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Air passenger traffic likely to fall by 45-50% in FY21: ICRA
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SME Times News Bureau | 04 Jun, 2020
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.
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