International Air Traffic Underfunded by U.S., Study Says

The biggest U.S. international airports provide a powerful economic engine and should receive a greater share of government aid, a report said.

The number of international air passengers more than doubled to 163.7 million in 2011 from 75.5 million in 1990, according to a report published today by the Brookings Institution, a Washington public policy group. The increase was more than twice the growth in domestic passengers and far outpaced U.S. inflation-adjusted gross domestic product, the report said.

While this growth has propelled economic activity, U.S. policies shortchange airports in the 100 largest metropolitan airports that accounted for 96 percent of international passenger traffic in 2011, according to the study.

“I land in Shanghai, I see a beautiful airport,” Adie Tomer, an author of the study and senior research associate at Brookings, said in an interview. U.S. gateways, such as New York’s John F. Kennedy International, appear second-rate by comparison, Tomer said.

“When are we going to invest more in our terminal facilities for our passengers?” he said.

Since 2003, international travel grew between the U.S. and every region in the world, the report found.

One-third of U.S. international air passengers traveled to or from Latin America and the Caribbean in 2011, making it the most popular destination. Western Europe followed, with 26.7 percent of passengers, according to the report.

Growth Regions

The growth rates in international travel were highest in areas with rapidly developing economies. The Middle East, North Africa, developing Asia-Pacific nations, sub-Saharan Africa, Eastern Europe and Central Asia all had passenger growth exceeding 40 percent from 2003 through 2011, the report found.

The New York area, which includes Kennedy and Newark Liberty International Airport in New Jersey, had the most international passengers, 21.6 million, it found.

Other leading metro regions include Miami, Los Angeles, San Francisco, Chicago and Washington, according to the report.

The rapid growth in flights to other nations benefits businesses other than airlines and aircraft manufacturers, such as Chicago-based Boeing Co. (BA), according to the analysis.

International visitors, the majority of whom arrive by air, spent $47 billion in the U.S. in 2011, a 57.7 percent increase from 2003.

Economically Vital

“It’s these major commercial airports and the spokes on the network that are vital economic utilities for their metropolitan economies,” Tomer said.

The study found that U.S. policy doesn’t do enough to support airport infrastructure where it’s needed most to foster international travel.

The Airport Improvement Program, which is authorized to spend $3.35 billion this year to fund airport construction and is overseen by the Federal Aviation Administration, is tilted toward smaller airports that have little or no commercial service, it found.

Airports in the 100 largest U.S. metropolitan areas received 36 percent of AIP funding though they had 90 percent of passengers, Tomer said. Fees on tickets generate the majority of funds for airport grants.

Large airports are also limited in how much they can raise from airport-specific fees on airline tickets known as passenger facility charges.

Reality Changing

“Outdated programs must be realigned and reformed to reflect the new and changing global economic reality,” the Brookings report said.

An attempt to alter airport funding or taxes would collide with positions of other aviation-industry groups.

Airlines for America, the Washington-based trade group representing large carriers, objects to any increase in fees or taxes on passengers, Nicholas Calio, the group’s chief executive officer, told a Senate committee hearing in July.

“Airports have more than adequate resources for needed infrastructure, while airline passengers are already overburdened with taxes that can be upwards of 20 percent of a ticket price,” Jean Medina, the group’s spokeswoman, said in an e-mail.

The Aircraft Owners and Pilots Association, a Frederick, Maryland-based group that advocates for general aviation pilots, supports continued funding at smaller airports, according to its website.

“GA airports are economic engines for the communities they serve,” the group said in a report on airport funding.

To contact the reporter on this story: Alan Levin in Washington at alevin24@bloomberg.net

To contact the editor responsible for this story: Bernard Kohn at bkohn2@bloomberg.net

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