Will Capital Expenditure at Small Private Airports in India Surge by 50-60% in the Next Three Fiscal Years?

New Delhi, May 12 (NationPress) A recent report indicates that capital expenditure (capex) at small private airports in India – which constitutes nearly half of the anticipated capex for private airports – is projected to increase by 50-60 percent on average during the fiscal years 2026-2028 compared to the previous three fiscal years.

This growth will be propelled by an expansion in capacity due to a significant rise in terminal utilization levels, as noted in the report by Crisil Ratings.

Conversely, capex at large private airports, making up the remaining half of the overall capex for private airports, is expected to decline during the same timeframe, as much of their capacity expansion has been completed or is nearing completion.

“Small private airports are anticipated to undertake a considerable expansion of up to 1.5 times their current capacity by fiscal 2028. This is a response to increasing travel demand and moderate ground capacity. The robust demand, which has led to the recovery of air traffic, has resulted in an impressive compound annual growth rate (CAGR) of 45 percent in passenger traffic at small private airports from fiscal years 2022 to 2025,” explained Ankit Haku, Director at Crisil Ratings.

Nonetheless, the capacity growth at these airports has been relatively slow, with a modest CAGR of 20 percent over the same period. This has led to terminal utilization levels rising from 60 percent to 90 percent, highlighting the urgent need for additional capacity, he added.

Moreover, new greenfield airports are slated to commence operations this fiscal year, requiring minimal capital expenditure going forward. Their strategic locations in or near Tier 1 cities reduce offtake risk, facilitating a smooth increase in both passenger and cargo volumes.

Consequently, in the medium term, a significant portion of capital expenditure will focus on maintenance activities—refurbishing equipment, enhancing amenities, and developing infrastructure—rather than expanding capacity, as the report suggests.

“As capex intensity for small private airports is set to exceed 2 times, project risk will remain manageable since these expansions involve existing sole airports in their respective cities. Furthermore, the sponsors’ expertise in managing large private airports and their robust fundraising capabilities help mitigate some of the risks,” stated Gauri Gupta, Team Leader at Crisil Ratings.

With moderate project risk and stable cash flow, the credit risk profiles of private airports are expected to stay steady. However, geopolitical uncertainties that may affect air travel and the need for timely adjustments for lower traffic and approvals for any cost overruns will require monitoring, the report noted.