Airport operators will pump in a cumulative Rs 60,000 crore in capital expenditure in the three years through fiscal 2027, up 12 percent compared to Rs 53,000 crore during fiscals 2022-24, to create the requisite capacity as the industry is adding 65 million passengers per annum, says a report.
In addition to expected growth in passenger traffic, increase in tariffs and spending within the airport ecosystem will lift revenue of private airports to an average growth of 17 percent per annum between fiscals 2025 and 2027, Crisil said Thursday in a report based on the 11 private airports accounting for 60 percent of the overall passenger traffic and 95 percent of private passenger traffic in fiscal 2024.
According to Manish Gupta, a senior director and deputy chief ratings officer at the agency, the number of air passengers is expected to grow 8-9 percent annually over fiscals 2025-27 from 376 million last fiscal.
He said domestic traffic growth, which comprises over 80 percent of overall volume, will ride on rising demand from business and leisure segments and government push to increase penetration of air travel.
As of July 2024, the government had operationalised 84 airports and 579 routes under its Udan scheme which seeks to connect small towns. While the impact is small at present, with air traffic in these airports contributing 2 percent, these regional routes are important as they provide feeder traffic to the metro airports.
To cater to this growth, airport operators are investing in infrastructure such as terminal buildings and runways to create room for increased passenger flow. Additionally, airports are also developing non-aeronautical offerings such as lounges, car parkings, food and beverage spaces and retail outlets, which will help increase revenue, too.
According to Ankit Hakhu, a director with the agency, although 70 percent of the Rs 60,000 crore likely capex is expected to be funded by debt, credit profiles of these airports will remain strong during this period due to an average projected revenue increase of 17 percent.
Revenue growth will be driven by rising passenger traffic, a regulated increase in aeronautical tariffs and an increase in non-aeronautical revenue, he added.