ICRA expects 18-20% growth for airport operators in FY26 on higher traffic

Indian airport operators are expected to see an 18-20 per cent topline year-on-year growth in this fiscal, driven by a sustained improvement in passenger traffic and tariff hike as well as ramp-up in non-aeronautical revenues, ratings agency ICRA said on Thursday.

At the same time, ICRA estimates overall air passenger traffic growing at a healthy 7-9 per cent Y-o-Y to reach at 440-450 million in FY26, on the back of an around 10 per cent 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.

The ratings agency 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.

Also, given the capacity bottleneck faced by a few airports, the sector will continue to witness substantial capex, it said.

According to ICRA, investments of more than Rs 1 trillion are 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 which include Bangalore, Hyderabad, Cochin, Mumbai and Nagpur airports and upgradation of airports under the AAI, it said.

"International traffic continues to outpace domestic traffic growth, driven by healthy international tourism activity, along with improved connectivity to newer destinations.

"The growth momentum is likely to sustain in FY26 as well, with expected Y-o-Y growth of 7-11 per cent and 6-8 per cent in international and domestic traffic, respectively," said ICRA sector Head for Corporate Ratings Vinay Kumar G.

The healthy rise in international traffic will augur well for the airport sector, given that it is relatively more remunerative than domestic traffic, he said.

"The revenues of ICRA's sample set companies are likely to grow by a robust 18-20 per cent Y-o-Y in FY6, 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 ," said Kumar.

According to ICRA, FY25 saw an 11 per cent expansion in international traffic and a 9 per cent rise in domestic traffic.

The continued healthy growth momentum was driven by a steady increase in international travel amid improving connectivity to newer destinations, continued uptick in leisure and business travel in the domestic segment, along with improvement in air connectivity to tier II cities/ key tourist destinations, it said.

Kumar further said with healthy profitability margins, the debt coverage metrics are expected to remain comfortable in FY2026, despite higher interest outgo and debt repayments with the commercialisation of the capex programme at some of the key airports.

The credit profile of airport operators is projected to remain stable, supported by healthy accruals and comfortable liquidity, ICRA said.