Private Indian airports are set to invest more than Rs 600 billion (bn) in infrastructure development between 2025 and 2027, marking a 12 per cent increase from the Rs 530 bn allocated during 2022-2024, according to a recent CRISIL Ratings report. This expansion aims to accommodate an additional 65 million passengers annually, driving a significant growth in the sector. The report forecasts a 17 per cent growth in revenue for private airports during fiscals 2025-2027, fuelled by higher passenger traffic, tariff hikes, and enhanced services. Improved funding access and stable regulations are expected to maintain strong credit profiles for these airports. CRISIL’s analysis, which covers 11 private airports handling 60 per cent of India’s total passenger traffic, projects a compound annual growth rate (CAGR) of 8-9 per cent in passenger numbers from 376 million in 2024. Domestic traffic, which makes up over 80 per cent of total volume, will see growth driven by both business and leisure travel, as well as government initiatives to expand air travel access. The Ude Desh ka Aam Naagrik scheme has already made 84 airports and 579 routes operational, with regional connections, which currently account for 2 per cent of domestic traffic, serving as feeders to major metropolitan airports. International travel is expected to increase, supported by growing business activities, simplified visa processes, and expanded airline routes. To support this growth, airport operators are enhancing their infrastructure by adding new facilities like lounges, parking, and retail outlets. CRISIL expects that 70% of the capital expenditure (capex) will be funded through debt, but the credit profiles of private airports will remain strong, thanks to an anticipated 17% revenue growth. This will be driven by rising passenger numbers, regulated increases in aeronautical tariffs, and growing non-aeronautical revenue. Aeronautical tariffs are expected to rise by 15 per cent in both fiscals 2025 and 2026. These regulated charges, collected from passengers, airlines, and cargo operators, will help recover infrastructure costs and deliver returns on capital. Aeronautical revenue is projected to grow by 24% during the same period, while non-aeronautical revenue is set to increase by 10%. The debt service coverage ratio is expected to improve to 1.45 times from the 1.1-1.3 times seen during the pandemic years of 2021-2023. Despite rising repo rates, private airports have successfully raised over Rs 100 bn in the last two fiscals at favourable interest rates. The regulatory environment has become more predictable, with tariff adjustments providing a stable framework for financing expansion and covering operational expenses. However, challenges such as aircraft availability and geopolitical tensions affecting fuel prices and passenger numbers could impact growth.