A history of close calls, political fights over traffic levels and a deadly crash at Ronald Reagan Washington National Airport is focusing attention on the skies over Washington, D.C., as litigation risks come to the surface.
"A key credit risk for airports is financial exposure from litigation, which is generally mitigated by insurance," said Kurt Forsgren, US Public Finance Managing Director, S&P Global Ratings.
"While safety concerns could weaken an airport's desirability and demand over the long term, this hasn't been observed for major U.S. airports."
On Jan. 29, a U.S. Army helicopter crashed into an American Airlines regional jet while flying over the Potomac River just east of Ronald Reagan Washington National Airport.
The crash killed all 67 people aboard the aircraft and raised scrutiny about a busy airport corridor, understaffed air traffic control operations, and Washington D.C.'s high level of helicopter traffic.
The finances of Washington's two major airports, Reagan National and Dulles International are overseen by the Metropolitan Washington Airports Authority. MWAA also manages the finances for the Dulles Toll Road which connects the airport to Interstate 495.
Even though the aftermath of the catastrophe is still generating headlines about the cause, MWAA's credit rating is currently holding steady.
"Historically, aviation accidents, like the one at Washington-Reagan National Airport haven't negatively impacted airport operators' credit quality, and we expect the same outcome here based on current information," said Forsgren.
The amount of traffic allowed to move through Washington-Reagan has been a political bone of contention as lawmakers attached a provision in the Federal Aviation Administration's reauthorization passed last spring to open more slots for flights.
The increases were opposed by Virginia Sens. Tim Kaine and Mark Warner, both Democrats. The airport is owned by the federal government but is located on the Virginia side of the Potomac River.
Washington-Reagan offers easy access to the city, a plus for anybody with business four miles away on Capitol Hill. Dulles is 26 miles west of the U.S. Capitol Building and was connected to the city's Metrorail System in 2022.
Baltimore- Washington International Thurgood Marshall Airport is thirty miles northeast from downtown Washington.
According to the most recent data from the FAA, BWI ranks 23rd for total enplanements, Ronald Reagan National is right behind them at 24th and Dulles is ranked 26th. Dulles benefits from having customs and immigration facilities on site, a plus for international destinations.
Although Dulles and Regan National compete for passengers, MWAA financially benefits from the relationship.
"MWAA has the unique benefit of operating as a two-airport system with a very large enplanement base," said Jeffrey Lack, senior director, Global Infrastructure & Project Finance, Fitch Ratings.
"We feel that this was an accident, and any impact would likely be minimal and short-term relative to the stress level applied in the Fitch rating case and to the total volume of the MWAA system and therefore not have a material impact on the financial profile and credit quality."
Fitch is assuming that any changes in traffic levels or patterns caused by the crash will be "extremely short-term and very minimal relative to annual enplanement levels."
The three major ratings agencies are all bullish on the Airports Authority's Airport System Revenue Bonds. Fitch has them at AA- stable, Moody's Ratings Aa3 stable, and S&P Global Ratings at AA-stable.
Airport bonds are usually considered safe bets even in time of uncertainty by virtue of their backing.
"The aviation industry in the U.S. is that it is largely modeled as a cost recovery system," said Lack. "Airports recover anywhere from a portion of their total costs from airlines to full cost recovery for some, so this acts as a mitigant to their financial profiles in times of reduced enplanement levels."
