Private airport operators are expected to spend around Rs 42,000 crore on capacity expansion over the five years through fiscal 2026 as they are confident of air traffic growth in the long term, Crisil Ratings said on Tuesday.
The amount will be more than double the capital expenditure (capex) they incurred in the previous five financial years, it said.
According to Crisil, the confidence on capex stems from the strong long-term fundamentals and regulated tariff structure, which allows pass through of capex costs and thereby keeping the risks low.
Prior to the pandemic hitting the country in early 2020, private airports were bursting at their seams, operating at over 115 per cent of their design capacity. It was around 175 million passengers on a design capacity of about 150 million passengers, as per the ratings agency.
The high operating rate was due to strong annual growth of over 8 per cent in air traffic between fiscals 2016 and 2020, Crisil said, adding the operating rates took a massive hit in fiscal 2021 as the pandemic and the subsequent economic slowdown led to traffic nose-diving by around 65 per cent.
Though the current fiscal also started with a more virulent second COVID wave, prospects of economic recovery look brighter with the infection rate easing, vaccinations gathering pace, and the government continuing its thrust on infrastructure development, it said.
31/08/21 PTI/Economic Times
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