Spike in Covid-19 cases challenging aviation sector's recovery

New Delhi [India], Apr 10 : Domestic air passenger traffic for March is estimated at 77 lakh to 78 lakh against 77.4 lakh in the same month of last year, implying a flat growth, according to rating agency ICRA.
It witnessed a marginal sequential decline of 1 per cent over 78.3 lakh domestic passenger traffic in February which had witnessed a year-on-year decline of 37 per cent.
ICRA said that in lines with its estimates of 62 to 64 per cent decline in domestic passenger traffic in FY21 (that is from May 25, 2020 till March 31, 2021), the traffic has been 5.34 crore against 14.12 crore in FY20, a year-on-year decline of 62 per cent.
International passenger traffic for Indian carriers under the Vande Bharat Mission (VBM) was recorded at 4.5 lakh, a sequential increase of 12 per cent. While initial flights under the VBM were operated only by Air India Group, other domestic private carriers (Go Air, Indigo, SpiceJet and Vistara) have also operated a few flights from June 14.
Overall, said ICRA, the impact of pandemic will last longer on international travel than on domestic travel.
Notwithstanding the improving pace of vaccination, the sharp rise in infections in select states and measures taken to curb the same, continue to weigh on the recovery prospects.
ICRA continues to maintain a negative credit outlook on Indian aviation industry.
The financial performance of Indian airlines is likely to remain weak in the near-to-medium term amid weak air traffic albeit sequential improvement following continuation of restriction on international traffic and subdued demand from the corporate traveller segment.
Hence the credit profile of Indian carriers will remain stressed until they are able to reduce debt burden through a combination of improvement in operating performance or by way of equity infusion.
The agency estimates Indian aviation industry to report a significant net loss of Rs 21,000 crore in FY21 against a net loss of Rs 12,700 crore in FY20.