Induce passengers to spend more money at airports, say operators

Bengaluru: The aero revenue of Indian airports is expected to grow at a compound annual growth rate (CAGR) of 42 per cent over fiscal years 2023-24 (FY24) to 2026-27 (FY27), while non-aero revenue will grow at a CAGR of 15 per cent over the same time period, said CareEdge on Thursday.

Aero revenue is what airports earn from airlines, like fees for parking fees and time slots. Non-aero revenue is from services like food and beverage (F&B), restaurants, lounges, etc.

CareEdge’s webinar on airports was also attended by many industry executives.

The overall air passenger traffic is expected to grow at a 9 per cent CAGR, as per the agency. As per GRK Babu, CFO, Airport Sector, GMR Airports Ltd, however, the growth is expected to be much higher, hitting up to 11 per cent growth in the next two years.

Non-metro airports cater to 40 per cent of the total passenger traffic with faster growth seen as compared to metro airports, CareEdge said.

Growth propellers in the sector are economic growth, a shift in income groups in India stimulating higher discretionary spending, and a rise in foreign travel remittance leading to higher international tourism.

The combined capex outlay of airport operators is projected to increase by 25 per cent over FY26-FY30, reaching almost Rs 1 lakh crore, led by brownfield expansion along with two greenfield airports.

While there is an uptick in non-aero revenue per passenger in India, the spend per passenger for international peers is two times compared to Indian airports.

Babu emphasised that there is a constant need for improvement in offerings as well as greater penetration (or inducing passengers to spend more money). He added that transfer time between terminals should also be better monetised.

Rakesh Tiwary, CFO, Adani Airport Holdings Ltd, said that another way to do this is increasing duty-free spending per passenger, as currently India is far behind global peers in this regard.

Monetisation from non-passengers is another area where Indian airports are lagging, stated Tiwary, pointing out that airport areas can be made a hub for local tourists and businessmen with malls, hotels, convention centres, F&B, and concerts.

One subdued business pointed out by panelists was cargo, which is poised for rapid air expansion.