Capital expenditure (capex) at small private airports in India is expected to increase by 50-60% annually over the next three years, driven by growing demand for air travel and the need for capacity expansion. In contrast, capex at larger airports will decline, as much of the required expansion has already been completed. This shift in spending priorities comes amidst a recovery in passenger traffic and a greater focus on enhancing airport infrastructure rather than expanding capacity at large airports. The overall capex for the private airport sector is expected to decline by 10-15% over the next three years.
Surge in Capital Expenditure for Small Airports
According to Crisil, small private airports in India are poised for a significant increase in capital expenditure over the next three years. These airports, located in cities such as Ahmedabad, Jaipur, and Goa, are expected to see a rise in investment by 50-60% annually during the fiscal years 2026-2028. The increase in capex is driven by the need to expand capacity in response to growing terminal utilization rates and a substantial recovery in passenger traffic.
Passenger traffic at small private airports has grown at a compound annual growth rate (CAGR) of 45% between fiscal years 2022 and 2025, reflecting the increasing demand for air travel. Despite this surge in demand, the capacity at these airports has grown at a modest CAGR of around 20%, leading to terminal utilization levels reaching 60-90%. This scenario necessitates further investment to meet the evolving needs of passengers and ensure that these airports can continue to operate efficiently.
Ankit Haku, Director at Crisil Ratings, explains, “Small private airports are expected to embark on a significant expansion of up to 1.5 times their current base by fiscal 2028. This is in response to escalating travel demand and moderate capacity on the ground.”
Decline in Capex at Large Private Airports
While small airports are ramping up their investments, the story is different for larger private airports, which will see a decline in capital expenditure over the same period. Airports in cities such as Delhi, Mumbai, and Bangalore have already completed or are nearing completion of major capacity expansions. These developments have sufficiently absorbed the recent surge in air traffic, stabilizing terminal utilization levels at around 80-85%.
For these larger airports, the focus is shifting from expanding capacity to maintaining existing infrastructure. The significant capital spent on expansion in recent years has allowed these airports to accommodate high traffic growth while maintaining operational efficiency.
As large private airports transition into a maintenance phase, Crisil predicts that most of their future capital expenditures will be allocated toward refurbishing equipment, upgrading amenities, and enhancing overall infrastructure rather than expanding terminal space.
Greenfield Airports: Minimal Capital Expenditure, Strong Potential
In addition to existing airports, the development of greenfield airports is also contributing to the evolving capex landscape. These airports, expected to become operational in the current fiscal year, are strategically located in or near tier-1 cities, providing a solid foundation for passenger and cargo volume growth.
With minimal capital expenditure required in the coming years, greenfield airports present a lower-risk investment, especially due to their location advantages and the demand in major urban centers. Their efficient ramp-up in traffic further reduces off-take risk, making them a strong contender in India’s growing aviation sector.
Managing Project Risks and Capex Intensity
The overall capex intensity, which is the ratio of capital expenditure to earnings before interest, taxes, depreciation, and amortization (EBITDA), is expected to double for small private airports as they undergo substantial expansions. However, Crisil analysts remain optimistic about the risks, noting that these projects are expansions of existing sole airports in their respective cities, which helps mitigate some of the risks associated with new developments.
“The sponsors’ expertise in operating large private airports and their strong fundraising capabilities further mitigate project risks,” said Gauri Gupta, team leader at Crisil Ratings. This experience and financial backing ensure that the expanding small private airports will be able to manage project risks effectively.
The Road Ahead: A Balanced Outlook for the Private Airport Sector
While small private airports prepare for substantial investments, large airports will capitalize on the infrastructure they have developed over the past few years. With continued growth in air traffic and a stable regulatory environment, particularly with a tariff framework that passes through capex costs to consumers, the private airport sector is set to remain a vital component of India’s aviation industry.
The near-term slowdown in overall capex—projected to decline by 10-15% over the next three years—reflects this shift in priorities. Still, the focus on operational efficiency, infrastructure upgrades, and capacity management will ensure that the sector remains competitive and able to meet the demands of a growing middle class increasingly inclined to travel by air.
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