India's Airport Boom: Greenfield Growth Faces Underutilization

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AuthorIshaan Verma|Published at:
India's Airport Boom: Greenfield Growth Faces Underutilization
Overview

India's push to build new, greenfield airports saw a 24.9% rise in passenger traffic for fiscal 2024-25. But this strong overall number hides a problem: nearly 40% of these new airports are not being used enough. This is different from older, established airports which are expanding more steadily. The recent launch of Noida International Airport shows both the large ambitions in India's aviation sector and the significant risks involved, especially as the industry as a whole faces financial pressure.

India's Airport Boom: Greenfield Growth Faces Underutilization

The ambitious expansion of India's aviation infrastructure, particularly through new greenfield airport development, is yielding mixed results. While the sector saw a strong 24.9 percent year-on-year surge in passenger traffic at greenfield airports during fiscal 2024-25, handling 10.1 million passengers, this overall gain hides significant operational disparities. A substantial portion, nearly 40 percent, of these new facilities experienced a decline in passenger volumes, pointing towards underutilization and challenges in generating sufficient demand.

Greenfield Growth: Success and Underutilization

Passenger traffic at India's greenfield airports grew by an impressive 24.9% in fiscal year 2024-25, significantly outpacing the 9.1% rise at brownfield sites. These new airports handled a combined 10.1 million passengers, up from 8.1 million the year before. While individual projects like Ayodhya, Rajkot (Hirasar), and Shivamogga saw passenger numbers more than double, and Deoghar and Itanagar (Hollongi) reported strong double-digit growth, the picture is mixed. Nearly 40% of greenfield airports, including Kushinagar and Kalaburagi, are seeing fewer passengers, suggesting potential overcapacity or forecasts that didn't materialize.

Brownfield Airports: Steady Growth

In contrast to the varied performance of new airports, brownfield sites—those developed from existing infrastructure—showed greater stability. Although their growth is slower, these established airports benefit from existing passenger bases in major cities and Tier-2 locations. Out of 112 brownfield airports, only 22 saw a drop in passenger numbers in fiscal 2024-25, indicating a more reliable operational model. This steady expansion is important as India's aviation sector, the world's third-largest, faces economic challenges.

Noida International Airport: Ambitious Project, High Risks

The recent opening of Noida International Airport (NIA) in Uttar Pradesh shows the scale of India's greenfield ambitions. Its first phase, costing about ₹11,200 crore, is set to handle 12 million passengers annually, with room to grow to 70 million. Yamuna International Airport Private Limited, a unit of Zurich Airport International AG, operates NIA, and the State Bank of India provided financing. However, questions remain about execution and financial success. Zurich Airport AG expects higher finance and depreciation costs in 2026, and NIA is projected to have a net loss in its first year because of these factors. The high costs also make it more expensive than similar projects, like Mopa airport.

Aviation Sector Financial Pressures

As infrastructure development accelerates, the wider Indian aviation industry faces significant financial challenges. Agencies like ICRA have downgraded their outlook for the sector to 'negative' from 'stable,' pointing to geopolitical tensions, currency drops, and rising fuel prices. Airlines are expected to report large net losses, estimated at INR 17,000-18,000 crore for FY26. This financial strain on airlines could affect future investments in airport services and routes. Major companies like GMR Airports Infrastructure Ltd., which saw a 22% stock surge in the six months before January 2026, are still trading with a negative P/E ratio, suggesting investors anticipate future growth or are factoring in current losses.

Future Outlook: Balancing Growth and Viability

Long-term projections for India's aviation market remain strong, with passenger traffic expected to reach 470 million by 2026-27 and over 1 billion by 2040. Government programs like the UDAN scheme continue to boost regional links, aiming to establish around 350 airports nationwide by 2047. However, the varied performance of greenfield airports and the financial pressure on airlines require a careful review of demand forecasts and development plans. The success of new projects like NIA will depend on securing consistent traffic and managing high building costs. Meanwhile, the steady performance of brownfield airports may offer a more dependable path for overall sector growth.

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