Private airports likely to witness 30 pc rise in topline this fiscal: Report

Private airports in the country are likely to see a 30 per cent jump in the topline this fiscal on the back of rising traffic, a report said on Thursday.

As passenger volume rises, airports will see an increase in aeronautical and non-aeronautical revenues. Aeronautical sources include fees collected from passengers, airlines and cargo operators for the use of infrastructure.

Non-aeronautical sources include advertising, retail, lounge and duty-free shops, credit rating agency Crisil said in its report. About two-thirds of the increase in the revenue of airports is expected to come from aeronautical sources, a 45 per cent growth year-on-year, it added.

This is because almost half the airports in the Crisil Ratings study will clock a pre-determined increase in their aeronautical tariffs by 25 per cent on average.

"An expected increase of around 10 per cent in passenger traffic on the high base of the previous fiscal, coupled with capital expenditure-linked tariff hikes and rising non-aeronautical revenue per passenger, will help grow their revenue of leading private airport operators by around 30 per cent this fiscal," the agency said.

The report is based on a study of 10 private airports that accounted for an estimated 60 per cent of overall passenger traffic in FY24, it added. The rising revenue will restore the cushion for debt servicing to around 1.4 times, taking it back to the level last seen before the COVID-19 pandemic.

Airports had dipped into their cash reserve to service debt during this period. "Taking off from the strong base of last fiscal, passenger traffic growth will continue its momentum in fiscal 2025 and rise more than 10 per cent to over 415 million," said Ankit Hakhu, Director, Crisil Ratings.

Continuing economic growth, opening of more airports and improving regional connectivity are providing the tailwinds necessary for domestic traffic growth, he noted. On the international side, growing business travel and easing visa requirements for countries like Malaysia and Vietnam, reducing wait times for visa applications to Western Europe and improving connectivity to Western and Southeast Asia are significant positives, he added.

Aeronautical tariffs are regulated and allow for cash flow required by airports to service the debt availed for aeronautical capex and a return on equity for the operator. Airports undertook significant expansion during the pandemic to more than double their capacity in anticipation of the current spurt in passenger volume. The current rise in aeronautical tariffs is compensating for these capacity expansions, as per the report.

The remaining one-third of the revenue growth will be driven by non-aeronautical sources, a 15 per cent growth year-on-year, it added. These have been increasing steadily, driven by rising passenger spending on retail and food and beverage, as well as real estate leasing and advertising, according to the ratings agency.