Private Indian airports are set to undertake substantial infrastructure development, with capital expenditure surpassing Rs 60,000 crore through fiscal 2027, representing a 12% increase from Rs 53,000 crore during fiscals 2022-2024, according to a recent report by CRISIL ratings. This expansion aims to accommodate approximately 65 million additional passengers annually.
Private airports’ revenue is projected to grow at 17% between fiscals 2025 and 2027, driven by increased passenger traffic, tariff adjustments and enhanced airport services. These factors, combined with improved access to funding and consistent regulations, will maintain robust credit profiles.
An analysis by CRISIL Ratings, covering 11 private airports that handle 60% of total passenger traffic and 95% of private passenger movement in fiscal 2024, supports these projections.
Manish Gupta, Senior Director and Deputy Chief Ratings Officer, CRISIL Ratings, says, “The number of passengers at Indian airports is expected to clock a CAGR of 8-9% over fiscals 2025-2027 from 376 million last fiscal. Growth in domestic traffic, which comprises over 80% of overall volume, will ride on rising demand from the business and leisure segments and government push to increase penetration of air travel.”
As of July 2024, under the Ude Desh ka Aam Naagrik scheme, 84 airports and 579 routes have become operational. Whilst currently contributing 2% of domestic traffic, these regional connections serve as vital feeders to metropolitan airports.
International travel is expected to increase due to enhanced business activities, simplified visa procedures and expanded airline routes.
Airport operators are expanding aviation infrastructure and developing additional facilities like lounges, parking spaces and retail outlets to accommodate growth and boost revenue.
Ankit Hakhu, Director, CRISIL Ratings, states, “Although ~70% of capex is expected to be funded by debt, the credit profiles of private airports will remain strong over fiscals 2025-27 due to an average projected increase of 17% in revenue of airports in the CRISIL Ratings study. Revenue growth will be driven by rising passenger traffic, a regulated increase in aeronautical tariffs and an increase in non-aeronautical revenue.”
Aeronautical tariffs are projected to increase by 15% in fiscals 2025 and 2026. These regulated charges, collected from passengers, airlines and cargo operators, allow for infrastructure cost recovery and capital returns.
Aeronautical revenue, comprising 50% of total earnings, is expected to grow by 24% during fiscals 2025-27, whilst non-aeronautical revenue should increase by 10%.
The debt service coverage ratio is anticipated to improve to 1.45 times during fiscals 2025-27, recovering from 1.1-1.3 times during the pandemic years of 2021-23.
Private airports have successfully raised over Rs 10,000 crore in the past two fiscals at favourable interest rates, despite increased repo rates.
The regulatory environment has become more predictable, with systematic tariff adjustments supporting expansion costs and operational expenses.
However, potential challenges include aircraft availability issues and geopolitical tensions affecting fuel costs and passenger numbers.
