The Harrisburg International Airport is set to sell $129 million of revenue bonds to finance capital projects, including a new "European-style" airport terminal linked by moving aerial walkways to a new Amtrak station.
The late February deal is the first ever by the Susquehanna Area Regional Airport Authority, which took over the ownership and operation of Harrisburg International Airport and nearby Capital City Airport from the state of Pennsylvania in 1998.
Despite stiff competition from Baltimore-Washington International and Philadelphia International, HIA has experienced a 15.6% growth in passengers during fiscal 2002 after a 12% decline in 2001. The uptick follows the addition of low-fare service at Harrisburg by US Airways and United Airlines and an aggressive marketing effort by HIA, which dubs itself the "Antidote to the Big Airport."
"If you want to choose congestion, long lines, highways that are jammed, and looking 45 minutes for a parking space, that's where you choose," said HIA director Fred Testa, who previously ran the Philadelphia airport before being ousted by Mayor John Street. Testa also presided over the expansion of Manchester airport in New Hampshire into a regional airport.
Goldman, Sachs & Co. is senior manager on the deal. The bonds, backed by airport revenues, consists of three series: $55.81 million subject to the alternative minimum tax, $54.56 million of non-AMT debt, and $18.6 million of taxable bonds. Eckert Seamans Cherin & Mellott serves as bond counsel.
A portion of the bonds will be used to refund $16 million in outstanding revenue notes and $9.1 million in Dauphin County General Authority parking revenue bonds.
Located 12 miles southeast of the state capitol, the airport serves 676,738 enplaned passengers, many of them flying into Harrisburg on government business. The city is also the headquarters for Rite-Aid Corp. Hershey Foods Corp., the nation's largest candy-maker, is nearby. The airport, served by 12 passenger airlines, including nine regional carriers, projects the number of passengers to grow 24% by 2008 to 837,000.
The airport's $233 million capital plan is only partially funded by bonds. It expects to receive $45 million in Federal Aviation Administration funding within 30 days.
Fitch Ratings assigned a BBB-plus rating to the bonds. Moody's Investors Service assigned a Baa1. The ratings are partially based on the expectation that the airport gets FAA funding.
"They've had a lot of enplanement volatility," said Fitch analyst Jessica Soltz Rudd. "At the same time, they have very good plans and very good management."
Moody's analyst Anne C. Van Praagh said Harrisburg is well-positioned to grow because the airport's two largest carriers have offered business travelers attractive fares.
"They need the low fares to compete with Baltimore, which has Southwest, and Philadelphia," Van Praagh said.
The airport's capital program includes a new ramp and taxiway as well as a new terminal with new security features. In addition, the airport plans to build a three-story transportation center attached to the terminal. The building includes a parking garage and space for rental cars, buses, cabs, and hotel shuttles.
Finally, plans call for a new train station, on Amtrak's New York-to-Chicago line, to service the airport. The station will be connected to the terminal and the transportation center by aerial walkways with moving sidewalks.
"This is the first true multi-modal facility in the country in the European style," Testa said, explaining the combination of aviation, ground transportation, and rail in walking distance of each other. "You get on once; you don't have to schlep with a bus like you do in Baltimore."
