By BW CFO World Online Bureau
Crisil reports state that the private airports would be spending Rs 42000 crore on capacity expansion by 2026
Private Airport Operators are expected to spend Rs 42000 crore on capacity expansion over the coming five years through 2026 as they are confident of the air traffic growth in the long term as reported by Crisil Ratings.
They predict that the amount would be more than double the capital expenditure they incurred in the previous five financial years. Before the pandemic, airports were working at their very best and were getting a great amount of productivity operating at about 115 per cent of their design capacity.
The high operating rate was a strong annual growth of over 8% in air traffic between the years 2016 and 2020. When the pandemic hit, the air traffic dropped down by 65%. Even though the current year started with the second wave, the prospects of the economy look brighter and the infections’ rate is easing and the vaccination drives being successful.
Economic growth will boost the air traffic volumes given the impact on an increase in per capita consumption and shift in preference towards an ancient mode of commute.
The agency stated that tariffs on these airports are based on fixed regulated return on CAPEX in the next five years, which provides certainty regarding cash flow return on the CAPEX.
The expected demand growth is driving private airport operators to enhance the design capacity to 340 million passengers per annum for the pre-pandemic level of around 150 million.
Stating that even airports earn from non-aero activities, Crisil said that by 2024, an increase in passenger traffic and economic revival should help this revenue stream rebound by 50% and add over 40% to the revenue of private airports.