From Rail to Runway: Investing in America’s Domestic Transportation Backbone

By: John Ma, Igeno Infrastructure Partners

This article highlights the significance of investing in America's domestic transportation infrastructure, which is essential due to its predictability, high barriers to entry, and strong linkage to GDP and population growth. It emphasizes the opportunities in sectors like short line rail and private general aviation, which are relatively insulated from global events and have strong growth prospects.

The changes in US Federal government policy in 2025 significantly impacted trade flows, particularly affecting the transport infrastructure that facilitates trade. The busiest port complexes in the US, Los Angeles and Long Beach, experienced a sharp decline in growth in May after ten consecutive months of year-on-year growth, as importers had been frontloading inventory in anticipation of tariffs. 

Essential transportation infrastructure such as toll roads, ports, logistics, rail, and airports are predictable due to their essentiality, high barriers to entry, and strong linkage to GDP and population growth. The challenge for infrastructure investors is to identify predictable revenues in a dynamic environment where international shippers may reconfigure their networks in response to tariffs and policy changes. Igneo's middle-market focus leads to investments in domestically oriented transportation infrastructure subsectors.

“As owners of and investors in US infrastructure and related businesses, we have focused on sectors and regions that should be stable and potentially prosper as the country aims to pivot towards greater domestic manufacturing.” - John Ma, Partner, Co-Head of North America

Patriot Rail: Playing the Short (Line Rail) Game

In the current environment of volatility and uncertainty in international trade values, the short line rail industry is relatively insulated from global events, mitigating issues like tariffs. Patriot Rail operates 31 short lines covering over 1,200 route miles in 23 states, with over 90% of their freight volume being entirely domestic. They are selective in seeking exposure to intermodal transport and have no exposure to the automotive sector, reducing concerns over the impact of tariffs.

While meaningful reshoring of manufacturing has not yet been seen, it presents a longer-term growth opportunity. In the near term, an environment where industrial and manufacturing companies, the core of Patriot’s customer base, have confidence to make multi-year capital investments to expand capacity would help accelerate growth. Igneo successfully refinanced the business this year, and Patriot Rail’s new chief executive has led the successful creation of two partnerships to develop and operate facilities with the large Class 1 railroads.

The Federal government has helped support freight rail through competitive grant funding programs, and that Federal support has not reversed under the new Administration—evidence of freight rail infrastructure’s broad, bipartisan support. 

Infinity Aviation: To Infinity and Beyond

Steel wheels are not the only form of transport to interest us in North America. Another mode of transport which is growing rapidly is private general, or non-commercial, aviation. There is plenty of this activity in the US, with over three and a half million private jet flights in 2023, according to JetFinder, which has driving significant demand for hangar capacity. 

A report by Honeywell Aerospace Technologies predicts that 830 business jets worth $27bn will be built this year. Even though most of those will go to meet demand in the US, we estimate that there is still a three-year backlog of orders for general aviation aircraft in the US.

Earlier this year, Igneo acquired Infinity Aviation; a fixed-base operator (FBO), offering fueling services and hangars for non-commercial, private general aviation aircraft. This market is flourishing, especially in America, in part because of novel means of accessibility, including fractional jet ownership and jet cards, which allow flyers to buy hours of flight time on a plane without owning the plane itself. The Honeywell report noted a 32% growth in expenditure on new aircraft from 2019 to 2023.

Where Infinity Aviation comes in is housing the growing number of these vehicles. Major airports, including general aviation airport facilities located in or near big cities, are reaching capacity. Planes are getting larger, and existing hangars are full already. Infinity Aviation already operates at one such airport 50 miles from Boston.

True to our focus, we have alighted on a middle-market opportunity to invest in the FBO sector. There are two large national players, with over one hundred locations each, focused on Tier 1 general aviation airports. We are excited by the prospects for Infinity in secondary general aviation facilities, which includes looking for other FBO operations and hangar space at other airports.

Patriot Rail and Infinity Aviation are two examples of our approach to North America. We seek to invest in businesses with defensive revenue characteristics acquired by meeting essential needs of the economy alongside strong growth prospects derived from long-term trends. The middle-market nature of our focus means that investors are getting access to the domestic US economy, within a diversified strategy, rather than international enterprises.

Bio: John Ma is a Partner and Co-Head of North America for Igneo Infrastructure Partners and is based in New York. He is a member of the GDIF and NADIF Investment Committee.

John is currently a board director at Patriot Rail and Terra-Gen. Prior to joining the team in 2018, John held a senior role at the Port Authority of New York & New Jersey, which operates the bi-state region’s airports, ports, bridges and tunnels, and PATH commuter rail. Prior to that, John was a Managing Director and head of US infrastructure advisory in the Investment Banking Division of Goldman, Sachs & Co.

John has a J.D. from Yale Law School and an A.B. from Harvard College. 

Disclosures: This information has been prepared and issued by First Sentier Investors (Australia) RE Ltd (ABN 13 006 464 428, AFSL 240550) (FSI ARE), which forms part of First Sentier Investors, a global asset management business. First Sentier Investors is ultimately owned by Mitsubishi UFJ Financial Group, Inc (MUFG), a global financial group. Igneo Infrastructure Partners (Igneo) is an unlisted infrastructure asset management business and is part of the First Sentier Investors Group.

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