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Capital expenditure by small private airports in India is projected to increase by an average of 50-60 per cent over the next three years, driven largely by a notable rise in terminal utilisation levels, according to a report by Crisil Ratings released on Monday.

This rise in spending is tied to capacity augmentation efforts needed to meet surging travel demand, reported PTI.

While smaller airports plan significant infrastructure upgrades, large private airports are expected to pull back on capital spending during the same period. This is attributed to the completion or near-completion of their ongoing expansion cycles. As a result, Crisil estimated that total private airport capex will experience a slight slowdown, falling by 10-15 per cent to approximately Rs 40,000 crore over the next three years.

Crisil’s findings are based on an evaluation of capex activity across 11 operational private airports and two that are set to begin operations soon. Together, these airports account for over 95 per cent of the country’s private airport passenger traffic.

Small Airports to Expand 1.5 Times by FY28

Airports with annual passenger capacities under 20 million—including those in Ahmedabad, Goa, Guwahati, Jaipur, Lucknow, Mangalore, and Trivandrum—have been classified as small private airports in Crisil’s study. These facilities are expected to undertake expansion projects that could increase their current capacities by up to 1.5 times by fiscal 2028.

“This is in response to escalating travel demand and moderate capacity on the ground,” said Ankit Haku, Director at Crisil Ratings. Passenger traffic at these airports grew at an impressive compound annual growth rate of nearly 45 per cent between FY22 and FY25, according to the report.

However, capacity growth lagged behind, registering a more modest CAGR of about 20 per cent during the same period. Consequently, terminal utilisation levels have surged, ranging from 60 to 90 per cent, prompting the need for added capacity.

In contrast, large airports—those with passenger capacities over 20 million and situated in metro regions such as Delhi-NCR, Mumbai MMR, Bengaluru, and Hyderabad—have already invested heavily in expansion. This has helped maintain terminal utilisation levels at a steady 80-85 per cent, thereby reducing the urgency for further capex.

Capex Intensity Rises, but Risks Remain Contained

Crisil expects capex intensity, measured as the ratio of capex to earnings before interest, taxes, depreciation, and amortisation (EBITDA), to more than double for small private airports. Despite this increase, the report suggests that project risks are under control. “These are expansions of existing sole airports in their respective cities. Further their sponsors' expertise in operating large private airports and their strong fund-raising capabilities also mitigates some of the risks,” said Gauri Gupta, team leader at Crisil Ratings.

For large airports, the slowing of new investment will allow them to maximise the utility of their existing capacities. Passenger traffic at these facilities has grown at around 30 per cent CAGR over the past three fiscal years. “Further, established regulatory tariff framework that provides a pass through of capex costs with reasonable returns remains conducive for the sector,” Gupta added.