The work on the second terminal at Rajiv Gandhi International Airport in Hyderabad will begin in February-March next year, said the airport operator.
GMR Hyderabad International Airport Ltd (GHIAL) plans to take up expansion at a cost of Rs 2,500 crore.
With the expansion, which is likely to be completed in two to two-and-half years, the airport will handle 25 million passengers per annum.
GHIAL CEO SGK Kishore told reporters in Hyderabad on Friday that if the traffic grows, the overall capacity can be increased to 34-35 million and the expansion including second runway can extend to five years.
He said they were waiting for approval from the regulator to start the expansion, which will be funded in a debt-equity ratio of 70:30.
Kishore said there would be no fresh equity requirement from the promoters or the government as the company will raise the funds from its internal accruals and bonds.
It recently raised $350 million through a bond offer.
He was confident that the airport will continue to see a growth of 15 to 20 per cent. The passenger traffic during current financial year is expected to be about 18 million, against 16 million in the last fiscal.
One fourth of the passenger traffic is international, growing around 9 per cent while the domestic passenger traffic is growing around 20 per cent.
Kuwait's low-budget airline Jazeera Airways, which launched Kuwait-Hyderabad daily flights from Friday, became the 20th airline to operate services to Hyderabad Airport. These airlines including four domestic are making 400 movements a day, connecting Hyderabad to 57 destinations.
GHIAL is in talks with some more airlines, especially European carriers and some long haul Indian carriers to fly to Europe. "Our focus is on Europe because apart from British Airlines we do not have any European carrier directly connecting to Hyderabad," he said.
The operator is in talks with Lufthansa and KLM to bring them back to Hyderabad. These carriers Ahad stopped flights to Hyderabad few years ago.
Kishore said they would also focus on unserved destinations in South East Asia like Indonesia and also on more wide-bodied aircrafts.