Spike in Covid-19 cases to delay recovery in air passenger traffic: Report

The fresh restrictions in turn will have an adverse bearing on airport operators cash flows and debt coverage metrics

The spike in coronavirus cases in the country and the subsequent restrictions imposed by the several states to contain the rising numbers are likely to delay the recovery in domestic passenger traffic and have an adverse bearing on airport operators' cash flow, a report said on Wednesday.

The domestic traffic, which slipped to a 10-years low last fiscal owing to the pandemic, may de-grow by 15-17 per cent in April over March 2021, ratings agency ICRA said.

The increase in infection cases has forced many state governments to implement fresh COVID-19 restrictions during the past two-three weeks, including air travel for the passengers.

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, a couple of states require mandatory e-pass, and all the states have compulsory thermal screening to be done at airports.

With the rise in the cases across metros, new restrictions cannot be ruled out that could further impact the traffic movement, ICRA said.

After 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.

Considering similar trend, domestic traffic was expected to grow at 125 per cent in 2021-22 after an estimated de-growth of 61 per cent in the financial year ended March 31, 2021, ICRA said.

However, the recent spike in the COVID-19 cases towards March-end and early April 2021 has resulted in several state governments implementing fresh restrictions.

In addition to the passengers being apprehensive for air travel, domestic airports are mandating negative COVID-19 test reports for travel and imposing mandatory home quarantine measures, said the ratings agency. This will adversely impact the passenger traffic this month, it added.

The fresh restrictions in turn will have an adverse bearing on airport operators cash flows and debt coverage metrics, it added.

"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 a 11-12 per cent dip in domestic passenger traffic as compared to the average of March 2021.

ICRA Senior Vice-President (Corporate Ratings) Shubham Jain said , "With the rising cases and the fresh restrictions imposed in many states till April 30, the air travel is likely to be curtailed to an extent and the domestic passenger traffic is expected be lower by 15 per cent-17 cent month-on-month in April 2021."

ICRA said the average new COVID-19 cases per day were at around 17,500 in January 2021, declining to around 12,700 in February 2021. The infections, however, have been on an increasing trend since March third week with average cases per day around 34,000, it added.

This has spiked up significantly in the first 11 days of April 2021 with an average of 1.10 lakh cases per day and the highest number of COVID-19 cases has been reported in India on April 11, 2021, at 1.53 lakh, it said.

Assuming 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 2021-22 than ICRA's earlier estimates, said Jain.

"The prolonged delay in recovery of the 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," he added.

Jain, however, added that 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.



Dear Reader,


Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel