The recent spike in Covid-19 cases, along with re-iimposition of fresh restrictions, will adversely impact air passenger traffic in April 2021, ratings agency ICRA said.
Post resumption of airport operations from May 25, 2020, the ramp up in domestic passenger traffic had been steadily reaching 64 per cent of previous year levels in February 2021, it said.
"Considering similar trend, domestic traffic was expected to grow at 125 per cent in FY2022 after an estimated de-growth of 61 per cent in FY2021," it added.
However, with domestic airports mandating negative Covid-19 test reports for travel and imposing mandatory home quarantine measures, it is expected to adversely impact the passenger traffic in April 2021.
The fresh restrictions, ICRA said, will have an adverse bearing on airport operators cash flows and debt coverage metrics.
It pointed out that average new cases per day were at around 17,500 in January 2021, declining to around 12,700 in February 2021.
However, the infections have been on an increasing trend since March third week with average cases per day standing at around 34,000.
This trend spiked up significantly in first eleven days of April 2021.
Consequently, the increase in infections forced many state governments to implement fresh Covid-19 restrictions during last two-three weeks, including on air travel.
Around 15 states have mandated a negative RT-PCR test report from all or some arriving passengers, few states have imposed mandatory home quarantine for seven days, couple of states require a mandatory E-pass and all the states have compulsory thermal screening to be done at airports.
In addition, with the rise in the cases across metros, new restrictions cannot be ruled out, which could further impact the traffic movement, it said.
"The average daily number of departing passengers during March 2021 stood at 2.49 lakh. During April 6, 2021 to April 11, 2021 there has been dip of 11-12 per cent in domestic passenger traffic as compared to the average of March 2021," said Shubham Jain, Senior Vice President, Corporate Ratings, ICRA.
"With the rising cases and the fresh restrictions imposed in many states till April 30, 2021, the air travel is likely to be curtailed to an extent and the domestic passenger traffic is expected be lower by 15-17 per cent M-o-M in April 2021."
According to Jain, assuming that Covid-19 infection rate subsides over the next few weeks with the support of mass vaccination programme and the restrictions by various states are lifted from May 2021, domestic passenger traffic growth is expected to be lower by 4-6 per cent during FY2022 than ICRA's earlier estimates.
"The prolonged delay in recovery of second wave of Covid-19 could result in higher than expected decline in traffic estimates which in turn will have an adverse impact on cash flows and coverage metrics of the airport operators."
"However, the airport operators are sitting pretty on huge cash balances estimated at around Rs 5,700 crore as on March 31, 2021. This would support the credit profile of the operators in the near-term."
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