Small private airport capex in India to rise 50-60 pc in next 3 fiscals: Crisil

This will be driven by capacity expansion due to substantial increase in terminal utilisation levels, according to the report by Crisil Ratings.

On the other hand, capex at large private airports - remaining half of the overall upcoming private airport capex - will see a decline during the same period as much of the capacity expansion has been completed or is nearing completion.

"Small private airports are expected to embark on a significant expansion of upto 1.5 times of their current base by fiscal 2028. This is in response to escalating travel demand and moderate capacity on the ground. Strong demand leading to recovery of air traffic movement has yielded a remarkable compound annual growth rate (CAGR) of 45 per cent in passenger traffic at small private airports between fiscals 2022 and 2025," said Ankit Haku, Director, Crisil Ratings.

However, capacity growth at these airports has been relatively sluggish, with a modest CAGR of 20 per cent over this period, resulting in terminal utilisation levels increasing from 60 per cent to 90 per cent and a need to build additional capacity, he added.

Additionally, greenfield airports are set to become operational this fiscal year, with minimal capital expenditure required going forward. Their strategic locations in or near Tier 1 cities minimise offtake risk, enabling a smooth ramp-up of passenger and cargo volumes.

As a result, in the medium term, most capital expenditure will be allocated towards maintenance - refurbishing equipment, upgrading amenities and developing infrastructure - rather than expanding capacity, the report mentioned.

"While capex intensity for small private airports will rise to over 2 times, project risk will be manageable since these are expansions of existing sole airports in their respective cities. Further their sponsors' expertise in operating large private airports and their strong fund-raising capabilities also mitigates some of the risks," said Gauri Gupta, Team Leader, Crisil Ratings.

With moderate project risk and healthy cash flow, the credit risk profiles of private airports will remain stable. That said, geopolitical uncertainties that could impact air travel, timely true ups for lower traffic and approvals for any cost overrun, will bear watching, the report mentioned.