According to ICRA Report on Indian Airport Infrastructure overall air passenger traffic growth moderated to 2% in FY2026 to reach 420 million. Further, ICRA estimates the passenger traffic to grow by 1-3% in FY2027 to reach 424-432 million owing to West Asian crisis and higher fuel cost. Capex for the sector is expected to remain high which include both greenfield and brownfield expansion and likely to cross Rs. 1.0 lakh crore over the medium term.
- Passenger traffic@ for FY2026 witnessed a moderate growth of 2% to 420 million over 412 million in FY2025, amid geopolitical tensions, lower availability of aircrafts, supply disruptions caused by FDTL restrictions and cross-border tensions. Further, as per ICRA’s estimates, passenger traffic growth likely to grow by 1-3% in FY2027 to reach 424-432 million. However, further disruptions owing to West Asian crisis and elevated fuel prices may pose downside risk to our estimates.
- Since the onset of the West Asian crisis, international air traffic at Indian airports witnessed a sharp decline, with air passenger volumes and aircraft movements contracting by around 20% and 17%, respectively, in March 2026 over February 2026. Thereafter, volumes recovered steadily on a month-on-month basis, however, international passenger volumes were lower by 9% YoY during 4M FY2027. While traffic is expected to normalise over the coming months, any further escalation of geopolitical tensions in the region and a sustained elevated ATF prices could pose downside risks to the pace of recovery.
- Revenues for ICRA’s sample set* are likely to grow by 6-8% in FY2027, supported by increase in aeronautical revenues amid implementation of new tariff orders for the control period (CP), ramp-up of non-aeronautical and real estate revenues and moderate growth in passenger traffic. The operating margins are likely to remain stable at around 50% in FY2027 and FY2028.
- Aircraft traffic# growth remained muted at 1% in FY2026, on the back of lower growth in domestic aircraft volumes amid supply-side constraints, FDTL restrictions, and the West Asian crisis. Further, ICRA expects aircraft traffic growth to remain muted at 0-2% in FY2027, supported by expected higher growth in domestic aircraft movements, given the low base effect albeit likely to be impacted by high ATF prices. International aircraft traffic is likely to be impacted by the ongoing West Asian crisis and ensuing global economic activity.
- Capex investments in airport infrastructure are likely to remain high with more than Rs. 1.0 lakh crore of capex expected to be incurred over the next 4-5 years, including new greenfield airports, brownfield expansions and other expansion projects under the Airports Authority of India (AAI).
