The rating agency said it is expecting the recovery process to remain subdued during March quarter and that the jet fuel prices continue to be a drag on the sector
Mumbai, NFAPost: Domestic air passenger traffic plunged around 43% month-on-month at 64 lakh in January 2022 as the third wave of the pandemic and the resultant restrictions by state governments kept flyers away from air travel, rating agency Icra said on Tuesday.
The domestic passenger volume in December 2021 was recorded at 112 lakh. The rating agency said it is expecting the recovery process to remain subdued during March quarter and that the jet fuel prices continue to be a drag on the sector.
The passenger traffic declined 17% last month over 77 lakh passengers transported by domestic airlines on local routes in January 2021, Icra said.
Also, airlines deployed 7% lower capacity in January 2022, which saw 62,979 departures against 67,877 departures recorded in the corresponding month of 2021, it said, noting that on a sequential basis, the number of departures in January was lower 27% due to emergence of the new COVID-19 variant.
The sequential recovery slumped in January 2022 with emergence of the new variant (Omicron) and related restrictions impacting the leisure travel segment along with existing subdued demand from the corporate traveller segment, said Suprio Banerjee, Vice President & Sector Head, Icra.
The same is also reflected as passenger traffic during April-January period of 2021-22 remained around 45% lower than the period year earlier, he stated.
The emergence of the new COVID variant and reactionary air travel restrictions will keep the recovery prospects subdued for the domestic airlines sector in the current quarter, he added.
One major concern that continues to be a drag on the aviation sector is the aviation turbine fuel (ATF) prices, which have seen a sharp increase of 59.9% on a year-on-year basis till February 2022, mainly owing to increase in crude oil prices, Icra said.
This, coupled with relatively low capacity utilisation of aircraft fleet, will continue to weigh on the financial performance of domestic carriers in this fiscal year.
Furthermore, the credit profile of most Indian carriers continues to be characterised by a weak liquidity position, the rating agency stated.
