Indian airport operators are poised for a significant financial boost, anticipating a robust 18-20% annual growth in revenue during this fiscal year. This optimistic outlook is largely fueled by a steady rise in passenger numbers, increased tariffs, and an expansion of non-aeronautical income streams, as reported by the ratings agency ICRA.

Growth in Passenger Traffic

In FY25, international air traffic surged by 11%, while domestic travel saw an impressive 9% increase. This uptrend in passenger numbers is expected to continue, supported by fresh investments. The airport industry is projected to attract an astounding ₹1 lakh crore over the next four to five years, according to ICRA’s insights.

• Projected growth in air passenger traffic for FY26: 440-450 million
• Estimated growth rate: 7-9% year-on-year
• Passenger traffic figures for FY25: 412-415 million

Investments Driving Expansion

ICRA’s projections are based on a representative sample of airports, including facilities managed by the Airports Authority of India (AAI) and prominent airports like those in Delhi, Bangalore, Hyderabad, and Cochin, which operate under a Public-Private Partnership (PPP) model.

Despite the promising growth, certain airports are grappling with capacity constraints. Consequently, the sector is expected to witness substantial capital investments to alleviate these bottlenecks. The anticipated ₹1 lakh crore investment will encompass both greenfield and brownfield projects, which include:

• Greenfield airports: Jewar (Noida), Navi Mumbai, Bhogapuram (Andhra Pradesh), and Parandur (Chennai)
• Brownfield expansions: Upgrades at Bangalore, Hyderabad, Cochin, Mumbai, and Nagpur airports, along with enhancements at AAI-operated facilities.

International Traffic Outpacing Domestic Growth

International travel is set to be a major driver for the airport sector, with projections indicating it will surpass domestic traffic growth. Factors contributing to this include a resurgence in international tourism and improved connectivity to new destinations.

Vinay Kumar G., the head of corporate ratings at ICRA, noted that “International traffic continues to outpace domestic traffic growth. This upward trend is expected to persist into FY2026, with projected growth rates of 7-11% for international travel and 6-8% for domestic travel.”

Strong Revenue Growth Ahead

The revenue for the airports sampled by ICRA is anticipated to grow robustly by 18-20% year-on-year in FY26. This growth will be driven by:

• Increased passenger volumes
• Higher tariffs at major airports such as Delhi, Bangalore, and Hyderabad
• Enhanced non-aeronautical revenue streams

The continuing upward momentum in the sector is attributed to a consistent rise in international travel, coupled with improved domestic air connectivity to secondary cities and popular tourist destinations.

Financial Stability

Despite the challenges posed by rising interest expenses and debt repayments associated with capital expenditure programs, ICRA expects that profit margins and debt coverage ratios will remain stable and comfortable throughout FY26.

In conclusion, the Indian airport sector is on a promising trajectory, with significant investments and a healthy growth forecast, making it an exciting area to watch in the coming years.