NEW DELHI: Geopolitical tensions seen this fiscal, along with lower aircraft availability due to enhanced checks post the June 12 Ahmedabad Air India crash, could slam the brakes on the runway growth seen by air traffic in India post-Covid. Rating agency ICRA has revised its overall airport passenger traffic growth projection in FY2026 to 5-7% YoY to reach 43-44 crore from its earlier 7-9% estimate. “This is a result of the cross-border tensions and lower aircraft availability owing to fleet inspections, post the fatal aircraft crash in June 2025, which compressed passenger traffic growth during the five months in FY2026. The 5-7% growth in FY2026 is likely to be the lowest post-Covid,” ICRA said in a statement.Since air travel resumed post-Covid, India has been seeing passenger traffic grow 64% in FY 22 over past fiscal; 73% in FY 23 (over last fiscal); 15% in FY 24 and 9% in FY 25. In FY 2026, ICRA expects this to be 5-7% which will be the lowest since FY 2025, barring the Covid years.The passenger traffic for five months in FY2026 recorded “a modest rise of 3% to 17 crore compared to 16.5 crore in (same period of) FY2025, lower than ICRA’s earlier estimates. Domestic passenger traffic growth is expected to moderate to 4%6% to reach 34.8-35.5 crore in FY2026, amid lower growth of 2.6% registered during 5M FY2026. However, international passenger traffic is likely to see a better growth of 7-10% in FY2026 to reach around 8.2-8.5 crore in FY2026,” ICRA said in a statement.ICRA sector head (corporate ratings) Vinay Kumar G said: “International traffic continues to outpace domestic traffic growth, driven by healthy international tourism activity, along with improved connectivity to newer destinations. The healthy rise in international traffic will augur well for the airport sector, given that it is relatively more remunerative than domestic traffic. The revenues of ICRA’s sample set companies are likely to increase by 7-8% in FY2026, and adjusted for one-time income in FY2025, the same is higher at 15-16% in FY2026, driven by a substantial increase in aeronautical tariffs at Delhi International airport, an increase in passenger traffic and ramp-up in non-aeronautical revenues.”The sector will continue to record substantial capex with investments of more than Rs 1 lakh crore expected over the next 4-5 years, including greenfield airports in Jewar (Noida), Navi Mumbai, Bhogapuram, Parandur (Chennai), Purandar (Pune), brownfield expansions in Bangalore, Hyderabad, Cochin, Mumbai and Nagpur and upgradation of airports under the Airports Authority of India (AAI).“Operating margins (of airport operators) are likely to remain healthy at around 51-52% during FY2026-FY2027. After completion of capex at some of the key airports, the interest expense is expected to increase (which were earlier capitalised), resulting in some moderation in interest coverage during FY2026. However, given the healthy profitability margins, the debt coverage metrics are expected to remain comfortable over FY2026-FY2027. The credit profile of airport operators is projected to remain stable, supported by healthy accruals and comfortable liquidity,” Kumar added.
