The Decline of Passenger Traffic in Delhi Airport May Harm DIAL’s Credit Rating: Moody’s Investors Report

However, the traffic is likely to grow at single-digit percentage annually in 2-3 years, the agency predicted.

The passenger traffic at the Delhi’s Indira Gandhi International (IGI) Airport has dropped 12.7% year-on-year in May 2019, according to the data from the Aviation Authority of India (AAI). Such a decline in traffic is a sharp turnaround from the average annual increase of 15% between 2016 and 2018.

The drop in the passenger traffic will hurt the credit metrics of the airport midst its expansion plans, says the US-based financial services firm Moody’s Investors Service.

flight-cancelled-refunds-alternates

The decline in traffic is credit negative for DIAL (Delhi International Airport Limited) because most of its revenue – outside of income from land monetization and rental – is linked to passenger and aircraft movements at the airport, Moody’s Investors Service said in its report on DIAL.

Our base case scenario assumes that the downward pressure on DIAL’s passenger traffic will gradually dissipate in the remaining months of fiscal 2020 and for passenger traffic to grow at a high-single-digit percentage annually over the next 2-3 years, the report said.

Also Read: Delhi Airport Opens Transshipment Excellence Centre to Handle Transshipment Cargo

The decline in traffic at IGI Airport is a result of the grounding of Jet Airways in April 2019. Jet Airways accounted for 18% of the domestic passenger traffic in the country, besides occupying 14% of the international traffic. Another factor the grounding of Boeing 737-Max aircraft may have also weakened the traffic at Delhi airport.

DIAL’s credit metrics are already likely to stay at the lower end of the range considered appropriate for its Ba2 ratings due to the additional debt incurred to fund its major expansion plan and Moody’s base case assumption that tariffs will remain at around the current low level.

Meanwhile, in another development, IGI airport will become India’s first plastic-free airport in the next five months. The project that covers all three terminals and the airside area of the airport intends to replace the plastic-based materials with paper and bio-based compostable materials. DIAL plans to ensure bio-friendly packing of food takeaways and beverages and using environmental-friendly bags for retail shopping. The initiative will be later expanded to other airports as well.

Also Read: Çelebi Aviation Invests INR 354 Crores to Deploy Taxibots in India

Ria is a lead news writer at Aviation Scoop. She writes from dawn to dusk, reads in the evenings, and draws at some ungodly hours. She loathes human interaction, and finds solace in the sweet, musky smell of old books, and rain. Find her on Twitter here - @rialakshman.

Recent Posts

Air India Sale Likely to Be Finalised by March 2020 As per Finance Minister

Finance Minister Nirmala Sitharaman has revealed that the government is aiming to complete the sale of Air India and Bharat...

IndiGo Chief Assures of Strong Fundamentals and Good Numbers in Indian Aviation Industry

According to IndiGo Airlines’ Chief Executive Officer Ronojoy Dutta, Indian civil aviation sector is in its “golden age”. He said...

Air India Is Offering Attractive Fares to Students Similar to Other Airlines, Here Is What You Need to Know

It has been a few rough months for Air India this year. The flag carrier airline has been around for...