Coronavirus will act as a blow to the Indian air traffic which was anyway subdued, said ICRA on Friday. The credit rating agency said that both domestic and international traffic has slowed down and it is likely to get worse in the coming few months.

“Passenger traffic growth at Indian airports has already been fairly subdued at around 1.7 per cent in 10 months FY2020 on year-on-year basis in comparison to a 12 per cent YoY growth in FY2019 and 10-year CAGR of 12 per cent,” it added.

The outbreak of COVID-19 began in China in December 2019 and since then has spread across the globe. While total passenger traffic at Indian airports grew by only 1.3 per cent in January 2020 on a YoY basis, “impact of COVID-19 outbreak on passenger traffic is estimated to be material from February 2020 onwards. Also in light of the curbs on air travel being put into place (both international and domestic) due to COVID-19 outbreak, recovery in passenger traffic growth is now likely to be deferred, given the uncertainty over the near term,” ICRA said.

Additionally, domestic air traffic growth is also likely to moderate further in light of risk averseness and precautionary deferment of non-essential travel by local passengers.

The Indian government suspended “all existing visas, except diplomatic, official, UN/international organisations, employment, project visas” until April 15. The visa-free travel facility for Overseas Citizen of India (OCI) holders has been suspended.

India imposed these stringent travel curbs after the World Health Organization (WHO) declared the coronavirus outbreak a pandemic.

Cancellation of major global/domestic events is also likely to hurt overall passenger traffic.

Nearly 585 international flights have been cancelled to and from India between February 1 and March 6 because of the outbreak of coronavirus.

Top seven airports including five privatised airports Delhi, Bengaluru, Hyderabad, Mumbai and Cochin and two major AAI owned airports in Chennai and Kolkata in terms of passenger traffic, account for around 65 per cent of the country’s total passenger traffic.

Given that these airports also handle almost 80 per cent of the total international passenger traffic, “they are likely to witness higher moderation in air traffic and pressure on revenue in the near term if the outbreak is not contained,” said ICRA.

“While the top four privatised airports (Delhi, Bengaluru, Hyderabad and Mumbai) can also face some moderation in their revenues in the near term, the overall impact on their credit profile will be contained to some extent, given that tariff determination for these airports is based on a cost-plus basis. Any gap in revenue generation in the near term will be compensated in the next control period. However given that most of these airports are also expanding their capacities with sizeable ongoing Capex, any prolonged material impact of COVID -19 on air traffic at these airports will be a key monitorable,” it’s report added.

In the light of the issues faced by the Indian aviation industry, the Association of Private Airport Operators (APAO) has asked for a moratorium on payment of concession fees to the regulator.

In a letter written on March 11, APAO highlighted the troubles being faced by the aviation industry, which is impacting the airports industry.

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