Delhi Airport's credit metrics may face pressure if sharp fall in passenger traffic continues: Moody's

"The decline in traffic is credit negative for DIAL because most of its revenue is linked to passenger and aircraft movements at the airport…Nevertheless, our base case scenario assumes that the downward pressure on DIAL's passenger traffic will gradually dissipate in the remaining months of the fiscal year ending March 2020, and passenger traffic will grow at a high single-digit percentage annually over the next 2-3 years,” said Spencer Ng, Moody’s vice president and senior analyst.

Earlier, the Airports Authority of India published data which revealed that passenger numbers at the airport fell 12 percent in May 2019 versus May 2018, after a 15 percent decline in April 2019.

With the passenger traffic at the airport predicted to grow at a single-digit percentage for the next two-three years, according to the Moody’s release. This, the report added, could pose a big challenge to the airport that depends mainly on passenger traffic for revenue.

As per the report, the decline in passenger traffic was primarily driven by the suspension of Jet Airways’ operations that led to scarcity in seat availability and an increase in the ticket price. Further, global economic slowdown and the grounding of 737-Max 8 aircraft too played its part.