International traffic to exceed pre-Covid levels this fiscal

Chennai: International air passenger traffic is likely to exceed pre-Covid levels this fiscal. Non-aero revenue contribution of airports increased to 51 per cent in 2023.

Promoted by the ease in travel restrictions, availability of direct flights, enhanced work-related travel and overall improvement in travel sentiments, international passenger traffic shall exceed pre-Covid levels in FY24, finds India Ratings and Research. Domestic air traffic exceeded the pre-Covid levels by 12 per cent in Q1 FY24.

International cargo traffic is expected to ramp-up, led by incremental capex by private players, Make-in-India initiative, Production-linked Incentive schemes and adoption of latest technology. In FY21, cargo volumes had contracted 25-30 per cent compared to FY19 levels.

In FY22, cargo volumes reached 90 per cent of pre-covid-19 levels. The quick recovery in cargo volumes was on the back of the trade of essential supplies, primarily in the pharmaceutical, medical equipment and agricultural produce sectors along with airlines piling cargo in cabins and dedicated freighters to meet the demand.

Domestic air traffic exceeded the pre-Covid levels by 12 per cent in 1QFY24 and 2 per cent for cargo for FY23.

Meanwhile, non-aero yield per passenger witnessed healthy growth of 30 per cent in FY23 as against FY19, on the back of the traffic recovery, availability of additional space and increased propensity of passengers to make purchases.

As part of the ongoing capex, airports have designed new or expanded their terminal area, to increase the duty-free revenues and forex gains, to improve non-aero yield per passenger. The CAGR growth in non-aeronautical yield per passenger at major public-private partnership airports was 7.3 per cent higher between FY19-FY23, backed by improved passenger traffic, enhanced customer experience at the airports and enhanced purchasing power of the consumers. Non-aero revenue contribution increased to 51 per cent in 2023 from 48 per cent in 2019. In FY23, land and space rentals (18 per cent), duty-free revenues (25 per cent) and retail (9 per cent) contributed around 50 per cent to the total non-aero revenues.