How India’s Domestic Market Fuels Air Cargo Demand

By Author: Skyone.Aero
Total Articles: 64
Comment this article

Growth of the Indian domestic market stimulator for India’s air cargo growth

The growth of the Indian domestic market is emerging as a key stimulator for the country’s air cargo sector, driving increased demand and infrastructure expansion.

The global airline industry market size was estimated at $837.0 billion in 2025. It’s projected to grow to around $1631.25 billion by 2030 with a CAGR of roughly 8.62% between 2023 and 2030. The industry includes both domestic and international passenger and cargo transportation.

Jet fuel is generally airlines’ largest operating cost, accounting for roughly 20 to 40 percent of an airline’s cost base, depending on the business model. Airline sector performance is often thought to be linked directly to jet-fuel-price developments, which lie outside airlines’ control. Both 2023 and, to a lesser extent, 2024 were years with higher nominal jet fuel prices, but the sector still performed relatively well in terms of ROIC. Jet fuel prices in 2025 have, thus far, been lower than they were in 2024, though geopolitical tensions could still cause them to fluctuate in ...
... the near term.

Airlines have responded to supply constraints by extending aircraft leases (there were 11 percent more lease extensions in 2024 than in 2018) and by keeping older aircraft in service longer (the average age of the narrow- and wide-body passenger fleet in 2024 was 11.3 years, versus 9.7 years in 2018).

The tremendous growth of India’s domestic aviation sector can also propel the country’s air cargo sector further, experts point out. Meanwhile, manufacturing major Boeing estimates that the rapid growth of the e-commerce sector, along with domestic aviation expansion, is expected to boost India’s domestic air cargo industry with a growth forecast of 6.9 per cent per year over the next two decades.

With its speed, reliability, and ability to connect even remote areas, air cargo offers businesses the opportunity to expand both domestically and internationally. “We must understand that the concept of airports being mere transit points has changed; they are now also integrated cargo hubs. This change should be adopted in India’s aviation sector too, to achieve its ambitious target of 10 million metric tonnes of air cargo annually by 2030, up from the present 3.5 million tonnes,” says Jaideep Mirchandani, Group Chairman of Sky One.

He states that state-of-the-art facilities are necessary to accommodate temperature-controlled shipments for pharmaceuticals and provide cold chain support. Better infrastructure is also required for express cargo and high-value goods. Additionally, there is now an increasing demand for faster, automated clearance processes and tailored solutions for each business sector.

According to Mr Mirchandani, in this scenario, regional connectivity schemes like UDAN have the potential to become a game changer not only for domestic air travel but also for cargo movement within the country. UDAN is likely to play a key role in creating a decentralised aviation logistics network. Along with modernising existing domestic airports and constructing new ones, equal importance can be given to building modern cargo terminals at the regional level. Airlines, logistics companies, and shippers can leverage UDAN-enabled routes, which can also act as connection points to major airports in the country,” he adds.

Loyalty programs have become considerable sources of value for many airlines. Some airlines, such as the large US network carriers, generate sizable amounts of revenue from cobranded credit cards. This is likely linked in part to the high credit card penetration and interchange rates in the United States.

In markets with lower credit card penetration and interchange rates, loyalty programs can still be an effective device for swinging customer demand. Customers might choose an airline because of a strong preference for its loyalty program, even when the airline doesn’t offer the lowest price or the best schedule option.

Meanwhile, a few factors suggest potential decreases in demand. For some mature aviation markets, such as Europe, real-GDP growth over the next few years is expected to be lower than it was from 2000 to 2019. While air travel tends to grow faster than GDP does, growth in GDP is still a core underlying factor for demand.

Airlines are also expected to increase their use of sustainable aviation fuels, which can be two to four times more expensive than regular jet fuel. This cost could be passed on through ticket pricing, and pricier tickets could drive some passengers away.

Recent economic uncertainty posed by global trade developments has caused consumer and business confidence to trend downward, especially in North America. This could lead to lower demand for both business and leisure travel. Rising geopolitical tensions could also reduce travel flows between certain countries. Notably, these tensions could alter supply chains and impede deliveries to certain parts of the world, thereby reducing capacity and counteracting yield drops.

Source: BIZZ BUZZ