier 2 cities and cargo hubs” observes, Ratan Shrivastava,
Director Aerospace and Defence Practice.
“On an average, the air freight traffic growth has been significantly
higher than the gross domestic product (GDP) growth rate and this trend has
been rising over the years,” observes Narayanan in the study. “This is the
result of an increasing use of the aerial mode to transport freight,
particularly perishables and time-sensitive products. The policy framework of
the government in this sector, notably the liberal bilateral agreements,
open-sky policy for air cargo, relaxation of foreign direct investment (FDI)
limits etc. has also helped in generating higher traffic growth.”
Analysis of Indian Air Cargo Market is part of the Aerospace Growth
Partnership Service program, which also includes research in the following
markets: Indian Air Cargo Market, Indian Commercial MRO Market, and Indian
Airport Infrastructure Market. All research services included in
subscriptions provide detailed market opportunities and industry trends that
have been evaluated following extensive interviews with market participants.
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