9 airports operating under PPP model to log 50% growth in revenue: Report

Nine airports in the nation that use the PPP model are anticipated to increase their overall earnings by 50% this fiscal year to US$ 1.1 billion (Rs 9,650 crores) from US$ 779 million (Rs 6,450 crores). According to the credit rating company CareEdge Ratings, the expected increase in revenue will be driven by a predicted 70% year-over-year increase in passenger traffic, which is expected to reach 93% of pre-pandemic levels in the current financial year. However, overall passenger traffic is anticipated to increase by 1.12 times in the fiscal year beginning in April 2023 compared to the pre-Covid level.

According to CareEdge, the Airport Authority of India provided assistance to airport operators during the Covid period by exempting claims on revenue sharing, which allowed PBILDT margins (profit before interest, leasing, depreciation, and taxes) in FY22 to stay at a healthy 56%.

It said that from the next year, such margins are projected to stabilize at approximately 45%, principally supported by the increasing scale of operations. However, with the return of revenue sharing with the AAI, PBILDT margins are likely to decline to 37% during FY23.

CareEdge Ratings anticipates that the air traffic growth rate between FY23 and FY25 will be 2.25 times greater than the GDP growth rate, due to the low base in FY22. According to Mr. Maulesh Desai, Director at CareEdge Ratings, India's favourable demographic profile with a rising working population and widening middle class hold good long-term prospects. Other key growth drivers include improved economic output, declining fare gaps between rail and air, and a full resumption of international travel in the short term.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.