AAI Profit Boosted by Privatized Airports Amid Decreasing Core Network Performance

AAI's Profitability Hinges on Privatized Airports as Own Network Continues to Struggle

New Delhi: The Airports Authority of India's (AAI) financial performance is increasingly dependent on a small group of privatized airports, even as the majority of its own network continues to incur losses. According to the AAI's annual report for the year ended March 2025, income from six airports operated under public-private partnership (PPP) agreements accounted for more than 30% of the authority's net profit.

The six airports, operated by Adani Airports, generated ₹2,232 crore in under-recovery income, which is classified as compensation paid by private operators for investments made by AAI before the airports were leased out. This amount includes a one-time payment and is not expected to recur. The under-recovery income jumped about 150% from the previous year, contributing more than 10% of AAI's total revenue and over 30% of its net profit.

In contrast, older privatized airports such as Indira Gandhi International Airport and Chhatrapati Shivaji Maharaj International Airport saw only about a 5% rise in annual fees paid to AAI. AAI owns and operates 122 airports, and also earns revenue from airports leased to private operators under PPP arrangements.

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The authority's total revenue stood at ₹20,648 crore, with a net profit of ₹7,233 crore for the fiscal year 2025. However, its revenue is about double that of ₹10,836 crore reported by GMR Airports Ltd and ₹10,224 crore by Adani Airports Ltd for the same period.

The majority of AAI's operational network continues to show structural stress. An estimated 91, or about 75%, of the 122 airports owned by AAI reported losses of ₹1,600 crore, while the remaining 31 airports earned a profit of ₹2,740 crore.

Apart from PPP-linked income, AAI's traditional revenue streams showed healthy growth. Air navigation services revenue rose 17% to ₹4,700 crore, airport service revenue increased nearly 30% to ₹5,482 crore, and non-aeronautical revenue grew 16% to ₹1,911 crore, driven by higher user development fees and commercial activity.

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However, analysts say the growing reliance on PPP-related income underscores structural stress in AAI's core operations. "The majority of AAI's operational network continues to show structural stress. As more airports are privatized, the authority will increasingly rely on such revenue streams to support its capital expenditure," said Mark D. Martin, chief executive of Martin Consulting.

AAI is preparing to privatize 11 more airports, including profitable ones such as Amritsar, Varanasi, Bhubaneswar, and Raipur, as well as seven loss-making airports including Tiruchirappalli, Kangra, and Gaya.