OREANDA-NEWS. Fitch Ratings has affirmed the following Maryland Transportation Authority (MDTA) bonds:

--Approximately $209.2 million outstanding passenger facility charge (PFC) revenue bonds at 'A';
--Approximately $159.8 million outstanding parking revenue bonds at 'A-'.

The Rating Outlook on all bonds is Stable.

MDTA functions as a conduit issuer for the Maryland Aviation Administration (MAA), a unit of the Maryland Department of Transportation (MDOT), which holds a lease for and operates Baltimore Washington International Thurgood Marshall Airport (BWI).

KEY RATING DRIVERS
The affirmation reflects low leverage and high coverage for both the Parking and PFC debt, but the ratings are constrained by the inherent volatility directly correlated with passenger volume. Future PFC debt plans remain uncertain as capital plans are finalized later this year. Historically, BWI has strong PFC collections as well as a stable enplanement base, but the airport relies heavily on a single carrier (Southwest). Fitch-rated peer PFC credits align with BWI's rating, while other parking credits in Fitch's portfolio are rated higher due to broader revenue streams and diversified air carrier market share.

STABLE CONCENTRATED ENPLANEMENT BASE: Baltimore Washington International Thurgood Marshall Airport's (BWI Marshall) enplanement base has demonstrated a relatively strong resilience. The large presence of low-cost carriers as well as the overall economic strength of the Baltimore-Washington D.C. area has anchored the traffic base. Concentration risk associated with Southwest (Southwest; Issuer Default Rating 'BBB' with a Positive Outlook) service exists and comprises nearly two thirds of enplanements slightly mitigated by a mostly origination and destination (O&D) base at 71% of total enplanements.

NARROW REVENUE STREAMS ON BOTH LIENS: The airport's narrow parking revenue stream is somewhat offset by the airport's moderate flexibility to increase rates because the last increase was in December 2009. The narrow revenue stream and the limited flexibility provided by PFC receipts represent the primary risk related to the PFC revenue bonds. PFC collections have been applied to around 90% of passengers historically.

FUTURE DEBT NEEDS UNDETERMINED: Discussions on how to fund MAA's capital needs have not yet occurred. MAA's current six year capital plan through FY2020 totals $651 million with funding estimated from 12% federal, 50% special, and 38% other sources. MDOT is currently working on the next six-year plan, and a draft will not be finalized until later this month.

MODERATE LEVELS OF FINANCIAL LEVERAGE AND COVERAGE: Net debt/cash flows available for debt service (CFADS) is a moderate 2.44x for the parking bonds and increased to 4.06x for the PFC bonds following the recent issuance. The airport has historically maintained ample coverage on both liens with around 3x coverage on the parking revenue bonds and around 3.7x on the PFC revenue bonds over the last five years.

PEER ANALYSIS
While BWI's parking debt boasts low leverage and strong coverage, revenue is constrained by a single stream which caps the rating also seen in other Fitch-rated parking credits (Philadelphia). Higher rated Fitch parking credits have multiple revenue streams. BWI's PFC debt is rated similarly to other Fitch-rated PFC credits, but the deeper enplanement base, larger PFC revenue stream, and greater coverage bring BWI above New Orleans's 'A-' rating.

RATING SENSITIVITIES

POSITIVE: Narrow revenue stream for bonds restrict the likelihood of a higher rating at this time.

NEGATIVE: Additional leverage on either credit that would result in deterioration of debt coverage ratios to levels inconsistent with the current ratings. In particular, PFC debt service coverage below 2x and leverage in the 6x-7x range would likely result in rating pressure.

NEGATIVE: Increased competition in rate setting with offsite parking lots would reduce the airport's parking volume and stress the rating.

CREDIT UPDATE
BWI Marshall's enplanements grew at a compounded annual growth rate (CAGR) of 1.3% between fiscal 2010 and 2015 reaching 11.4 million, and grew 2.4% in fiscal 2015 (FYE June 30). Condor is planning to increase from two to three weekly flights between BWI Marshall and Frankfurt summer of 2015, and SW will begin service to Liberia and Costa Rica in November 2015. The airport's current hybrid airline agreement is in effect through June 30, 2019, and the airport's cost per enplanement (CPE) was $9.85 in fiscal 2015 still below both Dulles and Reagan. The airport's favorable cost structure helps to offset concern regarding the presence of several competing airports in the service area, and the new agreement provides stability.

As the airport currently levies the PFC at the maximum $4.50 rate, total revenues generated from the charge are dependent on the level of passenger traffic at the airport which constrains the rating. PFC collections for fiscal 2015 totaled approximately $44.7 million, an increase of about 2% from fiscal 2014 due to enplanement increase despite a slightly lower share of PFC paying passengers compared to the prior year. The number of connecting passengers increased slightly along with increased mileage-points-paying passengers who also do not pay a PFC. Fiscal 2015 coverage decreased to 3.33x in FYE2015 from 3.62x at FYE2014 year due to the recent issuance. Under Fitch's 6% enplanement reduction scenario, the minimum coverage is estimated to remain around 2x in the medium term.

The airport has 24,800 parking spaces. The parking rate structure introduced in December 2009 has yielded strong cash flow from parking operations, and the administration has no plans to change rates. Fiscal 2015 gross revenues increased 2% to $71.5 million, and debt service coverage of 2.94x for fiscal 2015 was in line with historical levels. On-airport occupancy levels average approximately 50% while the five off-airport parking operators have lower occupancy and parking rates. MAA also has a new parking contract with SP Plus which started Jan. 1, 2015 and expires Dec. 31, 2019 during which MAA receives an 87.17% commission.

SECURITY
The PFC revenue bonds are secured solely by a first lien on the $4.50 charge assessed on all eligible enplaning passengers at the airport. The parking revenue bonds are secured by all revenues from all airport parking facilities payable to the MAA by the parking concessionaire.