Rating agency ICRA projects healthy growth of 8-11 per cent year-on-year (YoY) in overall air passenger traffic for FY25, reaching an estimated range of 407-418 million passengers. This growth is attributed to a significant rise in both leisure and business travel. Improved domestic connectivity with new destinations and a continued increase in international travel are also contributing factors.

Passenger traffic in FY24 already reached 376.4 million, a 15 per cent YoY increase, surpassing pre-Covid levels by 10 per cent. Vinay Kumar G, Vice President & Sector Head, Corporate Ratings, ICRA, highlighted India’s exceptional recovery compared to other major aviation markets globally.

“The recovery in the Indian airport passenger traffic is one of the best compared to other major global counterparts,“ said Kumar. “India accounted for 4.2 per cent of the global passenger traffic in calendar year (CY) 2023, and its share has improved from 3.8 per cent in CY2019.“

While global passenger traffic only recovered to 96 per cent of pre-pandemic levels in CY2023, Indian airports have surpassed that mark, reaching 106 per cent. This is credited to India’s strong economic growth and the addition of new air routes. ICRA expects this outperformance to continue.

The report also details the performance of individual airports. Delhi Airport has witnessed a 105 per cent recovery compared to pre-Covid levels, while Mumbai, Bangalore, and Hyderabad airports have achieved recoveries of 110 per cent, 111 per cent, and 109 per cent, respectively.

The Udan (Ude Desh Ka Aam Naagrik) scheme, which aims to connect underserved and unserved parts of the country, has also shown significant progress. Passenger traffic at Udan airports has grown fivefold, from 0.4 per cent in 2018 to 2 per cent in 2024.

“With more and more Udan airports being developed, and airlines offering direct flight services, we have witnessed a multifold increase in this segment,“ remarked ICRA representatives. “Though, absolute numbers may not be large but the growth is surely visible.“

The Airports Economic Regulatory Authority (AERA) determines tariffs for major airports in India, with these tariffs fixed for five-year control periods (CPs). The regulatory regime has seen improvements in recent years, with a reduction in delays related to tariff orders. Delays have dropped to less than 1.5 years for the third CP, compared to 3-3.5 years during the first and second CPs.

Businessline had reported that tariff revision proposals for Adani-owned Mumbai International Airport Ltd (MIAL) and GMR-owned Delhi International Airport Ltd (DIAL) are likely under-way by the Airports Economic Regulatory Authority (AERA). The tariff revision will be for user development fee at airports.

ICRA said that they expect an over 100 per cent increase in tariff at Delhi airport in light of the capex. 

ICRA expects airport operators’ revenues to grow by around 15-17 per cent YoY in FY2025. This growth is driven by factors such as sustained improvement in passenger traffic, potential tariff increases at some major airports, and a rise in non-aeronautical revenue streams.

“The revenues of ICRA’s sample set are likely to grow by around 15-17 per cent YoY in FY2025,“ said Kumar. “With healthy profitability margins, the debt coverage metrics are expected to remain comfortable, despite higher interest outgo and debt repayments with the commercialisation of the capex programme at some of the key airports. The credit profile of airport operators is projected to remain strong, supported by healthy accruals and comfortable liquidity.“