Indian airport industry's profit expected to grow 35% in FY25: Consultancy

Major domestic airlines can become world class carriers, says senior executive of CAPA India

The Indian airport industry's profit before tax (PBT) is expected to grow by 35 per cent year-on-year (Y-o-Y) to Rs 10,370 crore in the financial year 2024-25 (FY25) amid strong demand and "unprecedented investment in aircraft orders, product, brand, technology", said Parampreet Singh Bakshi, vice-president of aviation consultancy firm CAPA India, on Friday.

The industry, in FY24, is estimated to have had a PBT of Rs 7,680 crore, which was 134.1 per cent more Y-o-Y as the airport sector recovers after Covid-19.

Most large airports, except Delhi, Kolkata and Chennai, have seen domestic traffic in FY24 grow faster than the national average. “All major airports have seen strong international recovery,” said Bakshi at his firm's annual summit in Delhi.

 

The profitability of the government-run Airports Authority of India (AAI), which manages more than 100 airports in the country, is expected to remain robust in FY24 and FY25. The AAI's revenue will likely grow due to an increase in aeronautical revenue, along with the receipt of revenue share from the recently privatised six non-metro airports. As the AAI will not incur any expenses associated with these privatised airports, the authority's profitability is set to increase, he noted.

"Airport infrastructure at metros and non-metros, across the country, is ahead of demand. For the first time we are not playing catch up in terms of airport capacity. There is an ongoing $11 billion pipeline of investment, including in Tier-II and Tier-III airports...The (Indian airport) industry is forecast to see an ebitda profit of Rs 18,090 crore ($2.2 billion) and a PBT of Rs 10,370 crore ($1.3 billlon) in FY25," he said, referring to earnings before interest, taxes, depreciation, and amortisation.

Indian has a stable airline system (and not just a single airline) for the first time in which the key players have the determination and wherewithal to become world-class carriers, said Bakshi.

"This is being supported by unprecedented investment in aircraft orders, products, brands, technology, and balance sheets. The order books of Air India, IndiGo and Akasa represent an estimated investment in the fleet of close to $90 billion at market prices. The country's airline fleet is set to double by 2029-30."

Two principal airlines – IndiGo and Air India – are likely to have a deeper understanding of the direct and indirect cost of operating from the airports, which would result in more “engagement” on airport charges, he said.

It took the Indian industry around 90 years from the time of the first commercial flight to reach a fleet size of 700 aircraft. However, the rate of growth is so strong that carriers could add a further 600-700 aircraft in the next 5-7 years.

For the first time Indian airports will be largely dependent on Indian carriers for international growth, especially long-haul services, Bakshi noted.