Moody's warns UK airports' passenger growth is set to fly lower due to Brexit uncertainty and the weak pound

 
Rebecca Smith
Heathrow's capacity constraints also mean the airport is expected to grow at a more modest rate than other European airports
Heathrow's capacity constraints also mean the airport is expected to grow at a more modest rate than other European airports (Source: Getty)

Ongoing Brexit-related uncertainty and the weak pound is set to act as a dampener for UK airports' passenger growth, according to Moody's.

Raffaella Altamura, vice president at Moody's investor service, said:

While traffic at the UK airports we rate, excluding Heathrow, will likely expand by two - six per cent, Brexit-related uncertainty and the weak pound could act as a drag on passenger growth at UK airports.

Heathrow's capacity constraints mean that the airport is forecast to grow at a more modest rate of 0.5 per cent to one per cent this year.

Although the ratings agency says European airports' credit quality is expected to remain solid, a slowdown in traffic growth is expected this year.

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It said "a significant upswing" in passenger volumes last year will be tough to repeat.

"Traffic growth will slow but remain positive in 2017 after last year's jump," said Altamura. "Passenger volumes for European airports will grow by four - seven per cent, outpacing the one - three per cent we expect for European toll road operators."


(Source: Moody's)

For last year, traffic growth across the major toll road and airport operators varied across Europe.

In the airport sector, Spain recorded passenger increases of 11 per cent, which Moody's said partly reflected the shift in leisure traffic from countries with perceived higher geopolitical and terrorism risks, such as Turkey and North Africa, to those seen as safer.

Regional differences will continue, but the ratings agency expects passenger volumes linked to intra-European travel to be supported by increased penetration of low-cost airlines and that continued shift of leisure demand from mostly non-EU airports to those European destinations perceived as safer.

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Moody's maintains a stable outlook on the airport and road toll sectors, supported by continued traffic growth for the year ahead, but did warn that traffic at some UK regional airports, as well as European airports that receive UK tourists, could be hit if sterling remains weak against the euro due to continuing Brexit-related uncertainties.

Theresa May triggered Article 50 on 29 March, kicking off the process of Britain's withdrawal from the European Union.

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