Non-Subscriber Extract
US airport industry faces challenging year
By Jim Smith
29 February 2008
This year will be one of adjustment for the United States airport industry after a period of economic stability that translated into improving credit fundamentals for the past few years, according to Fitch Ratings.
In its special report entitled '2008 US Airport Credit Outlook', Fitch stated that while it is possible the strong operating environment experienced in 2007 will generate additional credit improvement at individual airports, changes in the domestic economic climate suggest that travel demand could weaken in 2008, leading to a stabilisation or possibly slight deterioration in industry credit trends.
Other factors that could affect the financial health of the airport industry include the financial condition of the airlines and potential for industry consolidation; movement on financial re-authorisation of the FAA; actions to confront the growing congestion in the air transport system; and the advancement of airport capital programmes.
"The health of the economy will be the key driver in determining how the domestic airport industry will perform in 2008," said Peter Stettler, senior director in Fitch's global infrastructure group.
"Potential declining demand for air service, increasing fares because of the run-up in oil prices and increasing congestion in air traffic are all factors expected to challenge the success of airports this year. In addition to these issues, possible domestic airline consolidation could influence the industry by altering hub and spoke networks."