Congestion at India’s four major airports—New Delhi, Mumbai, Bengaluru, and Hyderabad, which together handle over half the country’s air passenger traffic—would continue over the medium term, says a report by research firm Crisil. Currently, these airports on an aggregate operate at over 130% of their capacity. With healthy passenger traffic growth projected, this rate is expected to rise further in the next 12 months.

“Capacity at these four airports will increase a cumulative 65% to 228 million annually (from 138 million now) by fiscal 2023. However, traffic is expected to grow strong, at up to 10% per annum over the same period,” says Manish Gupta, senior director, Crisil Ratings. “Because the additional capacities will become operational in phases only around fiscal 2023, high passenger growth will add to congestion till then.”

While operationalising of capacities in the following two fiscals would bring down utilisation levels, it will still remain high at over 90% in fiscal 2023. According to the Crisil report, ₹38,000 crore in capex, largely debt-funded, is being undertaken by the operators of these airports from 2020 to 2024, the highest to be incurred in a five-year period.

“Despite the unprecedented capex, ratings are likely to be stable, given the strong cash flows expected due to healthy traffic growth, low project risks associated with the capex, and improving regulatory environment,” the report read. Crisil points out that aggregate cash flows at these airports are likely to double by fiscal 2024 and provide a healthy cushion against servicing of debt contracted for capex.

“These airports operate on a hybrid till model, where the non-aero revenue stream partially subsidises airport user fee. Hence rising traffic and increasing monetisation of non-aero assets will pave the way for a more balanced regulatory regime,” says Ankit Hakhu, director, CRISIL Ratings. The non-aero revenue streams include advertising, rentals, food and beverage, and parking, which already comprise around half the revenue of airports. These are expected to grow at over 10-12%.

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