Air passenger traffic likely to fall by 45-50% in FY21: ICRA

New Delhi, June 3 (SocialNews.XYZ) Air passenger traffic is likely to fall by 45-50 per cent in FY21, credit rating agency ICRA said on Wednesday.

In a research note, ICRA said that passenger traffic at airports will remain under pressure for H1FY2021, with some recovery likely only in H2FY2021, on a full year basis.

"The aviation infrastructure industry is amongst the most severely impacted sectors to bear the brunt of the novel coronavirus (Covid-19) pandemic and the setback on the industry is expected to be substantial in the near term," the note said.

As per the ICRA note, decline in air travel globally pursuant to spread of the pandemic and subsequent drastic precautionary measures undertaken by the Centre leading to pan India lockdown and near closure of airport operations, has led to a sharp contraction in air traffic in Q4 FY2020 and negligible passenger traffic in the month of April 2020 and May 2020.

"Although most airports resumed operations by the fag end of May 2020 for domestic travel, with restrictions on number of flights as well as passengers, the resumption of international commercial operations remains stalled," the note said.

"There have been extremely few international flights, limited largely to operations to bring back stranded Indians or repatriation of foreign citizens."

According to Anupama Arora, Sector Head & Vice President - Corporate Ratings, ICRA: "With almost negligible air traffic already in the first two months of the current fiscal, possible dilemma amongst travellers to travel amidst continuing pandemic fears and gradual addition of capacities by airlines, passenger traffic at airports is expected to remain under pressure for H1FY2021, with some recovery only likely in the second half."

"As a result, passenger traffic is estimated to witness sharp Y-o-Y decline of 45-50 per cent in FY2021."

In FY19, airports in India handled around 345 million passengers, driven by strong growth especially in domestic traffic.

The top five privatised airports in India developed under the Public-Private Partnership model have led from the front, accounting for 55-60 per cent of this passenger traffic.

As for the recovery, ICRA said the same will be contingent on the abatement of the pandemic, with international travel primarily dependent on lifting of travel restrictions by various countries.

"This is likely to happen only in phases. Additionally, availability of viable load factors across specific routes for the airlines would be another consideration for airlines to resume traffic directed towards various destinations," the note said.

The rating agency thus expects the traffic recovery in a meaningful manner only towards FY2022 and that FY2019 passenger traffic levels are likely to be surpassed only by FY2023.

"Given likelihood of weak traffic for a prolonged period and resultant operations conducted at sub-optimal capacities and at the same time necessity to invest in infrastructure to ensure passenger safety and meet preventive requirements against the pandemic, the airports' profitability and cashflows are likely to remain under pressure in the near term," ICRA said in the note.

Furthermore, this risk is exacerbated in case of the privatised airports, as most of them are in the midst of undertaking sizeable debt funded capex to expand capacities.

Source: IANS