Leading rating agency has forecasted that the domestic air passenger traffic will reach pre-Covid levels in Q4 FY 2023 itself whereas the international air passenger traffic is expected to recover fully by the second quarter of FY 2024. ICRA has also revised its outlook on Indian airport infrastructure to be stable from negative.
In its latest report, ICRA has expressed optimism that the overall passenger traffic to reach 90 per cent of the pre-Covid (similar period in FY2020) levels in September 2022. Domestic passenger traffic accounts for a major proportion (80 per cent of total passenger traffic) of the Indian airports.
The recovery of domestic traffic remained strong, and ICRA expects domestic air travel to recover to 97-98 per cent of pre-Covid levels in FY2023 itself. After the resumption of international commercial operations from March 27, 2022, post a two-year ban, international passenger traffic has registered a steady improvement in the last six months which is supported by the opening of major international destinations, easing of travel restrictions and an increase in aircraft capacity deployment. ICRA expects international passenger traffic to cross pre-Covid levels in FY2024.
Providing more insights, Rajeshwar Burla, Group Head, Corporate Ratings, ICRA, said, “Given the uptick in economic activity as well as the expected traffic ramp-up in the coming months ahead of the festive and the vacation season, the passenger traffic is expected to sustain healthy growth momentum. The outlook revision to stable from negative reflects ICRA’s expectation that passenger traffic is expected to surpass pre-Covid levels in the ensuing 12-month period (Sep-22 to Aug-23).”
“Driven by healthy momentum in domestic traffic as well as an uptick in international passenger traffic, overall passenger traffic is expected to witness YoY growth of 71-73 per cent and reach 324-327 million (95-96 per cent of pre-Covid levels) in FY 2023. Supported by an improvement in the overall revenue and consequent operating leverage benefits along with the increase in tariff (for some major airports), the cash flows available for debt servicing and debt coverage metrics are expected to witness a gradual improvement going forward,” he added.