Second wave of Covid-19 to put a brake on passenger traffic recovery at Indian airports, turbulence ahead: ICRA

Second wave of Covid-19 to put a brake on passenger traffic recovery at Indian  airports, turbulence ahead: ICRA

The domestic passenger traffic which witnessed a steady ramp up post resumption of airport operations from May 25, 2020, reaching 64% of their preceding year amounts in February 2021 has again suffered a setback. According to ICRA notice, the spike in Covid-19 diseases towards March-end and April 2021 has led in a number of state authorities implementing new restrictions, leading to marginal de-growth in visitors in March 2021 (-0.7% M-o-M) in comparison to February 2021 (+1.4% M-o-M). The average daily amount of departing passengers throughout March 2021 stood at 2.49 lakh; and dropped by 28% M-o-M in April 2021 into 1.79 lakh. There was a further dip of 56% during May 1, 2021 to May 16, 2021, compared to the average of April 2021. 

Giving more advice, Mr. Shubham Jain, Senior Vice President, Corporate Tests, ICRA, states "Along with the passengers being concerned for aviation, increase in diseases forced many state authorities to implement stringent covid-19 limitations during previous two weeks on aviation. The next wave of Covid-19 ailments is very likely to postpone recovery in visitors. The passenger traffic growth is currently estimated at 80%-85% Y-o-Y at FY2022 according to our previous projection of 130%-135% Y-o-Y. That can be factoring in the assumption that bulk of people (over 18+ years) will be vaccinated from December 2021, in accord with the GoI's vaccination policy aims, and effect of third wave (if any) to be nominal as a result of mass vaccination. ICRA expects national aviation to recuperate back to pre-Covid amounts by FY2023 along with the global industry by FY2024."

The Worldwide traffic stays restricted to countries with specific flights below the Vande Bharat Mission (VBM) rescue Performance flights and bilateral 'Air Transport Bubble (ATB)' agreements.  Many nations like the US, the united kingdom, Singapore, Kuwait, France, Canada, Australia, Iran, Indonesia and the UAE, that had ATB structures or beneath the VBM, have inadvertently prohibited flights out of India, mentioning the rising coronavirus infections.

The significant growth drivers for the businesses in the long run will seriously hinge on the achievement of mass vaccination, lifting of lockdown limitations, resumption of business traveling and advancement in leisure traveling.

"The operating income (OI) and operating profits for FY2022 are estimated to decrease 12% and 40% to Rs. 12,800 crore  and Rs. 2560 crore respectively, as compared to previous estimates because of revision in visitors. But on Y-o-Y foundation, OI is Estimated to rise by approximately 50% with operating earnings of 20% as against reductions in preceding calendar year. Together with the Improvement in the operating margins and the consequent money flows in FY2022, the interest policy and DSCR are Expected to increase to 1.3x and 1.1x respectively (according to earlier estimates of 2.4x and 1.5x). Slow ramp up in visitors would impact the cash flows available for debt servicing for airport operators adversely.  However, the strong on-balance sheet liquidity of Rs. 5400 crore For the|For those} airports is powerful to satisfy with the debt obligations and encourage the business in longterm," Mr. Jain added.