Airport infrastructure investment to surpass ₹60,000 crore between 2025-2027: CRISIL.

Private Indian airports are poised to invest over ₹60,000 crore in infrastructure development between fiscal years 2025 and 2027, a 12% increase from the ₹53,000 crore allocated during 2022-2024, according to a recent CRISIL Ratings report. This investment aims to cater to a projected 65 million additional passengers annually, supporting the rapid growth of India's aviation sector.

The report forecasts a 17% increase in private airport revenue over the next three years, driven by higher passenger traffic, tariff adjustments, and improvements in services. With a combination of easier access to funding and consistent regulations, airport operators are expected to maintain strong credit profiles.

The analysis, which covers 11 private airports handling 60% of total passenger traffic in fiscal 2024, predicts a compound annual growth rate (CAGR) of 8-9% in passenger numbers from 376 million in the previous fiscal. This growth will be propelled by rising demand from both business and leisure travelers, along with government initiatives to increase air travel penetration.

As of July 2024, under the Ude Desh ka Aam Naagrik (UDAN) scheme, 84 airports and 579 routes have become operational, contributing to the expansion of regional connections. These routes, currently accounting for 2% of domestic traffic, serve as essential feeders to major metropolitan airports. International travel is also set to grow, benefiting from boosted business activities, relaxed visa procedures, and expanded airline networks.

In response to this growing demand, airport operators are focusing on enhancing infrastructure, with new lounges, parking spaces, and retail outlets planned to increase capacity and revenue streams.

Ankit Hakhu, Director at CRISIL Ratings, noted that although approximately 70% of the capital expenditure will be funded through debt, the revenue growth driven by rising passenger numbers and tariff adjustments will ensure that private airports maintain strong financial health. Aeronautical tariffs, which make up half of total earnings, are expected to increase by 15% in the 2025-2026 period. These tariffs, which include charges from passengers, airlines, and cargo operators, help cover infrastructure costs and provide returns on capital investments.

Non-aeronautical revenue, including retail and other services, is projected to rise by 10%, while the debt service coverage ratio is expected to improve to 1.45 times from the 1.1-1.3 times recorded during the pandemic years.

Private airports have also successfully raised over ₹10,000 crore in the last two fiscal years at favorable interest rates, despite the challenges posed by higher repo rates.

However, the sector faces potential risks, including issues related to aircraft availability and rising fuel costs driven by geopolitical tensions, which could impact both passenger numbers and operational expenses. Despite these challenges, the outlook for the airport infrastructure sector remains positive, with significant growth anticipated in the coming years.

ET