Private Indian Airports to Invest Rs 60,000 Crore in Infrastructure by 2027
Private airports in India are embarking on a major expansion plan, committing to invest over Rs 60,000 crore by fiscal 2027, according to a recent report by CRISIL Ratings. This investment surge comes in response to the increasing demand for air travel, with an additional 65 million passengers expected annually. The growth of both domestic and international air traffic is anticipated to continue at a steady pace, further driving this large-scale infrastructure development.
The report highlights that this planned investment represents a 12% increase over the previous period, where private airports committed Rs 53,000 crore between 2022 and 2024. The expansion is geared towards managing the rising passenger numbers, which are projected to grow at a compound annual growth rate (CAGR) of 8-9% between fiscal years 2025 and 2027. Much of this demand will be driven by business and leisure travel, alongside government initiatives like the Ude Desh ka Aam Naagrik (UDAN) scheme, aimed at making air travel more accessible to the masses.
Manish Gupta, Senior Director and Deputy Chief Ratings Officer at CRISIL Ratings, explained that domestic air traffic, which accounts for over 80% of total passenger volume, will be a key factor in driving growth. He also noted that the UDAN scheme, which has already facilitated the operationalisation of 84 airports and 579 routes as of July 2024, will play an important role in expanding regional connectivity. This has allowed smaller regional airports to become feeders to larger metropolitan hubs, contributing significantly to the overall growth in passenger traffic. Revenue projections for private airports during the 2025-2027 period are promising. A 17% increase is expected, driven by higher passenger numbers, tariff adjustments, and the expansion of airport services. Specifically, revenue from aeronautical activities is projected to rise by 24%, while non-aeronautical revenue—which includes retail, parking, and other services—should increase by 10%. Regulatory tariff increases are expected to play a role in this growth, with aeronautical charges set to rise by 15% in the next two fiscal years.
Ankit Hakhu, Director at CRISIL Ratings, noted that while approximately 70% of the capital expenditure (capex) will be financed through debt, the financial outlook for private airports remains strong. The anticipated revenue growth, coupled with regulated tariff increases and the expansion of non-aeronautical income streams, will support the creditworthiness of these airports. The debt service coverage ratio (DSCR), a key measure of financial health, is expected to improve to 1.45 times, a significant recovery from the lower levels seen during the pandemic. While the outlook for private airports is generally optimistic, there are potential challenges. The availability of aircraft, geopolitical tensions affecting fuel prices, and potential fluctuations in passenger volumes remain concerns for the industry. However, the increasingly stable and predictable regulatory environment offers investors greater confidence in the long-term prospects of India’s aviation sector.
The investment in airport infrastructure reflects a broader vision for India’s aviation industry to position itself as a leading global aviation hub. Private airport operators are not only focused on increasing capacity to handle more passengers but are also prioritising enhancements in passenger experience. Upgrades to lounges, retail outlets, parking spaces, and other facilities will significantly improve the overall travel experience, making air travel more comfortable and convenient for the growing number of passengers. These investments in airport infrastructure are also expected to support India’s economic growth by improving connectivity and accessibility, ultimately benefiting both business and tourism sectors. As the aviation industry continues to grow, India’s airports are set to play an increasingly important role in fostering the country’s economic development. With the ongoing expansion of both infrastructure and services, India’s private airports are well-positioned to meet the growing demands of air travel, helping to make the country a key player in the global aviation market.
