Cumulative Capex Of Airports Expected To Grow 12 PC At Rs 60,000 CR In 3 Years: Report

Mumbai: The cumulative capex (capital expenditure) of Indian airports is expected to grow 12 per cent at Rs 60,000 crore in the three years through FY27 from Rs 53,000 crore during 2022-2024, to add the required infrastructure for about 65 million passengers per annum, ratings agency CRISIL said on Thursday.

CRISIL said 70 per cent of this capex is expected to be funded through debt. The ratings agency said its projections are based on a study of 11 private airports in the country that account for 60 per cent of the total passenger traffic in FY24.

In addition to the expected growth in passenger traffic, an increase in tariffs and spending within the airport ecosystem will lift revenue of private Indian airports at an average growth rate of 17 per cent between FY25 and FY27, it said.

That, coupled with improved funding access and a predictable regulatory regime, will support the strong credit profiles of private airports.

"The number of passengers at Indian airports is expected to clock a compounded annual growth rate (CAGR) of 8-9 per cent over fiscals 2025-2027 from 376 million last fiscal.

Growth in domestic traffic, which comprises over 80 per cent of overall volume, will ride on rising demand from the business and leisure segments and government push to increase penetration of air travel," said Manish Gupta, Senior Director and Deputy Chief Ratings Officer, CRISIL Ratings, As of July 2024, the government had operationalised 84 airports and 579 routes under its regional connectivity UDAN scheme to increase regional penetration, CRISIL said, adding that while the impact is small at present, with air traffic in these airports contributing around 2 per cent of domestic air traffic, these regional routes are important as they provide feeder traffic to the metro airports.

International traffic will also grow, driven by increased business travel, easing visa requirements, and improving connectivity with airlines adding new routes, it said.

To cater to this growth, airport operators are investing in aviation-related infrastructure such as terminal buildings and runways to create room for increased passenger flow.

Additionally, airports are developing non-aeronautical offerings such as lounges, car parking, food and beverage spaces and retail outlets, which will help increase revenue, too, the ratings agency said.

"Although around 70 per cent 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 per cent in revenue of airports in the CRISIL Ratings study," CRISIL Ratings Director Ankit Hakhu said.

He also said the revenue growth will be driven by rising passenger traffic, a regulated increase in aeronautical tariffs and an increase in non-aeronautical revenue.