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Research Announcement:

Moody's - Delhi Airport’s sharp fall in passenger traffic, if prolonged, will pressure its credit metrics

04 July 2019


Singapore, July 04, 2019 --

—Most of the airport's revenue is linked to passenger and aircraft movements.

—Passenger traffic should grow at a high single-digit percentage over the next 2-3 years.

Moody's Investors Service says in a just-released report that the fall in passenger traffic for Delhi Airport over the past two months is a sharp turnaround from the average annual increase of 15% between 2016 and 2018.

On 1 July 2019, the Airports Authority of India published data showing that passenger numbers at Delhi Airport (the Indira Gandhi International Airport) fell 11% in May 2019 versus May 2018, after a 15% decline in April 2019. The airport is owned and operated by Delhi International Airport Limited (DIAL, Ba2 stable).

Moody's believes that the decline in passenger traffic was primarily driven by the suspension of Jet Airways' operations on 17 April this year, which reduced the available seat capacity in the market, and was likely the reason for the reported increase in ticket prices in India.

Moody's points out that a slowdown in global GDP growth and the grounding of 737-Max 8 aircraft globally since March 2019, were also factors likely to have contributed to weakening passenger numbers.

"The decline in traffic is credit negative for DIAL because most of its revenue is linked to passenger and aircraft movements at the airport," says Spencer Ng, a Moody's Vice President and Senior Analyst.

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

"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," adds Ng.

Load factors for the major domestic airlines were high in April and May 2019, indicative of solid underlying demand for air travel in the country.

Subscribers can access the report "Delhi International Airport Limited: A longer than expected decline in passenger traffic will pressure credit metrics amid airport expansion" at: http://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1183988

NOTE TO JOURNALISTS ONLY: For more information, please call one of our global press information hotlines: New York +1-212-553-0376, London +44-20-7772-5456, Tokyo +813-5408-4110, Hong Kong +852-3758-1350, Sydney +61-2-9270-8141, Mexico City 001-888-779-5833, São Paulo 0800-891-2518, or Buenos Aires 0800-666-3506. You can also email us at mediarelations@moodys.com or visit our web site at www.moodys.com.

This publication does not announce a credit rating action. For any credit ratings referenced in this publication, please see the ratings tab on the issuer/entity page on www.moodys.com for the most updated credit rating action information and rating history.

Spencer Ng
VP-Senior Analyst
Project & Infrastructure Finance
Moody's Investors Service Singapore Pte. Ltd.
JOURNALISTS : 852 3758 1350
Client Service : 852 3551 3077

Terry Fanous
MD-Public Proj & Infstr Fin
Project & Infrastructure Finance
Moody's Investors Service Singapore Pte. Ltd.
JOURNALISTS : 852 3758 1350
Client Service : 852 3551 3077

Releasing Office :
Moody's Investors Service Singapore Pte. Ltd.
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JOURNALISTS : 852 3758 1350
Client Service : 852 3551 3077

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