Airports, which have been struggling during the past two pandemic years, are set to return to the black next fiscal on the back of the resumption of regular international flights and an increase in domestic tariffs, according to a report.
Air passenger traffic is likely to grow 68-70 percent year-on-year to 317-320 million in FY23, it added.
This will have their operating income rise 49-51 percent to Rs 14,400-14,600 crore in FY23, giving the operators an operating margin of 29-30 percent, rating agency Icra said on Monday.
Overall passenger traffic to increase by 68-70 percent over FY22 to 317-320 million in FY23, while domestic passenger traffic is expected to jump 64-66 percent year-on-year and reach the pre-pandemic levels.
With the resumption of international commercial operations from Sunday, after two years of ban due to the pandemic, international traffic is expected to see a healthy growth of 100-105 percent and recover to the pre-pandemic levels in FY24, provided there is no fourth wave or the impact of the next wave will be minimal.
In FY22, passenger traffic is estimated to increase by 62-64 percent to 187-189 million despite the temporary disruption in the form of the Omicron wave but supported by a healthy pace of vaccination.
The resumption of international flights will accelerate traffic recovery driven by traffic from Southeast Asia, the Middle East, and Europe. It can be noted that international travellers offer much higher yields to operators both from aero and non-aero revenues perspectives.
This along with an increase in tariffs at some of the major airports will result in operating income growing 49-51 percent in FY23, the report said.
While operating profitability is expected to improve sequentially in FY23 to 29-30 percent from 18-19 percent in FY22, it is still likely to remain lower than the pre-Covid-19 level of 40 percent with full recovery likely only in FY24.
Meanwhile, the report notes that the sector is set to get over Rs 90,000 crore of investments over the next five years. This includes ongoing capacity expansion at major private airports, investments by the Airports Authority of Rs 25,000 crore in AAI-operated airports; Rs 30,000-34000 crore towards setting up of 21 new greenfield airports, and around Rs 17,000 crore by the Adani Group to upgrade six airports it has taken over from the AAI.
(Edited by : Jomy Jos Pullokaran)