Delhi airport's shops, restaurants, and rentals outpace aviation revenue

Traditional aeronautical revenue contributed just 20 per cent to Delhi airport's total earnings in the first nine months of FY25, while 57 per cent came from non-aero activities

For an airport, one would expect its primary business to be aircraft operations — landing fees, parking charges, and passenger security fees. But at Delhi’s Indira Gandhi International Airport, aviation-related services now take a backseat. Traditional aeronautical revenue contributed just 20 per cent to the airport’s total earnings in the first nine months of FY25, while 57 per cent came from non-aero activities — retail, duty-free shopping, advertising, food and beverages, cargo, and commercial rentals, according to a report by Livemint.

 

Delhi airport, the busiest in the country, handled over 20 million passengers in the October-December quarter — the highest in its history. Passenger traffic grew by 8.3 per cent in Q3 FY25, while revenue increased by 8.1 per cent in the same period.

   

Over the first nine months of FY25, Delhi accounted for 17 per cent of India’s domestic air traffic and 28 per cent of its international traffic, solidifying its role as the country’s primary global gateway. With Air India aggressively expanding its operations, this position is set to strengthen further.

 

Meanwhile, GMR Airports Limited, India’s largest private airport operator, posted a Rs 49 crore loss in Q3-FY25 despite record passenger traffic at its key hubs, Delhi and Hyderabad. The company, which has France’s Groupe ADP as a stakeholder, cited high finance costs and debt burdens as the primary reasons for the loss, even as revenue surged.

 

Commercial success overshadows aviation earnings

 

However, Delhi airport’s earnings reveal a striking shift — traditional aeronautical services, such as landing fees, aircraft parking, and passenger security charges, contributed just 20 per cent of total revenue. Instead, the bulk — 57 per cent — came from non-aero activities like retail, duty-free, advertising, food and beverages, cargo, and commercial rentals.

 

For the nine months ending December 2024, Delhi airport generated a gross income of Rs 3,775.3 crore, of which Rs 597 crore came from commercial rentals, primarily driven by the development of its land bank. This trend indicates that the airport increasingly functions more like a commercial hub than a transportation facility.

 

Within non-aero revenue, retail and duty-free sales accounted for 28 per cent, space rentals contributed 18 per cent, and cargo operations made up 14 per cent. Food and beverage sales, which grew the fastest at 23 per cent, formed 10 per cent of the total. Notably, the average spending per passenger at Delhi Duty Free stood at Rs 1,026 in the first nine months of FY25.

 

Government revenue share limits profitability for operators

 

Despite these robust earnings, high revenue-sharing agreements have kept Delhi airport’s profitability in check. Under a 2006 concession deal, 45.99 per cent of total revenue must be shared with the government. This model, introduced during India’s first wave of airport privatisation, channels funds to the Airports Authority of India (AAI) for reinvestment in smaller or underutilised airports.

 

However, the financial burden of this arrangement limits Delhi airport’s ability to fully capitalise on its revenue growth. Unlike newer privatisation models that mandate a per-passenger fee structure, Delhi operates under a legacy system that significantly impacts its bottom line.

 

A global trend in airport economics

 

Airports worldwide are increasingly relying on non-aero revenue to offset infrastructure costs. According to the 2019 ACI Airport Economics Report, non-aero revenue accounted for 40 per cent of total airport earnings globally before Covid-19 outbreak. Since then, airports have further diversified their revenue streams.

 

Singapore’s Changi Airport, for instance, generates 55 per cent of its income from non-aero activities, closely mirroring Delhi’s revenue composition. The shift towards commercial revenue is a strategic move, as airports seek to maximise earnings from high-traffic zones by developing retail and hospitality services.