2 min read.Updated: 26 Nov 2021, 02:04 PM ISTRhik Kundu
The airports sector incurred a net loss of ₹5,400 crore in financial year 2021 because of a sharp decline in passenger traffic following the coronavirus outbreak
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NEW DELHI: India's airport infrastructure sector, which reported losses last fiscal, is expected to post up to ₹3,200 crore in operational profit during FY22 on the back of a revival in domestic air passenger traffic, rating agency Icra Ltd. said in a report.
"Domestic traffic has witnessed healthy M-o-M (month-on-month) growth since June 2021 with traffic reaching 72% of pre-Covid levels in October 2021, highest since start of pandemic. The passenger traffic is expected to witness 82%-84% Y-o-Y (year-on-year) in FY2022," said Icra, adding that the outlook on the airport infrastructure, however, remains negative.
"The significant ramp up in vaccination, decline in Covid-19 cases and pick up in revenge leisure travel are supporting the growth in domestic passenger traffic. This is further supported by the recent decision of the Ministry of Civil Aviation (MoCA) to increase the domestic capacity deployment to 100% of pre-Covid levels with effect from October 18, 2021," it said.
According to Icra's estimates, the airports sector incurred a net loss of ₹5,400 crore in financial year 2021 because of a sharp decline in passenger traffic following the coronavirus outbreak.
"In the recently released tariff orders for some of the major private airports, Airports Economic Regulatory Authority (AERA) has acknowledged the adverse impact of Covid-19 pandemic on the airport operators. The true-up of traffic for FY2021 has been considered in current control period. Further, considering the impact of second wave of pandemic on air traffic in Q1 FY2022, the regulator has decided not to increase the tariff for FY2022 as the sector is in the recovery phase and increase in tariffs had made with effect from April 1, 2022," said Rajeshwar Burla, group head, Corporate Ratings, Icra.
"Given the low traffic on one side and ongoing/upcoming capacity expansion plans at major private airports on the other side, the decision to continue with same tariff for FY2022 is expected to impact the airport operators temporarily," it added.
Meanwhile, demand for aviation turbine fuel (ATF), also known as jet fuel, is expected to rise by at least 33% sequentially during the October-December quarter, due to a surge in domestic air travel and gradual opening up of international flights, S&P Global Platts Analytics said in a report on Friday.
"India's jet fuel demand is ready for take-off as the country plans to open its doors to international tourists and forms more air travel bubbles, while domestic travel has surged as the local COVID-19 situation has mostly stabilized, with the total number of doses administered in the world's second most populous country crossing 1 billion," the report said.
"Indian refiners expect a higher run in the coming months on improved demand for aviation fuels as domestic airlines have started flights to international routes with the relaxation in coronavirus protocols, oil ministry officials said Nov. 23, adding that demand has also received an impetus as the threat of a third wave of COVID-19 has receded," it added.
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