The Tragedy of American Airports
Updated: Jun 15, 2022
Previously, every article on this blog has been about airplanes or airlines, but there is much more to the aviation industry than simply what flies us. Airports are the commercial hubs that see billions of travellers pass every year and are a crucial part of what makes air travel as commonplace as it is today. In this article, I explore the dire state of American airports, the reason behind this condition and the contrast to the East Asian and Middle Eastern Airports.
Aviation is synonymous with the United States, it has always been the site of major breakthroughs throughout the history of the industry, from the flight of the first airplane in 1903 in North Carolina to the invention of the queen of the skies by Boeing in 1969. The U.S. has always held a special, irreplaceable place in the aviation industry which is only recently coming into question in large part due to the level of customer comfort, or a lack thereof. While Boeing has maintained its prestigious reputation, it has been overshadowed by uncomfortable travel. Over the past few decades, we have witnessed the exponential growth of East Asian and Middle Eastern airlines and airports, with only little innovation and change on the other side of the world.
Airports were built in the 1920’s with non-existent passenger service and were used only by the U.S. post office to experiment with delivery by airplanes. During the great depression, there was an increase in technology and the number of passengers increased from 6000 in the 1930’s to over 1.2 million in 1938. However, flying was still loud and cold, only used by the 1% and other businessmen who refused to sacrifice time for comfort. By the 1940’s, these airports evolved from dingy structured to massive art deco buildings built for a large number of people.
The 1950’s and 60’s form the golden age of aviation where air travel meant three-piece suits for men, dresses for the ladies, lavish meals and spacious, leather seats. Wood, propeller airplanes gave way to all metal, sleek jet liners with the notable Boeing 707 introduced in 1958. Due to the massive amounts of public financing at this time, America had moved into the jet age. They were known for the efficiency of travel times and luxurious terminal. This could not be further from today’s world. Despite the deregulation of the airline industry in 1978, the airports were still owned largely by the government and relied on funding to stay afloat. By the mid 2010’s, the decaying infrastructure on many of the country’s major airports like JFK and Dallas spurred the government’s attempts to privatise these airports. They abandoned the public model and turned to private investors for help.
Airports all over the world divide their income into three major categories, aeronautical operating revenue, which consists of landing and slot fees, parking rent charges fuel sales, non-aeronautical operating revenue which is parking and concessions and non-operating revenue, which in most cases is government grants and returns from investments in government bonds.
While the largest source of income is related to the airline, over 35% of U.S. airport revenue comes from non-aeronautical operating revenue. Out of the $9.7 billion, $5.8 billion came from vehicle parking charges. This means that a large chunk of an airport’s revenue relies on people bringing their cars in to park. This is the primary reason why major U.S. airports are reluctant to have mass transit connections. While airports all over the world are connected to the city by rail or bus, U.S airports rarely have any convenient ways of reaching them except by road. According to a 2015 study by the Global Gateway Alliance, New York City’s JFK was ranked as the world’s least accessible airport. Despite a vast subway system with over 400 stations, the mere 14-mile journey from Grand Central Station to JFK takes between 70 to 90 minutes, requiring a transfer between at least three trains. On the other coats, LAX has no rail connection and travellers are forced to sit through the heavy traffic of Los Angeles’ highways. Improving passenger convenience will only destroy revenue streams for airports. As a result, the unpleasant travel experience in the United States starts even before you step foot inside the airport.
The tragedy inside the airport is a result of poor governance and a rigid bureaucratic structure that has stalled any improvement over the past decades. Major U.S. are almost entirely owned by the central or state government, and the smaller ones are handled by the county governments. Simply put, there are some things that private entities are simple better at than governments. In this case, it is handling the operational and commercial side of airports. Looking at another continent as an example, 9 out of the 10 biggest European airports are entirely or partially owned by private investors. These companies are profit motivated and are willing to spend money to improve facilities that will yield profits in the future. In contrast to government who are forced to have a yearly positive figure on their budget sheet. This has led to long security lines, poor maintenance and an overall appalling customer experience.
