Ind-Ra forecasts domestic passenger numbers to rise by 10 per cent in the next fiscal (over fiscal 2019-20) implying a GDP multiplier of 0.9 times, lower than the 2.4 times (median estimate) for the FY15-FY20 period.

l demand are already showing signs of revival, which has helped support load factors and yields, while cargo volumes are expected to rise amid stronger macro-economic fundamentals and e-commerce push.

Ind-Ra believes air travel demand will be supported by a moderate recovery in corporate travel and a pent-up travel demand. Lastly, as mass-scale vaccination progresses, VFR (visiting friends and relatives) demand too should start normalising to pre-COVID levels.

The rating agency believes fuel price trend, trajectory of yield recovery, airlines’ ability to deal with cost inflation and competition remain the key rating issues worth monitoring in the next fiscal.