Fitch: Airport Rental Car Facilities on the Rise

On-airport consolidated rental car facilities (CONRACs) are expected to increase in popularity at both major hubs and smaller regional airports because of their key operational benefits, according to a Fitch Ratings report.

"Rental car facilities benefit airport finances. According to the FAA, at 22% in both 2012 and 2013 they are the second-largest source of non-aeronautical revenues. Only parking and ground transportation were bigger," said Seth Lehman, Senior Director, Global Infrastructure and Project Finance Group.

"Car rental companies have had a presence at U.S. airports since the early days of commercial aviation, and operations have remained resilient at most locations. This track record of industry stability provides a strategic rationale for airports to finance centralized car rental facilities with long-term debt obligations."

The primary source of revenues to secure CONRAC project costs are customer facility charges generally in the range of $3-$5 per day. Unlike the federally regulated passenger facility charge, customer facility charges are typically established under local enabling legislation and often not subject to rate level limitations.

Still, alternative financing structures can be appropriate, including debt issuances secured by general airport revenue credit or even tax revenues.

While customer facility charge collections are directly linked to visiting original/destination passenger traffic, rental transactions are subject to greater volatility than enplanement changes. Thus, heightened financial risks may arise should airports lever this revenue stream at elevated levels.

For more information, a special report titled "Airport Car Rental Facility Financings" is available on the Fitch Ratings web site at www.fitchratings.com or by clicking on the link.

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria and Related Research: Airport Car Rental Facility Financings (Shifting into Higher Gear)

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=752259

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