Hartford Business Journal

www.HartfordBusiness.com • October 5, 2020 • Hartford Business Journal 15 separate bonds to fund construc- tion of the facility — one for $35.4 million that matures in 2049 and another for $115.7 million scheduled to be fully paid off by 2045. CAA is currently only required to make interest payments on the debt service. It's total annual debt payments — including principal — reach a peak of $9.6 million start- ing in 2023. That will be paid off through customer facility charges CAA levies on car rental compa- nies, Dillon said. Bradley currently charges $8.40 per car rental per day (so if 10 people rented cars for two days, the fees would add up to $168). In fiscal 2019, car rental companies at Bradley Airport — including Avis, Budget, Hertz, Enterprise, Alamo and others — recorded 1.5 million rental car transactions, which generated $11.6 million in customer facility charge revenue for the CAA. "This financial plan was put together on the basis that customer facility charges would satisfy the debt service," said Dillon. Bradley's car rental fee rev- enue has more than doubled since 2015, but will take a major hit this year with the precipitous decline in pas- senger traffic. Through July, Bradley recorded 1.6 million pas- senger rides so far in 2020 (including deplanements and enplanements), down nearly 60% from a year ago. At the same time, car rental company revenues have dropped by about half since March, said Chris Brown, executive editor of California-based trade publication Auto Rental News. "Revenues and bookings had dropped off a cliff," Brown said. "It really tipped Hertz into bankruptcy, and it has caused fleet sell-offs." That dynamic led S&P Global Rat- ings in late September to down- grade the credit ratings (from A- to BBB) of Bradley Airport's ground transportation center bonds. " … Rental car activity will be severely or materially depressed and unpredictable for 2020 and beyond as a result of the COVID-19 pan- demic and associated effects that we believe are outside of management's control," S&P Global Ratings credit analyst Ken Biddison said. In May, Fitch Ratings lowered its outlook for Bradley's ground trans- portation project to "negative," while still affirming its BBB rating. However, Jeffrey Lack, co-lead of Fitch's airport sector, said the fact that the project is still under con- struction with debt payments not peaking for a few years, puts Bradley in a better position than if the proj- ect was already complete. "[The project] is benefiting from the fact that it's in construction right now," Lack said. Most of the 12 car rental compa- nies Fitch rates are currently on a negative outlook, Lack said, due to the impacts from the pandemic. Air- port rental car companies generally pay fees to their hosts based on the revenue they generate, but con- tracts typically stipulate a minimum guaranteed payment, Lack said. "When you have a drop in passenger traffic as significant as we're expe- riencing, it impacts you across the board," Dillon said. "It's really our pas- senger volume that drives all of these different revenue sources." Long term, Lack predicts car rental com- panies will pull through, noting that many are run by large cor- porations that have substantial reserves to get them through prolonged downturns. Dillon said he isn't worried about a mass rental-car company exit because the pandemic won't last forever. "There will always be a certain amount of rental car business at the airport no matter what happens," Dillon said. Passenger traffic at Bradley International Airport is down 58.3% through the first six months of the year Total passenger enplanements and deplanements 2020 2019 % Change January 487,315 474,024 2.8% February 500,679 468,931 6.8% March 291,352 580,840 -49.8% April 20,579 612,102 -96.6% May 57,843 612,306 -90.6% June 126,082 582,256 -78.3% July 155,444 603,144 -74.2% Total 1,639,294 3,933,603 -58.3% Source: CT Airport Authority Bradley International Airport rental car fee revenue Fiscal year Rental car Car rental transactions fee revenue 2015 1,565,138 $5,477,984 2016 1,557,253 $8,833,553 2017 1,539,743 $9,980,893 2018 1,547,201 $10,753,047 2019 1,545,540 $11,591,006 Source: CT Airport Authority A rendering of Bradley International Airport's ground transportation center project. RENDERING | CONTRIBUTED

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