ICRA on aviation: Expect 37% YoY drop in February domestic air traffic, credit outlook negative


Domestic air traffic in February 2021 saw marginal improvement when compared with January.

(Representative image)

(Representative image)

Rating agency ICRA said it has a negative credit outlook for the aviation industry and estimates that domestic air traffic declined 37 percent year-on-year (YoY) in February 2021 to 78 lakh.

“For February 2021, the domestic passenger traffic is estimated at ~78 lakh, against ~123 lakh in February 2020, a YoY decline of ~37 percent. It witnessed a marginal sequential improvement of ~1 percent over ~77 lakh domestic passenger traffic in January 2021, which had witnessed a YoY decline of ~39 percent,” the rating agency said in a report.

Average daily departures were 2,296 in February 2021, higher than 2,190 during the previous month.

Also read: Airports in tier-2, 3 cities continue to outpace bigger peers in passenger traffic

The Directorate General of Civil Aviation (DGCA) has allowed domestic airlines to operate at 80 percent of their pre-COVID levels till March 31.

ICRA said it has a negative credit outlook on the aviation industry. The rating agency said the credit profile of most Indian airlines continues to be characterised by a weak liquidity position.

“The outlook reflects ICRA’s view that the financial performance of Indian airlines is likely to remain weak in the near-to-medium term amidst weak air traffic, albeit sequential improvement, following continuation of restriction on international traffic and subdued demand from the corporate traveller segment. Notwithstanding the improving pace of vaccination, the sharp rise in infections in select states and measures taken to curb the same, continue to weigh on the recovery prospects.”

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