Indian airport operators are expected to witness 18-20% topline year-on-year (y-o-y) growth this fiscal, driven by a sustained improvement in passenger traffic, tariff hikes, and the ramp-up in non-aeronautical revenues, ratings agency ICRA said on Thursday.
The FY25 saw an 11% expansion in international traffic and a 9% rise in domestic traffic. The growth will also be fueled by new investments. The airport sector is expected to attract an investment of Rs 1 lakh crore over 4-5 years, according to ICRA.
The rating agency estimates overall air passenger traffic to grow at a healthy 7-9% y-o-y to reach 440-450 million in FY26, on the back of around 10% estimated increase in the just concluded financial year, it said. The overall passenger traffic (domestic and international) is estimated at 412-415 million in FY25, as per ICRA.
It said its estimation is based on a sample set of airports, including those managed and operated by the Airports Authority of India (AAI), as well as Delhi, Bangalore, Hyderabad and Cochin International Airports, which operate under the public-private partnership (PPP) model.
\However, due to the capacity bottlenecks faced by some airports, the sector will continue to see substantial capital expenditure, it said. The investment of more than Rs 1 lakh crore is expected over the next 4-5 years, including greenfield airports such as Jewar (Noida), Navi Mumbai, Bhogapuram (AP) Parandur (Chennai).
These expected investments will also go into brownfield expansions, including Bangalore, Hyderabad, Cochin, Mumbai and Nagpur airports and upgradation of airports under the AAI, it said.
\International traffic will bolster the airport sector as it is also expected to outpace domestic traffic growth, driven by strong international tourism activity and improved connectivity to new destinations.
“International traffic continues to outpace domestic traffic growth…the growth momentum is likely to sustain in FY2026 as well, with expected y-o-y growth of 7-11% and 6-8% in international and domestic traffic, respectively,” Vinay Kumar G, sector head, corporate ratings, ICRA said.
The revenues of ICRA’s sample set companies are likely to grow by a robust 18-20% y-o-y in FY26, driven by the sustained improvement in both passenger traffic, increase in tariffs at Delhi, Bangalore and Hyderabad airports and ramp-up in non-aeronautical revenues, Kumar G added.
The sustained healthy growth momentum was driven by a steady rise in international travel amid improving connectivity to new destinations, a continued uptick in leisure and business travel in the domestic segment, along with enhanced air connectivity to tier II cities and key tourist destinations, it said.
The healthy profitability margins, debt coverage metrics are expected to remain comfortable in FY26, despite higher interest expenses and debt repayments associated with the commercialisation of capex programmes at some of the key airports.