In FY2022, the passenger traffic is estimated to increase by 62%-64% Y-o-Y (on a lower base) to 187-189 million despite the temporary disruption in the form of Omicron, but supported by healthy pace of vaccination
With the resumption of international commercial operations from March 27, 2022 after two years of ban due to pandemic, international traffic is expected to see healthy growth of 100%-105% Y-o-Y in FY2023 and recover to pre-Covid levels in FY2024. This is factoring in the assumption that impact of future Covid waves (if any) to be low. In FY2022, the passenger traffic is estimated to increase by 62%-64% Y-o-Y (on a lower base) to 187-189 million despite the temporary disruption in the form of Omicron, but supported by healthy pace of vaccination.
ICRA estimates the all India passenger traffic to increase by 68%-70% Y-o-Y to 317-320 million in FY2023. Domestic passenger traffic is expected to witness 64%-66% Y-o-Y growth in FY2023 and reach pre-Covid levels.
Giving more insights, Rajeshwar Burla, Group Head, Corporate Ratings, ICRA, says, “Resumption of international commercial operations would accelerate the traffic recovery. Southeast Asia, Middle East and Europe are expected to be the major destinations driving the demand. The yield per passenger is much higher for international sector both from aero and non-aero revenues perspective which is a positive for airport operators. This along with the increase in tariffs at some of the major airports will result in operating income (OI) growth of ~49-51% Y-o-Y in FY2023. While operating profitability is expected to improve sequentially in FY2023 to 29-30% from 18-19% in FY2022, it is still likely to remain lower than pre-covid level of 40% with full recovery likely in FY2024 only.”
Over Rs. 90,000 crore of investments are in pipeline to develop airport infrastructure in India during next five years. This includes ongoing capacity expansion at major private airports, investments by Airports Authority of India (AAI) of Rs. 25,000 crore towards development of AAI operated airports, around Rs. 30,000 -34000 crore is expected towards setting up of 21 new greenfield airports across country and around Rs. 17,000 crore by Adani Group towards development of six airports taken over from AAI.
“With the improvement in the operating margins and consequently cash flows in FY2023 for the sector, the interest coverage and DSCR are expected to improve to 3.0x and 2.7x respectively from 1.6x and 1.2x in FY2022 respectively. Further, the aggregate opening cash and liquid investments for the airport operators is estimated at Rs. 6,000-6,200 crore (includes cash earmarked for capex at Rs. 3,500 crore) by April 1, 2022 which is expected to be utilised to fund the equity requirements of ongoing capex programme,” Burla added.
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