New Delhi, Feb 8 (IANS): Covid's third wave, along with the resultant restrictions, has led to a sharp sequential decline in domestic air passenger traffic by 42-43 per cent, ratings agency ICRA said.

As per it, 64 lakh passengers were ferried in January 2022, compared to 112 lakh in December 2021. Besides, these figures reflect a YoY decline of 17 per cent, as passenger traffic stood at 77 lakh in January 2021.

Furthermore, airlines' capacity deployment for January 2022 was around 7 per cent lower than January 2021.

On a sequential basis, the number of departures in January 2022 were lower by 27 per cent due to emergence of the new Covid-19 variant.

ICRA Vice President & Sector Head, Suprio Banerjee said: "The sequential recovery slumped in January 2022 with emergence of the new variant (Omicron) and related restrictions impacting the leisure travel segment along with existing subdued demand from the corporate traveller segment.

"The same is also reflected as passenger traffic for 10M FY2022 remained 45 per cent lower than 10M FY2020 (pre-Covid level). The emergence of the new Covid variant and reactionary air travel restrictions will keep the recovery prospects subdued for the domestic airlines sector in the current quarter."

In addition, ICRA pointed out a major concern that continues to drag on the aviation sector is the aviation turbine fuel (ATF) prices, which have seen a sharp increase of 59.9 per cent on a YoY basis till February 2022.

"It is mainly attributed to the increase in crude oil prices. This, coupled with relatively low capacity utilisation of aircraft fleet, will continue to weigh on the financial performance of Indian carriers in FY2022," the ratings agency said.

"Furthermore, the credit profile of most Indian carriers continues to be characterised by a weak liquidity position."