According to a recent report by Fitch Ratings, airport infrastructure grants made through the Bipartisan Infrastructure Law are playing a vital role in offsetting the continuing rise of capital costs that airports across the country must bear as each entity undertakes its needed infrastructure expansions and projects.
Fitch also believes that airports will have strong cash flows and liquidity profiles for this year and the years to come. This is due to the financial support that the industry receives from the federal government and positive travel trends that will strengthen the airline industry’s position.
Fitch Ratings further noted:
The BIL provides almost $970 million of federal grants per year over five years through the competitive Airport Terminal Program (ATP) for airport terminal improvement and access projects and air traffic control tower updates, demonstrating continued strong government support for the industry even though COVID risks have diminished. However, this amount only represents a small proportion of the estimated infrastructure needs across US airports. A 2021 survey from Airports Council International-North America indicates a backlog of projects well in excess of $100 billion over the succeeding five-year period.
FY23 grants were spread across non-hub, small, medium and large hub airports, with Chicago O’Hare (A+/Stable) receiving one of the largest award amounts of $50 million for its Terminal C rehabilitation, which has a total budget of $136.3 million and is part of the airport’s larger $12 billion, 10-year capital plan. The smaller Key West airport (A-/Stable) was awarded $13.3 million for a new concourse with seven added gates. The BIL grant and separate federal and state grants cover around 65% of the total project cost of $113.4 million. Smaller airports generally benefit more from grant awards relative to their larger peers as their debt capacity for project funding is constrained by their limited enplanement bases.
