Indian airports are planning to increase their capital expenditure (capex) to Rs 60,000 crore over the next three years, from Rs 53,000 crore in FY22-24, as part of a major push to expand infrastructure and cater to the increasing demand for air travel. According to a report released by Crisil on Thursday, the expansion is expected to accommodate an additional 65 million passengers annually by FY27.
The majority of the fresh investments—around 70%—are set to be funded through debt. This comes as private airports, which contribute about 60% of the total passenger traffic in FY24, ramp up their infrastructure to support both domestic and international growth. The report focuses on 11 private airports, which play a central role in handling a significant share of India’s air traffic. Passenger traffic at Indian airports is projected to grow at a compounded annual growth rate (CAGR) of 8-9% from FY25 to FY27, driven largely by domestic air travel, which accounts for over 80% of the volume. This growth is expected to be fueled by increasing demand from both business and leisure sectors, alongside government initiatives to improve regional connectivity through the UDAN scheme. As of July 2024, 84 airports and 579 routes were operational under this scheme, providing vital feeder traffic to major metro airports.
The report also highlights the expansion in international traffic, which is poised to rise as business travel increases and airlines launch new international routes. To support this growth, airport operators are investing in key infrastructure projects such as new terminal buildings and runways. In addition to aviation-related infrastructure, Indian airports are also focusing on developing non-aeronautical services, including lounges, parking facilities, food courts, and retail spaces. These offerings are expected to play a significant role in increasing overall revenue, with an average 17% growth anticipated for private airports between FY25 and FY27. Despite the heavy reliance on debt financing, Crisil forecasts that the strong revenue growth and stable regulatory environment will help maintain the robust credit profiles of private airport operators through FY27.