India’s airport sector set for ₹1 lakh cr boost: ICRA

New Delhi: India’s aviation infrastructure is gearing up for a significant transformation, with capital expenditure (capex) projected to exceed ₹1 lakh crore over the next four to five years, according to a recent analysis by credit rating agency ICRA.

The report points to ongoing capacity limitations at several key airports, driving the need for sustained and large-scale investment. The upcoming expenditure will focus on the development of new greenfield airports and the expansion of existing facilities.

ICRA noted that continued investment is necessary to address growing demand, stating,“With a number of airports facing capacity constraints, the sector is expected to attract over ₹1,00,000 crore in investments during the next 4–5 years, covering both new greenfield developments and existing airport upgrades.”

Among the major greenfield projects in the pipeline are airports in Jewar (Noida), Navi Mumbai, Bhogapuram, and Parandur (near Chennai). In addition, several major brownfield expansions are planned at airports in Bengaluru, Hyderabad, Cochin, Mumbai, and Nagpur. Various facilities under the Airports Authority of India (AAI) are also scheduled for modernization.

On the demand side, passenger traffic is forecast to see robust growth, with ICRA expecting an annual increase of 7–9%, reaching around 440–450 million passengers by FY2026. This comes on the back of a projected 10% growth in FY2025, bringing estimated traffic to 412–415 million passengers.

The report also predicts strong financial performance across key airport operators. Revenues for ICRA’s sample airports are expected to grow by 18–20% year-on-year in FY2026.

Despite the high levels of capital deployment, the financial stability of the sector is expected to remain solid. ICRA anticipates healthy debt metrics, with an interest coverage ratio exceeding 5 times and a debt service coverage ratio (DSCR) above 3.5 times in FY2026.

Passenger demand continues to be driven by rising international and domestic travel. In FY2025, international passenger numbers rose by 11%, while domestic traffic increased by 9%. The upward trend is attributed to enhanced connectivity to emerging destinations, rising business and leisure travel, and improved links to tier II cities and key tourist hubs.