Why Are American Airports So Awful?
It’s the one opinion that Donald Trump and his opponents seem to share: America’s airports are so bad, it’s like “they’re from a third world country,” as Trump said in the first debate. Vice President Joe Biden used the same phrase to describe New York’s LaGuardia two years ago. Much of the flying public seems to roughly agree.
The sentiment is understandable if you’ve recently transited through a gleaming airport in Singapore, Dubai or Kuala Lumpur. Where LaGuardia has low-end souvenir shops, grim food courts and cramped concourses, these airports have butterfly gardens, jungle trails and sound-proofed, WiFi-enabled snooze cubes. It’s enough to drive a frequent flier to distraction. And it makes you wonder why the world's biggest economy can’t keep pace.
One obvious reason is that American infrastructure is chronically underfunded. McKinsey recently estimated that the U.S. needs to spend about $125 billion more a year simply to maintain its infrastructure at current levels, let alone make improvements. Airports have been no exception to this trend: Even as air travel has surged, capital spending on aviation infrastructure has actually declined, from $21 billion in 2004 to $13 billion in 2014.
Yet money isn’t the only problem. Even with significantly more investment, U.S. airports would probably never match the world’s best, for a simple reason: They cater primarily to domestic travelers. The best-loved airports -- such as Singapore Changi, Seoul Incheon and Tokyo Narita -- are international hubs or national gateways. They compete for the business of wealthy long-haul passengers who are willing to spend more time and money at the airport. Those passengers attract better retail and restaurants, which in turn yields more revenue for the airports to spend on amenities.
Thanks to geography, U.S. airports can’t compete for the lucrative international layovers that drive this virtuous cycle. That means they don’t have much incentive to spruce things up to meet the demands of wealthier global travelers, such as free-spending Chinese duty-free shoppers. Passengers have noticed: To find a U.S. city in the SkyTrax annual airport ranking, you’d need to scroll all the way down to number 28, where Denver International is slotted.
A better comparison for U.S. airports isn’t a national gateway like Dubai International or Incheon, but rather the dozens of airports that China has built in recent years to connect its own cities. Although they can be great architecturally, often they’re little more than shined-up shells housing horrific restaurants, down-at-the-heels retail and sketchy soap-free restrooms -- a fact reflected by their absence in the SkyTrax rankings, and by volumes of brutal online reviews that make LaGuardia sound like a glittering oasis.
Even if American airports aren’t as bad as the rhetoric suggests, that doesn’t mean there’s no room for improvement. Last year, one trade group estimated that the U.S. needs to invest $75.7 billion to accommodate passenger and cargo growth at its airports through 2019. The improvements needed -- such as replacing aging terminals, adding runways and streamlining security -- may not have the visceral appeal of, say, Seoul Incheon’s in-terminal ice skating rink. But collectively, they’d reduce delays and generally make traveling a less miserable experience.
Money for such projects is scarce, of course. But one way to bridge the gap is to attract private investors and operators who can make improvements in exchange for long-term leases or even ownership. About 450 airports worldwide have been privatized to some degree, including some of the world’s best. Yet privatization has lagged in the U.S. The process is inhibited by the financial benefits that still accrue to public airports, such as the ability to issue tax-exempt bonds. Making things worse, since 2000, Congress has capped the Passenger Facility Charge that airports can use to pay for upgrades.
The good news is that companies are finding ways to invest in some of America’s worst airports anyway. A long-sought $4 billion revamp of LaGuardia is being partly funded by a group of companies working with the Port Authority of New York and New Jersey, which operates the airport. Congress could encourage similar projects elsewhere by offering tax preferences for bonds issued by airport investors. It could also increase the Passenger Facility Charge, or at least index it to inflation.
These reforms won’t necessarily make America’s airports great again. But they would ensure that they’re good enough to get passengers where they need to go, in safety and relative comfort.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
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