Leading credit rating agency, ICRA has said that Indian airports have to concentrate more on increasing the non-aero revenues to become profitable and sustainable. Analysing the global average of non-aero yields of major airports, the agency has said that Indian airports lag significantly on non-aeronautical yields compared to their global counterparts.
While the non-aero yield per passenger for major private airports in India stood at USD 3.8, globally, it ranges between USD 5.7 and USD 16.4 for major airports across the world. If the non-aeronautical yields of the Airport Authority of India (AAI) operated and managed airports are added, the Indian average is around USD 2.9, the study says.
On the non-aeronautical revenues, the major private airports in India have witnessed growth at a CAGR of 12 per cent during FY2017-FY2020. Along with this, reduction in aeronautical revenue share due to decline in tariffs has resulted in change in aeronautical to non-aeronautical mix at major private airports from 67:33 in FY2017 to 49:51 in FY2020.
The non-aeronautical revenue share further increased to 57 per cent in FY2021 due to higher impact of pandemic on aeronautical revenues. As against this, the revenue mix at Airport Authority of India (AAI) operated airports is dominated by aeronautical revenues which constitutes 78 per cent of revenue mix as the focus is less on non-aero yield due to low passenger throughput at majority of tier II and tier III airports, lower international traffic and relatively low spend by the travellers.
Rajeshwar Burla, Vice President & Group Head, Corporate Ratings, ICRA, said, “The non-aeronautical yield per passenger at major private airports is low as compared to major private airports in the world. Given the evolving consumer spending behaviour, Indian airports still have a significant room for improvement. The aeronautical revenues are regulated in nature, where returns are capped; therefore, to maximise the return on capital employed, airport operators need to improve their non-aero yields.”
The hit on passenger traffic due to Covid-19 has severely impacted the revenues of non-aero concessionaires, which has consequently impacted the non-aero revenues for the airport operators. The airport operators provided relaxations in lease terms for the majority of the non-aeronautical concessionaires on a temporary basis by shifting to a pure revenue share basis from minimum monthly or annual guarantee. While the airline and other office space rentals have been least impacted, duty free, retail outlets and the advertisement revenues were severely impacted in FY2021. Some of the concessions given for FY2021 are expected to continue in FY2022 and as traffic and non-aeronautical revenues ramp-up, airport operators are expected to return to original lease terms.