Name: Nancy Katiyar, Arvind Banger & Armaan Banger
Country: India

Year: 2026
Volume: Volume-13, Issue-1 (January-June)
Page Number: 14-29
DOI: https://doi.org/10.5281/zenodo.18454097

ABSTRACT
When it comes to the value of goods, air cargo transportation is one of the most important ways to move them. However, the connection between air cargo transportation and international trade has been overlooked in the Indian and South Asian context. This study adds to the body of research by examining the relationship between these variables within a regional sample group. The goal of this study is to examine the various ways in which air
freight transportation and international trade are interconnected in India and South Asian countries. Data on global trade through merchandise exports (ME) and air cargo (AC) for India and eight South Asian partner countries from 2000 to 2023 are examined. This study employed cointegration and short- and long-run tests to establish a causal relationship between the variables. The results of the Pedroni cointegration test indicate that AC may
exert a long-term influence on ME in the South Asian region (Pedroni, 1999, 2004). The impact of ME on AC is substantial in the short term (Dumitrescu & Hurlin, 2012). The Dumitrescu and Hurlin (2012) panel Granger causality test results indicate homogeneous bidirectional causality from AC to ME and from ME to AC. In analyses conducted on a country-by-country basis, causality from ME to AC is present in six countries, causality towards ME is statistically identified in seven countries, and bidirectional causality is observed in three countries. The results have significant ramifications for policymakers, air
freight operators, and trade policy strategists in the region (World Bank, 2024; International Air Transport Association, 2024; Ministry of Civil Aviation, India, 2023).

Key terms: Air cargo, international trade, panel causality, error correction models, air freight transportation, and South Asia.