India’s airport passenger traffic may reach a new high of 45 crore in FY26, growing 7-9 per cent, aided by both domestic and international travel, business and leisure combined.

Rating agency Icra predicted international traffic to outpace domestic movement in this fiscal as it did in FY25. According to the agency, FY25 saw an 11 per cent expansion in international traffic and a9 per cent rise in domestictraffic.

In this year, international travel may again grow 7-11 per cent, while domestic traffic, which has a much higher base than international though, is projected to grow 6-8 per cent, Icra noted.

The continued healthy growth momentum was driven by a steady increase in international travel amid improving connectivity to newer destinations, continued uptick in leisure and business travel in the domestic segment, along with improvement in air connectivity to tier II cities/ key tourist destinations, it pointed out.

According to Vinay Kumar G, sector head, corporate ratings, Icra, said, the growth momentum is likely to sustain in FY2026 as well, “International traffic continues to outpace domestic traffic growth, driven by healthy international tourism activity, along with improved connectivity to newer destinations.

The airport sector and airlines have been on a tailwind ever since domestic travel boomed after Covid-induced restrictions were relaxed. The international travel picked up pace thereafter once foreign countries dropped guards over tourist arrivals.

After slumping 66 per cent to 11.5 crore in FY21, passenger traffic rose to 18.9 crore in FY22 and crossed the pre-covid peak in FY24 when traffic reached 37.6 crore.

Industry impact

The growth in the airline industry also had a positive impact on the hospitality industry which experienced sustained boom post lockdowns, with higher room rates as demand outstripped new supplies.

According to real estate consultancy JLL, India saw 367 new hotel signings and 154 new openings in 2024, marking a 14 per cent rise from the previous year, with a significant proportion coming from tier-II and III cities where air connectivity is going up.

Icra’s Vinay Kumar suggested higher passenger traffic will augur well for the airport operators, especially international, which is relatively more remunerative than domestic traffic.

“The revenues of Icra’s sample set companies are likely to grow by a robust 18-20 per cent YoY in FY2026, driven by the sustained improvement in both passenger traffic, increase in tariffs at Delhi, Bangalore and Hyderabad airports and a ramp-up in non-aeronautical revenues,” he observed.

Accordingly, the airport operators, dominated by the Adani group in the private sector, will make substantial investments to raise capacity.

A capex of more than ₹1,00,000 crore is expected over the next 4-5 years, including greenfield airports (Jewar (Noida), Navi Mumbai, Bhogapuram, Parandur (Chennai)), brownfield expansions (Bangalore, Hyderabad, Cochin, Mumbai and Nagpur) and upgradation of airports under the Airports Authority of India (AAI) such as Calcutta and Bagdogra.

Indian airlines are also trying to keep pace with the surge in traffic. According to one estimate, Air India, IndiGo, Akasa and a few more put together ordered purchases of 1,300 aircraft which will be delivered through the mid-2030s.