Unlocking Value: Identifying Undervalued Assets in U.S. Regional Airport Expansion Projects

The U.S. regional airport sector is undergoing a transformative phase, driven by a surge in infrastructure investments aimed at modernizing facilities and accommodating rising air travel demand. As of 2025, airports like Asheville Regional, John Glenn International, and Nashville International are spearheading multi-billion-dollar expansion projects, funded through a mix of state bonds, federal grants, and passenger facility charges. These developments present a compelling opportunity for investors to identify undervalued assets in a sector poised for long-term growth, despite near-term financial headwinds.

A Surge in Regional Airport Modernization

Regional airports are central to the U.S. aviation network, and their expansion projects reflect a strategic response to growing passenger volumes. For instance,
in a new terminal with 12 gates, jet bridges, and a modern control tower, slated for completion by 2026. Similarly,
John Glenn International Airport in Columbus, Ohio, to overhaul its terminal and add seven new gates, aiming to serve 13 million passengers annually by 2029. These projects are not isolated;
(AIG) program, part of the Infrastructure Investment and Jobs Act, , including runway expansions and sustainability initiatives.

Financial Resilience Amid Challenges

While these projects signal optimism, the financial health of regional airports remains mixed.
Global airport revenues in 2023 were still 11.4% below pre-pandemic levels, . However, airports with robust airline partnerships and diversified funding sources are better positioned to weather these challenges.
Corporación América Airports S.A. (CAAP), a key player in the sector, exemplifies this resilience, , reflecting disciplined financial management. Its ability to secure low-cost debt and leverage federal grants underscores the potential for value creation in well-managed airport assets.

Navigating Inflation and Cost Pressures

A critical challenge for 2025 projects is inflation,
Moody's predicts will reach 3.2% this year, driving up construction and material costs. Rising inflation, coupled with supply chain disruptions, has increased capital project budgets, complicating cost-benefit analyses. For example,
aims to consolidate operations and improve efficiency, but its success hinges on managing inflationary pressures. Despite these risks,
airports like Atlanta and Charlotte Douglas International continue to advance expansions, supported by strong airline demand and long-term revenue agreements.

Cost-Benefit Frameworks and Undervalued Opportunities

The (FAA)
mandates benefit-cost analyses (BCAs) for capacity projects exceeding $10 million in AIP discretionary funds, ensuring projects deliver net economic value. These analyses evaluate factors like passenger throughput, operational efficiency, and environmental impact, providing a roadmap for identifying undervalued assets. For instance,
, funded by bonds, grants, and passenger charges, is projected to enhance baggage handling and roadways, directly addressing bottlenecks. Such projects, though capital-intensive, offer long-term returns by improving passenger experiences and supporting regional economic growth.

Strategic Investment Opportunities

Investors seeking undervalued assets should focus on airports with clear revenue streams, strong airline partnerships, and alignment with federal funding priorities. Asheville Regional and John Glenn International, with their state-backed funding and phased completion timelines, represent lower-risk opportunities. Meanwhile,
-such as Tampa International's Airside D terminal-offer scalable growth potential. Additionally,
airports with low debt-to-EBITDA ratios and proactive sustainability initiatives, like Nashville's New Horizons plan, are likely to outperform peers in the long term.

Conclusion

The U.S. regional airport sector is at a pivotal juncture, with infrastructure investments creating both challenges and opportunities. While inflation and debt management remain concerns, the sector's reliance on diversified funding, airline partnerships, and federal grants positions it for recovery. By prioritizing projects with robust BCAs, strong financial backing, and alignment with long-term demand trends, investors can capitalize on undervalued assets in a sector poised for sustained growth.