ICRA predicts Indian airport operators to witness revenue growth of 15-17 per cent in FY 2025

New Delhi, May 16 Overall air passenger traffic is likely to witness healthy growth of around 8-11 per cent YoY (year-over-year) to around 407-418 million in FY2025, supported by a strong pick-up in both leisure and business travel, along with improved connectivity to newer destinations in the domestic segment and the continued uptick in international travel, according to a recent report by ICRA, a leading credit rating agency.

The ICRA said that passenger traffic had already reached 376.4 million (+15 per cent YoY) in FY 2024, surpassing the pre-Covid level by 10 per cent.

The revenues of ICRA's sample set are likely to grow by around 15-17 per cent YoY in FY 2025.

Giving more insights,Vinay Kumar G, Vice President and Sector Head, Corporate Ratings, ICRA, said: "The recovery in the Indian airport passenger traffic is one of the best compared to other major global counterparts. India accounted for 4.2 per cent of the global passenger traffic in CY 2023, and its share in passenger traffic has improved from 3.8 per cent in CY 2019.

"While the global passenger traffic recovered to just 96 per cent of global passenger traffic in CY 2023, the Indian airport passenger traffic revived to 106 per cent of the pre-Covid level owing to strong economic growth as well as the addition of new airport routes. The Indian air passenger traffic is expected to outperform the global trend," he said.

As per ICRA report, the airport operators, regulators and other stakeholders have made significant progress in resolving the long-pending issues, viz., cost of equity, return on security deposits, forex losses, and treatment of real estate income.

"Also, variation in the amount of capex proposed by the operator and disallowed by the regulator had declined significantly to around 10 per cent during the third control period (CP) from 25-30 percent during the first two CPs," it said.

Commenting on the airport operators' performance, Kumar said that the revenues of ICRA's sample set are likely to grow by around 15-17 per cent YoY in FY2025, driven by the sustained improvement in both domestic and international passenger traffic, increase in tariffs at some of the major airports and ramp-up in non-aeronautical revenues.

"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," said Kumar.

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