Indian Airports’ Non-Aeronautical Revenue Potential and Growth Prospects

Indian airports are currently behind global counterparts in generating revenue per passenger from non-aeronautical sources, but significant changes are anticipated in the coming years. Data from the rating agency ICRA reveals that major public-private partnership (PPP) airports in India earned an average of $4.3 per passenger in 2023-24 from non-aeronautical sources, significantly lower than the $7.2-15.9 per passenger earned by major global airports. However, the next four to five years are expected to witness a substantial increase in leveraging this lucrative revenue stream.

Non-aeronautical revenues, which encompass duty-free sales, retail, and other passenger services, play a crucial role in bolstering airport income, especially since aeronautical revenues are largely regulated. As non-aeronautical services are not regulated, airport operators have the flexibility to set prices for these services, contributing to higher profit margins and increased profitability. Vinay Kumar G, Vice President & Sector Head, Corporate Ratings at ICRA, highlighted that the non-aero revenues at Mumbai and Delhi international airports are projected to reach around $7 per passenger in the next few years. This growth is expected to be driven by a strong uptick in the duty-free segment, premiumization of retail outlets, and improved yields from advertising, car parking, and rentals. The anticipated increase in international passenger traffic, forecasted to rise to 100-110 million by 2027-28, will further boost non-aero revenues, aligning with the post-pandemic spending shift that favors international leisure travel.

The shift towards higher profitability through non-aeronautical revenues is evident in the strategies of airport operators like Adani Enterprise and GMR Airports Infrastructure, who are actively working to enhance revenues from non-aero services. The focus on increasing non-aero revenues is driven by the high margins and profitability associated with these services, making them a key contributor to overall airport profits. The concept of ‘airport cities’ is also emerging, envisioning integrated urban centers around airports that offer a mix of commercial, residential, and recreational facilities, catalyzing economic growth and urban development in the surrounding areas.

Source – The Print