The overall passenger traffic will touch record highs of 373-380 million in FY24, translating into a YoY growth of 14-16% over FY23, ratings agency ICRA has said in its recent report, while maintaining a ‘stable’ outlook on the Indian airport infrastructure sector.

The current estimate is higher than ICRA’s earlier estimate of 12-14%. The upcoming festive and holiday season is likely to drive passenger growth over the next 4-5 months.

Vinay Kumar G, sector head, corporate ratings, ICRA, says the improved occupancy in other airlines as well as the addition of new routes has largely offset the impact of the Go-First bankruptcy on overall passenger traffic. This is also evident from a handsome 19% YoY growth in domestic passenger traffic during 7M FY2024.

The data shows air traffic has consistently exceeded pre-Covid levels from April 2023, supported by robust growth in business and leisure travel in the domestic market, along with improvement in air connectivity to tier II cities or tourist destinations.

"Given this, the domestic traffic is expected to reach 110-112% of pre-Covid levels in FY2024. The international traffic recovered to 98% in 7M FY2024 and is expected to cross to pre-Covid levels in FY2024,” says Kumar G.

The ICRA report says aero revenues of the major private airports recovered to around 85% of pre-Covid levels in FY2023 on the back of higher passenger and aircraft traffic, and are likely to reach 107-110% of pre-Covid levels in FY2024. 

Notably, the top five airports in India -- Delhi, Mumbai, Bengaluru, Hyderabad and Cochin -- developed under the PPP (public-private partnership) model, account for 50-55% of this passenger traffic. 

The recovery of aero revenue can largely be seen in line with broader trends in passenger traffic recovery. The ratings agency believes the recovery in "non-aero revenues" is also much stronger and is estimated to cross 120% of pre-Covid levels in FY2024, on a significant increase in lease rentals with large terminal areas getting added with the completion of the expansion at the PPP airports.

“The revenues for these airports are expected to grow by 16-18% in FY2024 on the back of increase in passenger traffic growth, ramp-up of non-aero revenues, and increase in tariffs at some of the major airports," says Vinay. 

Notwithstanding the sizable capex planned towards capacity expansion in the medium term, ICRA expects the coverage metrics and liquidity position to remain strong for the industry players.”

To meet the growing air traffic demands, AAI and other Airport Operators have targeted a capital outlay of approximately Rs 98,000 crore in the airport sector during 2019-2024 for the construction of Greenfield Airports and new terminals, expansion and modernisation of existing terminals and strengthening of runways, among other activities.

Additionally, airports are transitioning to 100 % green energy, with 55 airports, including 49 managed by the Airports Authority of India (AAI), currently operating on 100% green energy.

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