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Photo: Ramesh Pathania/Mint
Photo: Ramesh Pathania/Mint

Indian air cargo volume expected to contract at 17-20% in FY21: ICRA

  • Air cargo volumes have witnessed a faster recovery as compared to passenger and aircraft traffic since April 2020 despite a 45% contraction in the cargo volumes in H1FY21 as compared to the corresponding previous period

NEW DELHI : Indian air cargo volume is expected to contract by 17-20% during the FY21 due to the capacity restriction imposed on airlines by the government to contain the covid-19 pandemic, rating agency ICRA said in a statement on Friday. Despite overall cargo volume ramping up faster than passenger traffic since April, a meaningful recovery is likely only in FY22, it added.

"Air cargo volumes have been witnessing a faster recovery as compared to passenger and aircraft traffic since April 2020 despite a 45% contraction in the cargo volumes in H1 FY2021 (April-September 2020) as compared to the corresponding previous period," the rating agency said.

"The faster recovery in the cargo volumes is because of the trade of the essential supplies majorly in the pharmaceutical, medical equipment and agricultural produce sectors besides the expanding e-commerce business. During the period under consideration, the passenger traffic and aircraft traffic movement declined at a much faster pace, by 86% and 75% respectively," it added.

In comparison, around 49.33 million passengers were carried by domestic airlines during January-October this year, against 118.21 million during the corresponding period of the previous year, registering a 58.27% year-on-year (y-o-y) decline, according to the latest data from Directorate General of Civil Aviation (DGCA).

“Despite faster ramp-up, the total cargo volumes declined by 45% y-o-y in H1FY21, with slow recovery in passenger aircraft traffic leading to loss of the earlier available cargo belly space constraining cargo growth," said Anupama Arora, Vice President & Sector Head at ICRA Ratings.

"In October 2020, the cargo volumes are likely to show significant improvement sequentially owing to the expected higher domestic air traffic movement due to the festival season," Arora added.

The domestic cargo volumes witnessed significant improvement to 94,598 tonnes in September 2020 from 7,280 tonnes in April 2020, ICRA said.

"The cargo volumes at metro cities witnessed CAGR growth of 5.3% during FY2011-FY2019. However, the volumes contracted by 8.2% YoY owing to the decline in the aircraft traffic movement due to grounding of Jet Airways and the adverse impact of covid-19 in Q4 FY2020," it said adding that the decline in cargo volume from metro cities stood at 44% annually, and that of non-metro cities at 55% annually, during April-September 2020 period.

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