Airlines & Airports
Are US Airports in Danger of Falling Behind?
Photo courtesy of Thinkstock
Politicians from both sides of the aisle have criticized the state of airports in the United States. In 2014, Joe Biden said of walking through LaGuardia: “I must be in some third world country.” Donald Trump echoed this criticism during his presidential campaign, targeting New York City area airports and LAX.
Is this merely political rhetoric or are the problems at U.S. airports real?
The biggest worry for U.S. airports is not making cosmetic changes to terminals; it is keeping up with the air travel industry’s rapid growth. The fear is that bureaucracy in Washington could put U.S. airports' development far behind the rest of the world.
Traffic is about to rise significantly
According to the IATA, the world is on the cusp of an air travel boom, and preparing for this should be job number one for airports. The trade organization’s projections suggest that much of the growth in air travel will take place in Asia.
However, the United States will also see a significant spike in passenger numbers. The number of commercial passengers will almost double over the next two decades. By 2035, 1.1 billion Americans will fly every year. That is an increase of 484 million compared to the current number of annual fliers.
Erik Hansen, senior director of domestic policy at U.S. Travel, says that the issue is more pressing than even the IATA's projections suggest: "Within the next five years, 20 of the top 30 airports in the U.S. will have Thanksgiving-like passenger volume on a weekly basis."
Hansen also thinks that overcrowded airports are already causing business travelers headed to busy Northeastern hubs to think twice about flying because of the strong possibility that they could encounter delays and cancelations.
FAA realizes development is needed
In a budget proposal earlier this year, the FAA underlined how the commercial aviation industry directly and indirectly affects the US economy. “Civil aviation contributes roughly $1.5 trillion annually to the national economy and constitutes 5.4 percent of the gross domestic product. Aviation generated more than 11.8 million jobs, with earnings of $459 billion. Aviation enables the economic benefits of tourism, shipping and travel for business or pleasure.”
Recently, the FAA has focused on things like NextGen air traffic control systems, which could help make airport operations more efficient and safer. Unfortunately for those in favor of such developments, NextGen has proven controversial and was not part of the latest FAA reauthorization bill.
However, the fact that the FAA is pushing for more efficiency and safety features means that these subjects will remain an important part of air travel debates in the future.
The FAA does, to some extent, put its money where its mouth is when it comes to infrastructure development. It supports development and maintenance projects with grants given through its Airport Improvement Program (AIP). A large number of grants are given to airports each year to help fund expansion and upkeep. For example, this year’s awards include $25 million for a runway expansion at Chicago O’Hare and $11.5 million for Charlotte Douglas to repair taxiways and aprons. Many of the FAA’s AIP grants go to smaller airports and are for amounts of less than $1 million.
Is Washington helping or getting in the way?
According to Airport Council International - North America (ACI-NA), AIP and other forms of federal funding for aviation industry development do not go far enough. A report released last year by ACI-NA projects that commercial airports in the U.S. will need $62.2 billion by 2019 to make improvements so that they can keep up with rising demand.
This figure includes what ACI deems necessary improvements that are not covered under the grants program. The annual budget for AIP grants has hovered around $3 billion for several years and will still be below what ACI claims is needed after an increase to $3.75 billion in 2017.
What can be done about funding issues?
Airports want a change in regulations so that they can come up with any additional funding by themselves.
For the past few years, ACI and its allies, especially the American Association of Airport Executives (AAAE), have been arguing against the current cap on so-called PFCs (passenger facility charges). The maximum that airports can charge passengers is currently $4.50 per segment of their trip. These fees can only be assessed if the money is used for an FAA-approved project. The ACI-NA and AAAE have been trying to get Congress and the FAA to increase this cap to as much as $8.50, but they have been unsuccessful thus far.
AAAE president Todd Hauptli’s frustration seemed to boil over last month when he spoke about new DOT data showing that airlines made more than $3 billion in baggage and reservation fees during the first half of 2016. "What defies not only gravity, but also logic, is their increasing addiction to bag fees and ancillary revenues while continuing to vigorously oppose a modest increase in the airport Passenger Facility Charge program.”
U.S. Travel's Hansen thinks that airlines have stepped up to some extent, but their investment will always be limited by competition. "What airlines are not willing to do is invest in airports where it might benefit their competitors."
This is why PFCs, which were created as an independent source of investment, are so important to future development. Hansen explains that a slight increase in the fee cap could be beneficial. U.S. Travel only wants "PFCs to remain consistent with inflation."
Raising the cap by $4, to the same $8.50 per segment mark that ACI is seeking, would accomplish this. Hansen points out that these fees would not be universally applied, but only charged to passengers in airports that needed expansion projects.
READ MORE: What Do Travelers Buy Most At Airports?
Criticism from the international aviation community
Speaking at the recent World Passenger Symposium, IATA head Alexandre de Juniac had similar criticisms of Washington’s inability to make meaningful changes to they way it plans to go forward with infrastructure developments. He said the current air traffic control debate in the U.S. is an example of America’s inability to make significant improvements: “In the United States, air traffic management modernization is held captive to a politicized budgeting process and special interests. It’s preventing much-needed improvements agreed to by nearly all airlines and air traffic controllers.”
The numbers don’t add up
Michael Sargent, Research Associate at the Thomas Roe Institute for Economic Policy, points out that there is little logic behind the way that the FAA’s funding is allotted. “The problem with the AIP is that it redistributes funding from major airports to airports that serve relatively few travelers. The FAA classifies the nation’s most critical airports as large and medium hubs, which together account for 88 percent of commercial enplanements. Yet even though these airports move the vast majority of travelers, they receive just 26.6 percent of airport improvement grants.”
What about TSA?
The issue that is freshest in every traveler's mind is the security checkpoint delay problem. TSA seems to have weathered the summertime crush this year, but if the "Thanksgiving-like" airport traffic becomes more common, the slow-to-change security agency could be under the gun again.
Privatization might help, but private firms are still required to use the same screening procedures and equipment as TSA. This means that booting the government screeners won't really solve the problem.
Hansen suggests that getting the private sector involved in other ways could be more beneficial than simply hiring private screeners. "Allowing private sector companies to innovate in airport security," could lead to new equipment and new best practices that would be more likely to speed up the screening process more than employing additional agents or hiring private security firms.
Changes are needed
So it seems that everyone agrees that improvements need to be made to American airports in order for them to keep up with the increasing number of fliers. However, industry watchers and airport trade organizations are of the opinion that the way Washington is currently handling the situation leaves a lot to be desired. Further debates, delays and inaction could make things much worse (and much slower) for America's fliers.
More by Josh Lew
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