Global Airports Rise, But Regional Differences Are Vast

Fitch Ratings believes, while airports globally are growing strongly, the differences in performance between airports across global regions are likely to continue due to local economic trends and choices by carriers. According to Airports Council International, global passenger traffic grew by 5.0% year over year in the first half of 2012. Global cargo traffic increased by 0.9% year over year.

In the Americas, Latin American airports are leading the growth, with an over 16.0% increase in passenger traffic and a cargo traffic increase of 1.6%. Mexican airports have risen sufficiently to recoup the steep losses they suffered in 2008 believe the big drop was 2009. Bogota airport (BOG) in Colombia saw an increase of 8.0% in passenger traffic and a significant 8.9% increase in cargo. In our view, it seems that many of these markets are being powered by their rising internal demand.

Some of Latin America's regional airports are testing the relationship between a country's gross domestic product (GDP) and its airports' performances. Despite Brazil's GDP deceleration (expanding by just 0.5% in the second quarter of 2012), Sao Paolo's (GRU) passenger traffic rose by 8.5% and Campinas' (VCP) increased by 26.3%. Our outlook at the beginning of this year was for modest growth in these airports. From a traffic perspective, we now expect them to continue to perform very well through the end of 2012.

North American and European airport traffic is increasing at a much slower rate. Europe's passenger traffic increased by 3.1% and North America's gained 0.9%. The performance of individual airports on these continents tends to vary widely. We believe the strong market airports and international gateway hubs are outperforming the regional averages, while many regional and secondary market airports are underperforming as carriers continue to favor the largest economic markets while restraining capacity and supply overall.

We expect that dynamic to continue for the near term. For example, Los Angeles (LAX) saw passenger traffic increase by 3.9%. New York (LGA) also notched 2.2% growth. But passenger traffic declined by 18.1% at Memphis (MEM). That airport's status as a FedEx Express "Super Hub" also faltered. It's cargo traffic declined by 11.4%.

Additional information is available on www.fitchratings.com .

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