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CPA: Fitch rating won’t affect airline fees
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Posted on Jan 03 2005
The Commonwealth Ports Authority has no plans to immediately raise airline fees despite the Fitch credit rating agency’s recommendation for the agency to be more flexible in adjusting rates.
Fitch recently assigned a negative outlook on CPA’s airport bonds, indicating that CPA’s current “BBB-“ rating is likely to be downgraded over the next one to two years.
“The negative outlook was based on concerns regarding CPA’s willingness to raise airline fees in a timely manner and avoid future technical defaults, long-term ability to preserve adequate liquidity and uncertainty regarding funding for future capital improvement projects,” Fitch said.
But in an interview, CPA executive director Carlos Salas maintained that the port authority’s reluctance to raise airline fees should not be a major cause for concern.
He explained that while CPA has the legal ability to raise rates anytime, it would rather stick to a policy of constant consultation with its stakeholders.
“There is a process involved in raising fees. We have to consult and take into consideration the concerns of all partners involved in airport operations, then we can implement the rate increase. That way, everybody understands the necessity for the rate increase,” Salas said.
Still, he agreed with Fitch that maintaining liquidity levels is important if CPA wants to maintain future credit quality and remain afloat in case of downturns in passenger enplanements, such as what happened after the Sept. 11, 2001 terrorist attacks in the United States.
“Fitch has made a good point that the way to have a back up plan for [an event like this] is to have liquidity. Your cash should be readily available for the purpose of covering debt service if something like that happens again. We totally agreed with that and we have demonstrated that over the past couple of years,” Salas said.
Currently, airlines pay CPA an enplanement fee of $8 per departing passenger, an arrival fee of $2 per international passenger, and a landing fee of $1.41 per 1,000 lbs.
