Toll increases mean profit for private investors

| 2/19/2009

Private-sector companies that operate a handful of toll roads in North America have stayed profitable despite significant declines in traffic. It would not have been possible without toll increases, company officials say.

Officials with Australian toll operator Macquarie Infrastructure Group issued a report to say their portfolio took a $1.3 billion hit to its profits during the second half of 2008. In their portfolio are stakes in five North American toll roads, including the Indiana Toll Road and Chicago Skyway.

Still, Macquarie managed to post a slight revenue increase during that time – about 1.4 percent – thanks in part to toll increases and to the sale of shares in some of its worldwide assets.

Macquarie operates the Dulles Greenway in Virginia and South Bay Expressway in California.

Macquarie and partner Cintra Concesiones of Spain formed a consortium to operate the 407 Express Toll Route in Toronto, Canada, along with the Indiana Toll Road and the Chicago Skyway.

The consortium is guaranteed toll increases at or above the rate of inflation for decades to come as part of its long-term leases for those roadways.

The 407 ETR did not see significant traffic growth in 2008, but the consortium has countered with a toll increase that took effect Feb. 1 of this year.

Traffic counts in December 2008 on the Indiana Toll Road and Chicago Skyway were down 8 to 10 percent when compared with December 2007.

A 20 percent toll increase on the Indiana Toll Road and a 27 percent toll increase on the Chicago Skyway have kept those roads profitable for the Cintra-Macquarie group.

Transurban, an Australian company that operates the Pocahontas Parkway in Virginia saw traffic decline by 10 percent in 2008. A toll increase implemented in January 2008 offset the brunt of the decline, company officials stated, leading to a 4.4 percent profit.

Toll-road investors do not appear to be slowing down, although Macquarie stated in a report released Tuesday, Feb. 17, that it is not obligated to buy into new toll ventures at this time.

Transurban won a contract in 2008 to construct and operate a tolled-lane project to expand the Capital Beltway in Washington, DC, and add tolled lanes along Interstates 95 and 395 in Virginia. The Beltway project is in its first year of a five-year construction project, and the I-95/I395 project has not yet broken ground.

Cintra has landed several new toll road projects in the state of Texas and continues to bid on more.

Another Spanish company, Grupo ACS, has burst onto the North American scene in the past year by bidding on at least four new toll roads in Texas, Florida, North Carolina and Quebec, Canada.

– By David Tanner, staff writer