Home / News / India /  Second covid-19 wave slowed down air travel recovery: ICRA

NEW DELHI : Credit rating agency ICRA Ltd has revised the growth estimates for air passenger traffic to 80%-85% annually during financial year 2022 (FY22) from earlier projected yearly growth of 130%-135% as a result of the ongoing second wave of covid-19 pandemic.

Domestic air passenger traffic had during FY21 slipped to 10-year low at 53.4 million primarily due to the covid-19 pandemic.

India recorded a total of 140 million domestic air passengers and 65 million international passengers during FY20.

"In addition to the passengers being apprehensive about air travel, increase in infections forced many state governments to implement strict covid-19 restrictions during the last two months on air travel. The second wave of covid-19 infections is likely to delay recovery in traffic," said Shubham Jain, senior vice president, corporate ratings, at ICRA.

"The passenger traffic growth is now estimated at 80%-85% year-on-year (y-o-y) in FY22 as against our earlier projection of 130%-135% y-o-y. This is factoring in the assumption that the majority of population (above 18 years) will be vaccinated by December 2021, in line with the government of India's vaccination policy targets, and the impact of third wave (if any) to be minimal due to mass vaccination," Jain said and added that domestic air travel is expected to recover to pre-covid levels by FY23 and the international sector by FY24.

Meanwhile, according to ICRA estimates, Indian airports will see their operating income (OI) and operating profits for FY22 decline by 12% and 40% to 12,800 crore and 2,560 crore respectively, as compared with earlier estimates due to revision in traffic.

"Slow ramp up in traffic will affect the cash flows available for debt servicing for airport operators. However, the robust on-balance sheet liquidity of 5,400 crore for the airports is strong to meet the debt obligations and support the sector in near-term," Jain added.

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