India’s airport infrastructure sector is set to draw investments amounting to Rs 4.2 lakh crore by 2029, as per a report. This estimation comprises Rs 3.7 lakh crore from ongoing and upcoming projects by FY26 and an additional Rs 0.5 lakh crore likely to be commissioned by 2029, according to Brickwork Ratings. Following a strong revenue growth in FY26 driven by high passenger traffic and tariff hikes, FY27 is expected to maintain robust revenue growth fueled by domestic air travel expansion.
The sector witnessed significant capacity expansion in FY26, with a focus on regional airport development and terminal enhancements to accommodate the increasing domestic travel demand. Anticipating an 8–10% growth in air traffic, driven by domestic demand resilience, expansion into Tier-2 cities, and the introduction of new greenfield projects like Navi Mumbai and Jewar airports, the sector remains optimistic despite a sluggish international segment.
The report highlighted challenges such as stagnant international growth due to route limitations, escalating fuel costs, and conflicts in the Middle East, which significantly impact India’s international passenger traffic. The credit outlook for the airport infrastructure sector remains stable, with heavy investments in terminal expansions affecting short-term cash flows but sustained passenger traffic growth ensuring industry progression.
Operating margins for FY26 surged to an estimated 53.8%, up from 44.4% in the previous year, attributed to the completion of new terminals. Projections indicate a further margin improvement to 54.5% in FY27 as these expanded facilities become operational, enabling operators to generate higher-margin revenues from increased passenger volumes. Positive developments for the sector include the UDAN initiative with a capital outlay of Rs 288 billion by FY36 and the allowance of 100% FDI in greenfield airport projects.
