Air passenger traffic volume is expected to recover to the pre-pandemic level, implying a robust 75 per cent YoY growth this fiscal, a report said on Monday. The pick-up in traffic volume is expected to be led by domestic traffic as slots and routes on the international front are still opening up, domestic credit rating agency, CRISIL said in its report.
It also said that airport operators are expected to see their traffic volume recover to the pre-pandemic level this fiscal, spurring a recovery in revenue, supported by an increase in tariffs.
In FY23, with the pandemic impact seemingly behind us, air traffic volume is expected to increase to FY20 level of around 340 million passengers.
Till August, the volume was around 88 per cent of the corresponding fiscal 2020 level but is expected to pick up in the remaining months of the year on account of improving business travel sentiment, pent-up demand on the international segment, and de-bottlenecking of capacity availability on aircraft and international slots, it said.
"In the first five months of FY23, domestic traffic stood at 92 per cent of the corresponding fiscal 2020 mark, while international traffic was at 75 per cent. This cements our confidence for healthy volume growth in the current fiscal and a return to near-double-digit growth in FY24," said Manish Gupta, Senior Director at Crisil Ratings.
The report noted that the revenue recovery is crucial to support rising debt-servicing requirements as private airports are at the end of their expansion phase.
Between FY15 and FY20, air traffic logged a healthy compound annual growth rate around 12 per cent, driven by growing penetration of air travel beyond metro cities on tailwind from the government schemes, such as RCS and UDAN1, and focus on infrastructure development, as per the report.
Then, the pandemic hit, and air traffic volume nose-dived in FY21. Fiscal 2022 saw only partial recovery, given the multiple waves of infection and restrictions on the movement of people, according to CRISIL.
It also said that aeronautical tariffs have increased by around 30 per cent for the top four private airports, which will help aeronautical revenue reach 120 per cent in FY23.
The air traffic recovery estimates and revenue projections remain sensitive to macroeconomic uncertainties and geopolitical developments, the agency noted.