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Domestic Passenger Traffic May See 41% to 46% De-Growth


ICRA expects FY2021 to witness a de-growth of 41-46% in domestic passenger traffic and 65-72% in international passenger traffic.

"The revenues of the Indian aviation industry are expected to witness significant de-growth. The profitability of the industry will also be adversely impacted due to lower revenues and high fixed costs," ICRA has said in its latest report on the aviation industry.

"While some airlines have sufficient liquidity and/or financial support from a strong parentage, which will help them sustain over the near term, the airlines, who were already in financial stress, are now facing existential crisis. Furthermore, even for the former, it has resulted in significant weakening of their credit metrics and liquidity profile. Many airlines have already undertaken several cost rationalisation measures.

Domestic Passenger Traffic May See 41% to 46% De-Growth

These include salary cuts for their employees, including leave without pay and laying off pilots and crew members to cut costs. However, until the cash inflows resume, the airlines will require funding support to meet their expenses. The credit profile of domestic airlines will thus weaken materially over the near-term," the rating agency has said.

According to it, overall, the impact of the Covid outbreak will last longer on international travel than domestic travel. Thus, ICRA maintains its expectations of YoY de-growth of 67-72% in international passenger growth for Indian carriers in FY2021

Read more about: icra
Story first published: Thursday, August 6, 2020, 8:54 [IST]
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