Seeking Alpha: GAP's Traffic Improving, But Costs And Shareholder Squabbles Need Watching

If you like businesses with significant economic moats and effectively unscalable barriers to entry, Grupo Aeroportuario del Pacifico (PAC) or "GAP" as it is commonly known, could be up your alley. GAP holds 50-year concessions to operate, maintain, and develop 12 airports in the Pacific and Central regions of Mexico, including Guadalajara, Los Cabos, Puerto Vallarta, and Tijuana. With traffic on the way up and the company exploring more ways to increase revenue from parking, duty-free operators, and other merchandise/service providers, the revenue outlook is pretty solid.

There are clouds in the sky, though. First, the company's traffic and costs haven't always been the best, and the company has lagged other Mexican airport operators in terms of returns on capital. There is also a serious ongoing squabble among its shareholder base, with the loser potentially looking to sell a large amount of shares. I do see some value in these shares, but a lot of growth and margin improvement already seems to be factored in by the market.

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GAP's Traffic Improving, But Costs And Shareholder Squabbles Need Watching