Airports show robust recovery

New data show that air travel, especially international flights departing from the U.S., is coming back strong, a key driver for the health of airport credits that should provide some relief to a sector carrying a heavy debt load.

A report from the Airports Council International – North America on Monday shows an increase in international passenger traffic of 117.2% as compared to 2021. Domestic passenger traffic was up by 25.8%. Airport revenue is directly tied to how much traffic is flowing through terminals with departures accounting for most of the cash. 

"While the COVID-19 pandemic seriously affected air travel across North America and around the world, our airports continue to recover and provide even better, safer, and more efficient travel experiences for passengers," said Kevin M. Burke, the president and CEO of ACI-NA. "There is no doubt that our industry is meeting the challenges presented by an ever-changing and reinvigorated travel environment."  

The data was crunched from traffic summaries that include passenger, cargo, and aircraft operations collected from 277 North American airports. Per the report, four of the world's five busiest airports in terms of total passenger traffic are in the U.S. Hartsfield-Jackson Atlanta International Airport leads the pack, showing an increase of 23.8% from 2021. The top five in passenger traffic include Dallas/Ft. Worth, Denver International, Chicago O'Hare, Los Angeles International and JFK International. 

In July, Fitch Ratings declared that U.S. airports and toll roads were in full recovery from the pandemic. Per that report, "Average airport traffic recovery across the Fitch Traffic Monitor portfolio ended first quarter 2023 at 99% of first quarter 2019 levels. Most airports ended the quarter at or above their pre-pandemic levels despite operational challenges such as staffing shortages."   

Fitch shows leisure markets leading the way while secondary hubs including Detroit and Philadelphia lagging. International departures were strong on the East Coast and overall slower on the West Coast. Per the report, "San Francisco and Los Angeles had the most to gain, ending the first quarter of 2023 at 80%-83% of 2019 levels." 

In July Moody's Investors Service predicted a normalization for passenger traffic growth with tourist destinations returning to their pre-pandemic era traffic. Changing demographic patterns are also playing a role. Per their report, "the pandemic-driven movement of people to lower-cost areas from pricier, urban coastal areas is boosting airport traffic in those cities. While migration patterns have also begun to normalize, the population gains already achieved will support long-term traffic growth."  

The aviation industry has attracted congressional attention this year as the FAA secured a bipartisan reauthorization bill from the House in July that also takes aim at improving how the airlines handle refunds, reimbursements, and disabled travelers. Lawmakers want to hire more air traffic controllers, boost safety, and improve infrastructure.  

In March, during a House reauthorization subcommittee hearing, representatives of the ACI-NA pleaded for lawmakers to address shortages in the Airport Improvement Program which is funded by Passenger Facility Charges. PFC's are currently capped at $4.50 a head, a rate that hasn't moved in twenty years. 

According to the ACI-NA, desired terminal improvements are pegged at over $63 billion for 2023-2027 with another $38 billion needed for airfield improvements.

The industry's existing debt includes approximately $8 billion in airport bond principal and interest payments that are due each year, with total outstanding debt for U.S. commercial airports standing at roughly $111 billion as measured at end of fiscal 2021.