Indian airport operators are expected to post a strong 18–20% y-o-y revenue growth in FY26, driven by rising passenger traffic, tariff hikes, and growth in non-aeronautical revenues, according to ICRA. Total passenger traffic is projected to reach 440–450 million, supported by a ₹1 lakh crore investment in green-field and brownfield projects over the next 4–5 years. International travel growth, improved connectivity, and expanding access to tier II cities are key drivers. Despite capacity constraints and rising debt costs, the sector’s financial health remains robust, with stable profitability, healthy liquidity, and strong debt coverage ratios projected for FY26.
Indian airport operators are projected to register a robust 18–20% year-on-year (y-o-y) growth in revenue this fiscal, driven by rising passenger traffic, tariff hikes, and a strong ramp-up in non-aeronautical revenues, according to ratings agency ICRA. The estimates by ICRA are based on a representative sample of airports, including those operated by the Airports Authority of India (AAI) and major public-private partnership (PPP) airports such as Delhi, Bengaluru, Hyderabad, and Cochin.
Growth trajectory in the airport sector set to continue
In FY25, international air traffic expanded by 11% while domestic traffic rose by 9%. According to the report, the growth was driven by enhanced connectivity to new destinations, a surge in international travel, and sustained growth in domestic leisure and business travel. Improved air access to tier II cities and major tourist hubs further fueled the momentum.
This growth momentum is expected to persist, fueled by substantial investments, as the airport sector is projected to draw over ₹1 lakh crore in capital over the next 4–5 years, as per the ICRA report. This anticipated growth is driven by several key factors:
- Sustained Improvement in Passenger Traffic: ICRA estimates overall air passenger traffic to grow by 7–9% y-o-y, reaching 440–450 million in FY26.
- Tariff Hikes at Major Airports: Increases in tariffs at key airports, including Delhi, Bengaluru, and Hyderabad, are expected to contribute significantly to the revenue growth.
- Ramp-Up in Non-Aeronautical Revenues: Enhanced revenues from non-aeronautical sources, such as retail, food and beverage, and advertising, are anticipated to bolster overall income.
- Substantial Capital Investments:
- The sector is expected to attract investments exceeding ₹1 lakh crore over the next 4–5 years.
- These investments will focus on developing greenfield airports like Jewar (Noida), Navi Mumbai, Bhogapuram (Andhra Pradesh), and Parandur (Chennai), as well as expanding existing airports in Bengaluru, Hyderabad, Cochin, Mumbai, and Nagpur. News24
- Growth in International Traffic: International passenger traffic is expected to outpace domestic growth, driven by strong international tourism activity and improved connectivity to new destinations.
Mr Vinay Kumar G, Sector Head, Corporate Ratings, ICRA, 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 YoY growth of 7-11% and 6-8% in international and domestic traffic, respectively.”
Revenue Growth on the Rise
ICRA noted that revenues among its sample companies are set to grow strongly in FY26, thanks to rising passenger volumes, tariff increases at major airports, and growth in non-aeronautical income streams.
The credit profile of airport operators, , according to the rating agency, is expected to remain stable, supported by healthy accruals and comfortable liquidity. Despite rising interest costs and debt repayments related to large-scale infrastructure projects, ICRA expects profitability margins and debt coverage metrics to remain healthy and stable in FY26.
The agency also stated that despite continued investments, the financial stability of the sector is expected to remain robust. In FY2026, debt coverage indicators are projected to stay healthy, with the interest coverage ratio exceeding 5 times and the debt service coverage ratio (DSCR) remaining above 3.5 times.
However, the sector continues to face capacity constraints, prompting substantial capital expenditure.
ICRA noted that the expected ₹1 lakh crore investment will fund both greenfield projects—such as Jewar (Noida), Navi Mumbai, Bhogapuram (Andhra Pradesh), and Parandur (Chennai)—and brownfield expansions at airports including Bengaluru, Hyderabad, Cochin, Mumbai, and Nagpur. Upgrades at AAI-managed airports are also part of this investment drive.
The Indian airport sector is poised for significant growth in FY26, underpinned by increased passenger traffic, strategic tariff adjustments, diversification of revenue streams, and substantial infrastructural investments.
