Private airports to double their capex to Rs 42,000 crore in next five years: Crisil
New Delhi : Expecting a gradual recovery in air traffic and assured returns on their investment, private airport companies would together spend Rs 42,000 crore on capacity expansion over the five years through fiscal 2026.
“That is more than double the capital expenditure (capex) they incurred in the previous five fiscals,” said research and rating firm Crisil while estimating the investment by private airport operators.
Ankit Hakhu, Director, CRISIL Ratings said economic growth will boost air traffic volumes given the impact on increase in per capita consumption and shift in preference towards an efficient mode of commute.
“Given that air traffic in India tends to grow faster than the GDP growth and government’s push to connect lower tier cities with metros under its Regional Connectivity Scheme (RCS), we expect a robust 8.5 per cent annual air traffic growth at Indian airports till fiscal 2026 (compared to fiscal 2020 levels),” he said.
This would mean an additional 190 million passengers will fly pan India by fiscal 2026 over the pre-pandemic base of fiscal 2020 of 340 million passengers, taking the overall traffic to 530 million passengers by fiscal 2026.
Of this, 70 per cent or 375 million passengers are expected to be handled by private airports in fiscal 2026, up from 50 per cent in fiscal 2020.
The higher share of private airports has been attributed largely to overall traffic growth and new airports getting privatised during this period.
Crisil said despite significant capacity expansion proposed by private operators, strong increase in demand could keep utilisation rates of these airports around 100 per cent.
“While the high utilisation rate justifies the large capex, credit profiles of these airports will also be supported by their regulatory business model. Tariffs for these airports are based on a fixed regulated return (weighted average of 16 per cent on the equity investment and the market cost of debt) on capex in the next five years, which provides certainty regarding cash-flow return on the capex,” said Varun Marwaha, Associate Director at CRISIL Ratings.
