Q&A: "All Tier-2 cities are showing growth trends"

CareEdge Rating last month issued a report titled "Airports - Smooth Runway Post Pandemic". MEHUL PANDYA, MD & CEO, Care Edge, discusses the report and other trends in this Q&A with CRUISING HEIGHTS

Your report suggests that "India's GDP growth and its multiplier effect on air passenger traffic growth with favourable demographics of a rising working population augur well for Indian airport operators." Where do you see the growth in Tier-2 and Tier-3 cities, the major metros or region specific?

Compounded Annual Growth Rate (CAGR) for air passenger traffic for FY15-FY19 was higher for key tier 2/tier 3 airports (21 per cent) compared to tier 1 airports (17 per cent). The higher growth rate in tier 2/3 cities was contributed by domestic traffic growth of 23 per cent which was higher than 19 per cent in tier 1 cities. CareEdge Ratings expects overall passenger traffic to grow at a CAGR of 16 per cent from FY23-FY25. While passenger traffic in tier 1 cities is expected to grow at a CAGR of 15 per cent for FY23-FY25, it is expected to grow at 20 per cent over the said period. It is on account of the thrust on capacity addition at tier 2 cities leading to the addition of new airlines and favourable demographics of a rising working population. There is no region-specific trend is expected within tier 2 cities. While traffic growth within tier 3 cities shall be influenced by leisure destinations.

You have also stated that "improving the regulatory environment with the timely issuance of tariff orders will pave the way for timely revenue visibility for Indian airport operators." IATA has repeatedly stated that tariff at Indian airports is some of the highest in the world. How do you fight that contention as you move ahead?