Airport Capex to Grow 12% to Rs 600 Billion by FY27: CRISIL

The cumulative capital expenditure (capex) of Indian airports is projected to rise by 12% to Rs 600 billion by FY27, compared to Rs 530 billion during 2022-24, according to a CRISIL Ratings report. This investment aims to enhance infrastructure to accommodate 65 million additional passengers annually, with 70% of the funding expected to come from debt. The projections are based on a study of 11 private airports, which handled 60% of India’s passenger traffic in FY24. CRISIL anticipates an average annual revenue growth rate of 17% for private airports from FY25 to FY27, driven by increased passenger traffic, higher tariffs, and spending within the airport ecosystem. Passenger volumes are expected to grow at a compound annual growth rate (CAGR) of 8-9% over FY25-27, up from 376 million in FY24. Growth in domestic traffic, accounting for over 80% of the total, will be fuelled by rising demand in business and leisure travel, along with government initiatives to expand air travel penetration. The government’s regional connectivity UDAN scheme, which has operationalised 84 airports and 579 routes as of July 2024, contributes approximately 2% of domestic air traffic. While this is a small share, these routes provide essential feeder traffic to metro airports. International traffic is also expected to rise, supported by increased business travel, relaxed visa policies, and expanded airline routes. To meet the growing demand, airport operators are investing in terminal expansions, new runways, and non-aeronautical facilities such as lounges, retail spaces, and parking, which will further boost revenues. CRISIL highlights that despite 70% of the capex being debt-funded, private airports will maintain strong credit profiles due to robust revenue growth projections. "The revenue growth will stem from rising passenger volumes, regulated tariff hikes, and increased non-aeronautical revenues," said Ankit Hakhu, Director at CRISIL Ratings. (ET)