After a gap of two years, Indian airports expected to become profitable in FY23
Post-pandemic the economic slowdown is slowly seeing an uprise. The Indian Airport sector is also expected to become profitable in FY23 after a gap of two years.
On Sunday, the Centre allowed for the resumption of international commercial operations after a gap of two years due to the pandemic, international traffic is expected to see a healthy growth of 100-105 percent YoY in FY2023 and recover to pre-Covid levels in FY2024.
In FY2022, the passenger traffic is estimated to increase by 62-64 percent YoY (on a lower base) to 187-189 million despite the temporary disruption in the form of Omicron but supported by a healthy pace of vaccination.
As per ICRA, the trend will be supported by the resumption of international commercial operations and an increase in tariffs.
According to ICRA estimates, all India passenger traffic is likely to increase by 68-70 percent YoY to 317-320 million in FY2023. Besides, domestic passenger traffic is expected to witness 64-66 percent YoY growth in FY2023 and reach pre-Covid levels.
Rajeshwar Burla, Group Head, Corporate Ratings, ICRA, “Resumption of international commercial operations would accelerate the traffic recovery. Southeast Asia, the Middle East, and Europe are expected to be the major destinations driving the demand. The yield per passenger is much higher for the international sector both from aero and non-aero revenues perspective which is a positive for airport operators.”
He added, “This along with the increase in tariffs at some of the major airports will result in operating income (OI) growth of 49-51 percent Y-o-Y in FY2023. While operating profitability is expected to improve sequentially in FY2023 to 29-30 percent from 18-19 percent in FY2022, it is still likely to remain lower than the pre-Covid level of 40 percent with full recovery likely in FY2024 only.”
“This is factoring in the assumption that the impact of future Covid waves (if any) to below,” he said.
[With Inputs from IANS]
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