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No Excess Baggage at Pacifico

What is driving traffic at Mexico's airports?

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Danny Goode: Among the Mexican airport companies we cover, we believe wide-moat Pacifico is the best positioned and most ready to take advantage of several tailwinds, including a demographic boom in Mexico and an aging U.S. population. A healthy balance between domestic and international passengers and a lack of reliance on a particular airport also puts Pacifico in a unique position compared with its domestic peers. 

In the interim, we expect economic headwinds and AMLO's recent referendum to cancel construction at Mexico City's international airport to slow passenger traffic growth through 2021. Denying expansion at Mexico City's primary station will crimp growth at a major artery within Mexico's network and consequently lower air travel’s growth trajectory through lower connectivity. We think AMLO’s administration will refrain from meddling with airport concessions, and we see more uncertainty emanating from potential economic policies.

Danny Goode does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.

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