With a rising population already exceeding 1.3 billion and GDP climbing sharply over the last two decades from 433 billion euros to 2.3 trillion euros, India’s potential for business on all fronts is immense. Growth in different industrial sectors has been strong, and the air transport sector is no exception. Growth is especially strong in domestic aviation, where more and more customers are choosing to fly instead of using the country’s vast rail network.
Almost 400,000 people are employed in aviation in India, contributing around 27 billion euros to national GDP annually, according to data from IATA, which also estimates that India will account for over 500 million air passenger journeys by 2037. In terms of air cargo, total tonnage flown from India topped one million tons in 2017, underlining an impressive annual growth of 16.9 per cent.
Even so, most international freight traffic is accounted for by Middle East and Asian markets, with only two European countries, the UK and Germany, figuring in the top ten. This would suggest that there remains considerable potential for growth in traffic to European cargo hubs, including Finnair Cargo's Helsinki base.
Electronics, textiles and pharmaceuticals
The Indian government responded to the booming growth in September 2018 by announcing an investment of 55 billion euros in the construction of 100 new airports over the coming ten to 15 years. The country is already home to two of the world’s top ten fastest growing airports in terms of cargo handled, Mumbai and Chennai, with respective freight growth totals of 18.1 per cent and 17.2 per cent recorded for 2017.
The world’s top 50 freight handling airports include Delhi – currently Finnair’s sole India destination – at number 29 and Mumbai ranked 31. Delhi’s Indira Gandhi International Airport is clearly the most important for freight traffic, handling a total of 963,000 metric tonnes of freight from 2017 to 2018. Foreign carriers transport over 80 per cent of international cargo to and from the country. Exports from India to Europe include clothes and textiles, vegetable and fish products, and pharmaceuticals. Air freight imports from Europe to India include machinery, electronics, chemicals and pharmaceuticals, computers and metal products.
E-commerce looks promising
Buoyed by expansions and improvements in infrastructure and competition in a domestic passenger market fueled by a swelling middle class, India’s advance in the air freight sector is a relatively recent trend. The case for a growing cargo market in India is supported by two sectors where the country has special strengths, namely pharmaceuticals and e-commerce. According to Boeing's World Air Cargo Forecast for 2018-37, global retail e-commerce sales are expected to be worth nearly 4.3 trillion euros by 2021. In the longer term, however, air freight handling and warehousing facilities at Indian airports will require further investment to exploit this potential.
Aviation in India is subject to short- and long-term fluctuations in fortune just as it is elsewhere. However, IATA is confident that potential for growth in Indian air transport is favourable for the foreseeable future, with economic development and increases in household incomes providing the platform. The expectation is for per capita incomes to increase to 4,460 euros annually by 2036 – a five-times increase over the 2006 figure.