Rising Aeronautical Fees and the Unsubsidized Nature of Canadian Airports
In the absence of meaningful and predictable government subsidies or other funding sources, tariff increases appear to have become a necessary move for Canadian airports, and probably the only option left to improve cash flows and reignite future growth. Increased aeronautical fees may gradually erode Canadian airports' relative competitiveness vis-à-vis their U.S. peers; however, DBRS Morningstar doesn't currently expect the impact to be material, as we believe major Canadian airports' pricing power will remain largely protected by their monopolistic status and the resilient demand from the origination and destination traffic sector, both of which lend support to their ratings.While airports in both Canada and the U.S. are public, being operated under some forms of cost-recovery mandates, U.S. airports have had the benefit of substantial federal contributions during the Coronavirus Disease (COVID-19) pandemic. From a credit perspective, we view such level of government support during times of considerable economic uncertainty to be a strength for U.S. airports.
DBRS Morningstar is a global credit ratings business with 700 employees in eight offices globally. DBRS and Morningstar Credit Ratings are committed to empowering investor success, serving the market through leading-edge technology and raising the bar for the industry.
Together, we are the world’s fourth largest credit ratings agency and a market leader in Canada, the U.S. and Europe in multiple asset classes. We rate more than 2,600 issuers and 54,000 securities worldwide and are driven to bring more clarity, diversity and responsiveness to the ratings process. Our approach and size provide the agility to respond to customers’ needs, while being large enough to provide the necessary expertise and resources. For more details visit us at dbrs.com.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.