DALLAS -- U.S. airports, ports, and toll roads should experience healthy growth in 2016 with the three sectors expected to benefit from a recovering economy and low fuel prices, Fitch said in an outlook report.
The credit outlooks are expected to remain stable in 2016 for the sectors, which should continue the steady growth from last year although capital needs also will increase, Fitch said.
"Moderate growth will likely be offset by increasing capital improvement spending needs across all sectors, driven somewhat by lower borrowing costs for new money issuance," the analysts said.
International hub airports will lead an expected 3% to 3.5% increase in overall air passenger traffic, while ports will benefit from a stronger dollar that will make imports cheaper, the report said. Toll roads in the growing Southeast and Southwest regions should continue to lead in traffic performance, much as they did in 2015.
"All transportation sectors will likely retain ample pricing power, ensuring at least inflationary rate increases in the near to medium term, reflecting fuel-savings benefits and lower import prices, as well as the expectation for steady volume growth," the report said.
Fitch expects traffic on toll roads will continue to increase in 2016 from last year's levels due in part to population and employment growth in the South and Southwest.
Toll facilities in the Midwest and Northeast benefited from moderate economic growth and low fuel prices in 2015, but under-performed other regions due to below-average population growth.
Toll traffic was also up in the West, due to robust performance from Southern California facilities.
Toll revenues grew about 1.6% more than traffic totals in 2015, reflecting inflationary toll rate increases. That favorable trend continued into the first quarter of 2016, Fitch said. Revenues are expected to increase 2% over the intermediate term, the analysts said.
Toll road revenues will remain linked to economic conditions and fluctuating gasoline prices in 2016, according to Fitch.
"A national or regional economic slowdown, or a rapid reversion of gas prices to historical levels, would likely have a dampening effect on traffic and revenue growth trends," the analysts said.
A recent report from the International Bridge, Tunnel and Turnpike Association said toll road traffic was up 7% in 2015, with five billion trips on 31 toll roads. The IBTTA survey found that 30 of the 31 had traffic increases last year, with 23 of them reporting the largest traffic volumes in their history.
Airport enplanements grew by 5% in 2015, with all but 10 of the airports rated by Fitch posting traffic increases. More than half of the airports last year reported traffic increases of 3% or higher, which was double the 2014 growth rate.
Passenger traffic is expected to grow in 2016 thanks in part to increased seating capacity of most U.S. airlines but will vary across airports, Fitch said. Those airports serving major markets or international destinations should have the largest increases in traffic while airports serving smaller markets may lag considerably, according to the report. The largest growth in passenger loads last year came from large hub airports in Seattle, Chicago, and New York, but smaller airports in Dallas, Fort Lauderdale, Fla., and New Orleans also reported significant passenger increases. The weakest performers were regional airports in Dayton, Ohio, Jackson, Miss., and Long Beach, Calif., Fitch said.
Seaport capital projects are being driven by the need to accommodate the larger cargo ships that can travel through the expanded Panama Canal, the report said.
The projects involve deepening the shipping channels, expanding wharf capacity, and uncorking surface transportation bottlenecks that hamper the movement of cargo to and from the ports.
