An increase in capacity and spillover of sea cargo to air routes due to the Red Sea crisis helped Indian airports post double-digit volume growth in April-June quarter on a year-on-year basis.
Overall international freight handled by airports rose 18.4 per cent to 5.68 lakh metric tonnes in the first quarter of FY25. All the major airports reported growth including Delhi (24 per cent ), Mumbai (12 per cent), Bengaluru (25.4 per cent), and Chennai (10 per cent).
While there was a base impact too as the same quarter last year saw international cargo growth flat, the growth rate recorded was nearly double that witnessed on a full-year basis in fiscal 2024.
"We have seen time-sensitive shipments shift from sea route to air. The trend has been witnessed since February and largely consists of industrial goods, auto parts, machinery, etc. bound for Europe and the US," said Venkatesh Iyer, Vice President (Commercial), Sharaf Cargo Private Ltd.
"Cargo vessels are taking up to three extra weeks to reach Europe via Cape of Good Hope. Additionally, there is a shortage of containers, so booking sea freight has become a challenge for exporters. Consequently, air freight rates have doubled between India and Europe over the last year," Iyer added.
Sea ports handle around 90 per cent of India's trade by volume and 70 per cent of its trade by value. The government insists there is no acute shortage of containers in India, and the first quarter of FY25 saw a 4 per cent growth in port traffic.
Yet, even a marginal shift of traffic from sea to air is boosting cargo volumes and yields for airlines.
“The Red Sea crisis has driven strong growth for air cargo, but this is mainly benefitting carriers who have capacity into Europe and beyond. The only wide-body capacity that IndiGo has in this category is to Istanbul, and we have greatly benefitted from this,” said Mark Sutch, the airline’s Chief Commercial Officer in charge of cargo. However, on an overall basis, the impact of the Red Sea crisis on IndiGo is limited, as most of its capacity is on domestic and regional international routes.
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Air India has seen a double-digit growth in volume and yields, a source said. Volume growth is particularly strong on its flights to Germany, the UK, and the US.
Part of the reason for the surge in traffic this year is the subdued industry-wide growth of last year. A lot of capacity that went out of the market during Covid-19 was reinstated, which depressed loads and yields.
International airlines too are reaping the benefits of high demand. German carrier Lufthansa said it is seeing particularly strong cargo growth on the India-to-Europe route. "In 2024, market analysts in general expect a near-double-digit growth rate on this route compared to the previous year, and over the next year, expect an above-average annual growth rate as well," Lufhansa Cargo said in an emailed response.
Sutch said the growth outlook remains strong, and IndiGo recently launched a thrice-weekly freighter service to Ezhou in China. "We have made significant strides in our freighter operations with daily utilisation now hitting around 8-9 hours per aircraft compared to two hours last year," he said.
Other foreign carriers are also adjusting their freighter capacities and striking new partnerships to tap growth from Asia. Air France KLM cargo has pulled out a freighter from the Latin America route and introduced a service to Hong Kong. The airline is also operating a freighter between Paris and Mumbai and last month signed an agreement with IndiGo wherein the two airlines will feed each other’s flights. “India is a strategic growth market for us, and having a strong partner in India is a great building block in our network strategy,” said Gertjan Roelands, Senior Vice President (Commercial), Air France KLM Martinair Cargo.
Qatar Airways, too, plans to move its freighter capacity from the Americas to focus on Asia and India, with some extra capacity to Europe, its Chief Cargo Officer, Mark Drusch, told Air Cargo News last week.