Carriers see enhanced opportunities for air cargo business with the signing of India-UK comprehensive economic and trade agreement (CETA) last week. CETA will provide duty free access to 99 per cent of India’s exports and help double current bilateral trade to over $110 billion by 2030.
For airlines, an increase in trade will lead to better product mix and higher yields.
“India is a vital market for our business, and this agreement will further build on our longstanding customer relationships to unlock fresh opportunities for trade,” said David Shepherd, CEO of IAG Cargo.
IAG group owns five airlines, including British Airways. The cargo business of all the airlines is combined at the group level.
“We look forward to supporting our customers as they leverage the opportunity that free trade agreement brings,” Shepherd added. UK-based Virgin Atlantic also remains bullish. “India is a key market for Virgin Atlantic cargo, and we expect it will continue to grow,” said.
Carriers from India and UK operate around 40 daily flights between the two countries. London Heathrow airport is also the largest destination for Indian travellers in Europe and the second largest overall after Dubai.
Air India remains the largest airline in the India-UK market, though it has cut capacity after last month’s Ahmedabad air crash. British Airways is the second-largest carrier followed by Virgin Atlantic and IndiGo (which began Manchester operations this month). The market demand is also served by carriers in West Asia and Europe, which also operate freighters to both the countries.
For non-stop carriers like Air India, perishable products, general cargo, garments and courier form significant air cargo volume on UK routes.
Virgin Atlantic said the commodity mix of Indian exports has changed notably in the recent years, and also includes high-tech exports, pharmaceuticals and machine parts, among others. The airline said it is also seeing increased demand into India from the UK and beyond with the increase in Indian consumer spend.
Better rates
Sources point out that export freight offers better rates to airlines over imports as the trade balance is tilted in favour of India.
“Capacity addition and cost competitiveness will be a key for airlines to tap higher demand that will result from the trade agreement. On the airport side new cargo terminals are being built in Ahmedabad, Navi Mumbai and Jewar. Airlines will need to develop better products and have greater synergy with stakeholders to reap the benefits,” said Manoj Singh, a senior aviation cargo professional.
