Indian airports are projected to invest Rs 60,000 crore over the next three years, a 12% increase from the previous period, to accommodate the rising demand for air travel. This investment, largely debt-funded, will focus on expanding airport infrastructure to support an additional 65 million passengers annually by FY27. The projections were shared in a report by ratings agency CRISIL on Thursday.
The study, based on data from 11 private airports that account for 60% of India’s total passenger traffic, highlights the growing need for modernized infrastructure to handle the increasing flow of domestic and international passengers. With 70% of the capex expected to be funded through debt, these developments are poised to enhance both passenger services and freight handling capabilities. Passenger traffic is expected to grow at a compounded annual growth rate (CAGR) of 8-9% from FY25 to FY27, fueled by a rise in domestic travel, particularly driven by business and leisure sectors, as well as government initiatives to expand air connectivity through the UDAN scheme. This regional connectivity initiative, which has operationalized 84 airports and 579 routes as of July 2024, is crucial in stimulating feeder traffic to major metro airports.
In addition to passenger growth, private airports are anticipating an average revenue increase of 17% from FY25 to FY27. This growth will be supported by increased passenger volumes, higher tariffs, and a rise in non-aeronautical revenue, such as from retail, food and beverage outlets, lounges, and parking services. CRISIL noted that the enhanced revenue streams, coupled with improved access to funding and a stable regulatory environment, will help maintain strong credit profiles for private airport operators. As airports continue to expand their terminal buildings, runways, and other aviation infrastructure, they are also diversifying their offerings to include more non-aeronautical services, which will further contribute to their revenue growth. Despite the heavy reliance on debt for financing, CRISIL’s report suggests that the financial strength of the airports will remain solid, thanks to the projected revenue increases and ongoing improvements in infrastructure. With these significant investments, Indian airports are well-positioned to handle the country’s booming air traffic, contributing to the overall growth of the aviation sector.
