New Delhi: Indian air transport agents have urged the government to step in and provide relief to exporters affected by flight disruptions caused by the escalating war between Iran and the US, which has led to widespread airspace closures in parts of West Asia.
In a letter dated March 2 to the Economic Adviser to the Directorate General of Civil Aviation (DGCA), the Air Agents Association of India (ACAAI) has sought waiver of demurrage charges for export cargo stranded at airport terminals due to canceled or delayed international flights. The Mint saw a copy of the letter.
Demurrage charges are daily fines imposed when cargo remains inside a terminal, port or depot beyond an agreed “free time”.
The letter highlighted that recent geopolitical developments have led to route restrictions, diversions, timetable discrepancies and operational restrictions at some overseas airports. “Delays in the increase are purely due to external factors beyond the control of exporters, customs brokers or air agents,” the letter said.
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According to industry estimates, freight forwarders and shippers only have 12 hours of free storage time. After that, the fees range from ₹2-3 per kg per day for normal loads ₹8-9 per kg per day for special cargo with the cost increasing day by day.
Air cargo agents are seeking relief as they handle exporters’ shipments and are directly affected by the flight disruptions. Airspace closures have forced diversions, increasing shipping costs and causing delays. This will hit their margins, lock up working capital and increase the risk of penalties for late deliveries.
Emails sent to Adani Airports Holdings Ltd and GMR Airports Ltd – India’s two largest private airport operators – did not elicit any response. Aviation regulator DGCA also did not respond to requests for comment.
Flights cancelled
Top Indian airlines IndiGo, Air India Group, Akasa Air and SpiceJet canceled flights to the Middle East, the US, Canada, Europe and the UK over the weekend.
The country’s aviation security regulator called a “significant escalation of security risks” to civil aviation following coordinated US and Israeli military strikes inside Iran and Tehran’s retaliation in a report issued on February 28. Airlines have been advised to avoid operations in eleven flight information areas, including Iran, Iraq, Israel, Jordan, Saudi Arabia, the UAE, Qatar and Oman, until at least March 2.
India’s airports have collectively handled around 3.3-3.7 million tonnes of air cargo in recent years, EY estimates.
“The current airspace disruption over West Asia is more of a network efficiency shock than a demand shock for India’s air cargo sector. West Asia accounts for roughly 15-20% of India’s merchandise exports, and more importantly, serves as a critical transit corridor to Europe, the Middle East and North America. Any instability in this geographic location therefore affects not only direct trade flows over time, but exports,” said Bhavik Vora, Partner, Grant Thornton Bharat.
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The problem is compounded by existing restrictions on Pakistani airspace for Indian carriers. A key structural factor is that a substantial portion of international air cargo traffic is carried below the decks of commercial passenger flights. The result is an effective tightening of capacity, longer transit times and upward pressure on freight rates, he said.
“In this context, the standstill becomes a working capital rather than an operational outage. A temporary exemption or calibrated relief would be commercially pragmatic under force majeure conditions while supporting export continuity,” Vora said.
Force majeure is a contractual clause that relieves parties of liability when unforeseen events – such as wars and natural disasters – beyond their control prevent them from fulfilling their obligations.
The war, which began on February 28 with coordinated attacks by the US and Israel on Iran, has since expanded as Iran has launched missile and drone attacks on US and allied military bases and infrastructure in the Persian Gulf, including Saudi Arabia, the United Arab Emirates (UAE), Qatar, Bahrain and Kuwait.
Due to the disruption of air traffic due to the West Asian crisis, export consignments scheduled to be airlifted to international destinations remained stranded at cargo terminals across India. Under the existing CTO tariff rules, demurrage charges become payable if the cargo remains after the specified period of free storage. Exporters now face the prospect of paying additional charges despite delays caused by external factors.
“Exceptional and Inescapable”
The air cargo body described the situation as an exceptional and unavoidable disruption to the global air logistics chain. “A delay charge in such cases would impose an undue financial burden on exporters who are already facing supply delays and trade uncertainty,” the letter said.
Air cargo is often used to handle time-sensitive goods such as pharmaceuticals, perishable goods, electronics and engineering products.
The Air Cargo Agents Association has requested the Union Ministry of Civil Aviation to issue appropriate instructions to cargo terminal operators to waive demurrage charges on export consignments that could not be airlifted due to flight disruptions or airspace restrictions due to the ongoing crisis. According to her, the exception should apply for the relevant period in question.
ACCAI called for a temporary measure to help maintain continuity and confidence in India’s air cargo business during a challenging period.
A similar situation of stranded shipments has also been seen in ocean cargo movement, where logistics companies coordinate with port operators to minimize disruption.
Read also | Maritime trade in the crossfire as conflict between Israel and Iran escalates
“CFSs (container cargo stations) play a proactive and supportive role in enabling faster evacuation at ports and ensuring smoother flow of export cargo to terminals. We are working closely with port authorities, terminal operators and trade associations at all major ports and are constantly monitoring the situation,” said Suresh Kumar R., Managing Director, Allcargo Terminals Ltd, operator of CFS Mumbai.
A container freight terminal is a facility near a seaport where export and import cargo is handled before loading onto ships or after unloading.
CMA CGM, the French global shipping and logistics company, ordered all vessels currently in the Persian Gulf or heading to the region to move into shelter with immediate effect, according to a statement issued on February 28.
“The Suez Canal beach has been suspended until further notice and vessels will be diverted via the Cape of Good Hope,” the shipping company said, adding that customers would be contacted once it had more details on possible alternative ports where their cargo could be unloaded.