Below are some very specific ways to illustrate how much of a difference public and private ownership makes. Because U.S. airports are funded by taxpayers, they are not allowed to charge a fee for the use of an airport except for passenger facilities like lounges and even these prices are highly regulated. The federal government micro manages these airports. Any new form of retail requires a tedious approval process and unnecessary red tape that discourages major brands from opening shops at the airports. Additionally, there is no incentive to improve efficiency of security queues in public owned airports since profit is not the motive. Because studies show that an additional 10-minute increase in wait time reduces consumer spending at airports by 30%, privately owned airports around the world are creatively designed to be as smooth as possible, because past the lines wait attractive shopping spaces, restaurants and other facilities. Further, European airports do not announce the gates of the flights until right before boarding to force the travellers to spent time in the social spaces of the airport.
Their Asian counterparts like Hamad and Changi have high tech terminals that cater to customer experience. They have outstanding facilities like gardens, theatres, sports centres, extravagant lounges and many more that simply make flying an enjoyable experience. However, these countries pour significant amounts into their airports and cannot be compared to the United States. However, their neighbour, Canada punches well above its weight in terms of quality of airports. Its two major international airports, Toronto-Pearson and Vancouver provide great passenger experiences with complimentary iPads, lounges and art displays. These models can be the easiest for the U.S. to emanate.
Apart from the major hubs, the United States has a large number of medium and small size airports that have to be looked at. In the early 2000s, there were around 10 to 12 major domestic carriers that operated out of various airports all across the United States. Northwest Airlines, for example, used Memphis as their hub, a city of 650,000 that served as a critical travel point in an out of the region. However, because of the economic recession of 2008, Northwest Airlines was forced to sell to Delta, a bigger airline who didn’t need Memphis as a hub, they simply used Atalanta. As a result, Memphis airport, that saw over 6 million travellers in 2010, only catered to 4.5 million in 2018, a decrease of 25%. This has been the case for many other medium sized airports like Cleveland, that used to be the hub of Continental Airline which then merged with united. Milwaukee airport was the hub for Air Tran Airways, which was then bought over by Southwest Airlines and Pittsburgh, which used to be the hub of US airways is now almost deserted since they sold to American Airlines. As a result of this, a dichotomy of will appear in which the marquee airports will get substantially better whereas the rest will fail to see any form of investment and will continue to fall into disrepair.
Apart from the economics side of things, the United States aviation sector suffered tremendously as a result of the 2001 attacks. After this horrific event, any government grants given to airports always came with strings attached, forcing airports to use a specific amount on beefing up security, even when no more was necessary. Even if spending this money meant unnecessary employment of extra staff at security lines and a wastage of resources, airports were forced to comply. Apart from these strict spending regulations, overall passenger volume suffered a sharp decline over the next two years, and then again in the early 2010s, contributing to reduced revenue overall.
Despite these setbacks in the past, the United States has now opened its doors to vast private investment. JFK, for example is getting a $13 billion overhaul with the building of 2 new terminals and improved facilities and transport to the existing terminals. Out of the $13 billion, $12 billion is from private investment. A similar story is unfolding on the other cost where LAX is going through with a $14 billion renovation with over 50% of this being private investment. However, these private influxes of cash are only viable at the large airports, and the sad reality is that the smaller airports just don’t see enough traffic to attract investors. The dire situation of these airports is perfectly summed up by this statistic. The useful life of an airport is around 20 to 25 years, after which it become non-competitive. The average life of a terminal in the United States is over 40 years, clearly portraying the need for change.
Overall, it is not that the U.S. cannot build good airports, they are simply a victim of poor governance and bureaucratic laziness combined with a string of unfortunate events. All hope is not lost since over the next decade, we will continue to see projects like the JFK and LAX renovation extent to more airports, cementing the prestigious place of the United States in aviation.