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The airport passenger traffic growth in the financial year 2025-26 (FY26) is set to mark its slowest pace since the onset of the Covid-19 pandemic, owing to rising cross-border tensions and grounding of flights, ratings agency Icra said in a report on Tuesday.

 

Icra revised its full-year projection to 5-7 per cent year-on-year (Y-o-Y) from its earlier estimate of 7-9 per cent. Passenger traffic is now expected to touch 430-440 million, up from 412 million in FY25.

 

According to the report, the downgrade follows a weaker-than-expected start to the current financial year amid rising global tensions and the grounding of aircraft amid fleet inspections after the Air India plane crash in Ahmedabad in June this year. Passenger traffic during the first five months of FY26 rose just 3 per cent to 170 million compared to 165 million, during the same period last year.

 

Domestic vs international traffic

Domestic passenger traffic is expected to grow by 4-6 per cent in FY26, reaching 348-355 million, after a modest 2.6 per cent rise in April-August. In contrast, international passenger traffic is projected to expand by 7-10 per cent, taking volumes to 82-85 million. 

 

“International traffic continues to outpace domestic traffic growth, driven by healthy international tourism activity, along with improved connectivity to newer destinations,” said Vinay Kumar G, sector head, corporate ratings, Icra. He added that international passengers, who are more remunerative for airports, will continue to drive growth.

Cargo volumes to moderate

Cargo volumes, which surged in FY25 on the back of the Red Sea crisis, are also set to moderate. Overall growth is expected to ease to 4-6 per cent in FY26, from 10 per cent last year. International cargo traffic growth slowed to 4 per cent in the first five months of FY26, while domestic cargo rose 6 per cent.

₹1 trillion investments lined up

Despite the softer growth outlook, Icra said the sector is set for a capex push, with investments of over ₹1 trillion lined up over the next five years. This includes greenfield projects at Jewar (Noida), Navi Mumbai, Bhogapuram, Parandur (Chennai) and Purandar (Pune), alongside expansions at major airports in Bengaluru, Hyderabad, Cochin, Mumbai and Nagpur, as well as upgrades by the Airports Authority of India (AAI).

Revenues to rise 7-8% in FY26

Icra expects revenues of airport operators to rise 7-8 per cent in FY26, and as much as 15-16 per cent when adjusted for one-time income in FY25. This will be supported by tariff hikes at Delhi International Airport, steady passenger growth and ramp-up in non-aeronautical revenues, it added.

 

“Given the healthy profitability margins, the debt coverage metrics are expected to remain comfortable,” Kumar said, adding that the credit profile of airport operators will stay stable, supported by strong accruals and liquidity.