Asia-Pacific Airports Rode Through Disruptions

November 25, 2011

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Growth in international traffic offset falls in domestic travel in Asia-Pacific airports in the quarter to September 30, according to a ratings agency.

Standard & Poor's said that the grounding and reduced capacity of a domestic carrier, and a protracted industrial relations dispute have caused a dip in domestic traffic at some of the rated Australian airports.

In addition, the recent earthquakes in New Zealand and Japan continue to have a dampening impact on passenger numbers at Christchurch and Narita airports, the ratings agency said in the report.

"Offsetting the drop in domestic traffic at some of the rated Australian airports was healthy international passenger growth during the quarter ended September 30, 2011," credit analyst Danielle Kremzer said.

"Overall passenger growth in Australia has been robust, supporting our investment-grade ratings on the airports. We believe the disruptions are unlikely to have a lasting impact on domestic services. Playing a greater role would be the impact of economic conditions on passenger demand and airline capacity over the near term."

S&P placed Christchurch and Narita airports on negative outlooks because they believed their business risk profiles could suffer in the long term due to the lingering impact of the earthquakes on passenger numbers.

For Hong Kong International Airport, the agency expects a soft landing to occur due to the sluggish global economy. China's continued strong growth would further provide reasonable growth in passenger traffic at the airport, it said.

That said, the global volatility spreading from the US and Europe could depress consumer sentiment in Asia-Pacific. The agency said that if consumer sentiment were to weaken, it could adversely affect passenger traffic at the rated airports.

Nevertheless, S&P's current view of Asia-Pacific's sound economic growth means it believes that the uncertainty affecting other parts of the globe would have limited immediate impact on rated airports. Furthermore, rated airports have refinanced most of their upcoming debt maturities.

On the other hand, the changing low-cost carrier market in Asia Pacific, regulatory developments, and major capital works underway would have a more immediate impact on the credit quality of the region's rated airports, in the agency's opinion.