After a bruising year for airlines, capacity constraints, fleet shortages and geopolitical disruptions are limiting passenger growth at airports even as India’s underlying demand for air travel remains strong.

The pressure is forcing airport operators to look beyond passenger traffic for growth, with cargo, maintenance, repair and overhaul (MRO), and other non-aeronautical businesses becoming increasingly important as new airport capacity takes longer to ramp up.

At the same time, operators are continuing to invest on the expectation that airline capacity will eventually catch up with passenger demand.

“The aviation Industry in India is facing geopolitical shocks,” said aviation expert Amit Mittal, director, Aerointellect Aviation, a Delhi-based consultancy firm.

“Airport operators have an opportunity to look at other streams of revenue and monetisation such as ATO (approved training organisation), MRO, FTO (flight training organisation), warehouses, cargo, FBO (food business operator) and airport EPC, apart from passenger-centric revenue growth,” Mittal added.

GMR’s annual report pegged Indian airlines' net losses at ₹32,000-34,000 crore in FY26, against about ₹5,500 crore in FY25, and expects losses to widen to ₹36,000-38,000 crore in FY27. It cites rupee depreciation, elevated jet fuel prices, higher lease rentals and softer passenger traffic as key pressures.

“The airline industry is in financial distress and industry net losses are forecast to escalate to ` 360-380 Bn in FY 2027,” GMR said.

IndiGo and Air India group, including the low-cost carrier Air India Express, which together account for more than 90% of India’s domestic airline market, reported losses of over ₹22,000 crore and nearly ₹2,400 crore in FY26. Privately held Akasa Air and SpiceJet—the two other major airlines—are yet to declare their annual numbers.

“Ongoing restructuring and fleet reduction by budget carriers has resulted in lower domestic capacity utilization at the airports,” the GMR report noted. “Supply-side constraints also persisted: about 99 aircraft remained grounded across selected airlines at March-end."

The Noida International Airport said that as a newly operational airport, its focus is on maintaining stable and reliable operations while expanding connectivity in a phased manner. “We continue to work closely with our airline partners to grow the route network in line with airline plans and passenger demand. The long-term fundamentals of the Delhi-NCR and Western Uttar Pradesh region remain strong, and our long-term outlook is unchanged,” a spokesperson told Mint.

GMR Airports and BIAL did not respond to queries.

The impact is visible in GMR’s traffic numbers. Its airports handled 121.6 million passengers in FY26, barely 1% higher than 120.6 million a year earlier. Cargo, however, remained resilient, with volumes across GMR-operated airports rising to 1.33 million tonnes.

GMR’s Indian airport portfolio has also grown. Besides its established operations at Delhi, Hyderabad and Mopa, the group has added Nagpur and Bhogapuram to its portfolio. It is also evaluating the proposed privatization of 11 regional AAI airports and potential airport development opportunities in Chennai, Kolkata and Pune.

Noida is another example of how airline constraints are playing out at airports.

Zurich Airport chief executive Lukas Brosi said in an investor call that the new airport’s operations had started successfully, but the geopolitical environment had resulted in a “more gradual ramp-up than originally anticipated.”

Zurich has also said Noida will put pressure on its near-term profitability. The airport is expected to make a negative contribution in 2026, with breakeven expected in 2027.

Fairfax-owned BIAL, in its annual report for 2025-26 described the year as “amongst the most challenging years in recent history” for aviation and said the sector’s “aftershocks will likely spill over into FY27”. Yet Kempegowda International Airport handled 44.47 million passengers, up 6.2%, with international traffic rising 23.9% to 7.23 million. Cargo grew about 6%, while income rose 15% to ₹4,579 crore, and PAT increased more than 86% to ₹1,115 crore.

Bengaluru’s performance suggests that the underlying demand story remains intact, even as airline capacity increasingly determines how much of that demand airports can capture.

For GMR, the response is to build businesses around the passenger rather than depend entirely on the passenger. GMR Aero Technic generated ₹676.9 crore in FY26 revenue, up 26%, while cargo, retail, food and beverage and airport-led real estate are becoming increasingly important parts of its platform.

That diversification has supported the company’s financial performance. Gross income rose 40% to ₹15,200.8 crore, and consolidated PAT turned positive at ₹472.4 crore, against a loss of ₹816.9 crore in FY25.

GMR remains confident that the current disruption does not alter the structural aviation opportunity. “The structural investment case for Indian aviation remains intact as air travel penetration continues to improve with the expanding middle-income segment of population and domestic carriers expand their fleet size and connectivity,” the company said.

“For well-capitalized major airport platforms with newly expanded capacity, the medium-term demand outlook remains firmly positive," it added.

Chairman G.M. Rao said, “We see a long runway for growth across our existing Airport portfolio, supported by long residual concession tenures…”

GMR is evaluating new airport concession opportunities while pursuing asset-light operations and maintenance opportunities in Central and Southeast Asia, West Asia and Africa.

The expansion comes with a larger funding requirement. GMR Airports’ consolidated net debt was ₹34,000 crore as of Q1FY27.

GMR is now seeking approval to raise up to ₹5,000 crore, separately from approval to raise up to ₹1,500 crore through NCDs for refinancing existing debt. The proposed fund-raising comes as the company expands its airport portfolio and pursues new concession opportunities.

GMR-run Hyderabad and Fairfax-run Bengaluru airports are planning a near ₹26,000 crore expansion over the next five years.