Air travel serves as a primary means of medium to long distance travel in the U.S. As a result, domestic airports play a critical role in the national transportation network. Airports are capital intensive and have significant need for ongoing investment. While the federal government provides capital resources to airports through the Federal Aviation Administration’s Airport Improvement Program, the majority of capital development projects are funded through the capital markets. An airport’s location, size, accessibility, and strength and size of its service area are important credit components, as they are the driving force in the crucial number of airport enplanements.
Miller Tabak Asset Management expects flat or nominal traffic growth for most airports in 2012. The sector faces challenges in the form of carriers restraining capacity, security costs, and macroeconomic pressures. Click here to read the rest of the credit update on the U.S. Airport Sector.