Passenger traffic at Indian airports to grow at 7 pc CAGR over FY25-FY27: Report

New Delhi, Aug 29 Passenger traffic at Indian airports is projected to grow at a CAGR of 7 per cent over FY25–FY27, normalising from the earlier pre-Covid estimates of 9 per cent, a report said on Friday.

"The long-term growth outlook remains robust, owing to favourable demographics, conducive regulations, rising non-aero revenues per passenger, and increasing airport city-side development," CareEdge Ratings said in a report.

The report stated that passenger traffic is expected to expand from 412 million in FY25 to 470 million by FY27.

India is the third-largest aviation market after the US and China, and Indian airports continue to handle a steady share of global traffic.

This underscores the structural demand potential that will continue to drive investments in capacity expansion and modernisation of airport infrastructure, the report highlighted.

"The aviation sector in India is currently experiencing a transformative phase, fuelled by its status as home to the world's fastest-growing air passenger markets.

The strategic investments in airport infrastructure, capacity expansion, and rising private participation are set to drive the next phase of infra growth," said Rajashree Murkute, Senior Director, CareEdge Ratings.

"We expect investments in the key infra sector, such as roads, ports, airports, and logistics, to act as a multiplier for GDP and urbanisation. Renewable energy, backed by policy support and declining storage costs, will drive the next phase of capacity addition," Murkute added.

According to the report, a conducive regulatory environment continues to encourage private participation and long-term investments in infrastructure, while favourable demographics -- characterised by a young population, an expanding middle class, and an increasing propensity to travel -- are driving sustained passenger growth.

"In addition, the rising trend of non-aeronautical revenue per passenger through retail, food and beverage, parking, and other commercial avenues is strengthening profitability and reducing dependence on aero charges," the report highlighted.

Furthermore, city-side development has emerged as a key opportunity, with potential in real estate, hospitality, logistics, and commercial spaces, transforming airports into integrated urban hubs and unlocking significant long-term value.

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