‘Third World’ U.S. Airports? That Insults the Third World Private managers make terminals sparkle and hum the world over. Here we’re stuck with LaGuardia. By John Tierney
http://www.wsj.com/articles/third-world-u-s-airports-that-insults-the-third-world-1484955696
For once, Donald Trump was guilty of understatement. “Our airports are like from a Third World country,” he said during a debate year. It’s a common complaint but inaccurate: Comparing America’s airports with the Third World’s is unfair to the Third World.
Even in the poorest countries, a traveler can expect to reach the terminal by car. At New York’s LaGuardia Airport, traffic is so nightmarish that passengers jump from cabs along the highway and schlep their bags on foot. In the Third World, people typically fly out of their home city. At Newark Airport, the landing fees are so high that New Jerseyans often drive hours to Philadelphia to find affordable fares.
The highest-ranked American airport on the list of the world’s top 100, as determined by the Passengers Choice Awards, is Denver—at 28. Atlanta comes in at 43, Dallas at 58, Los Angeles at 91.
Why do American passengers pay so much to get so little? Because their airports, by global standards, are terribly managed.
Cities from London to Buenos Aires have sold or leased their airports to private companies. To make a profit, these firms must hold down costs while enticing customers with lots of flights, competitive fares and appealing terminals. The firm that manages London’s Heathrow, currently eighth in the international ranking, was so intent on attracting passengers that it built a nonstop express train to the city’s center. It’s also seeking to add another runway, as is the rival firm running Gatwick Airport.
American airports are typically run by politicians in conjunction with the dominant airlines, which help finance the terminals in return for long-term leases on gates and facilities. The airlines use their control to keep out competitors; the politicians use their share of the revenue to reward unionized airport workers. No one puts the passenger first.
New York City’s problems are even worse. All three of the major airports serving the city are under the control of a single agency, the Port Authority of New York and New Jersey. Because the governors of those two states appoint the Port Authority’s executives and board, no single politician ever gets blamed.
Freed of competition, the Port Authority spends $156,000 in wages and benefits per worker. It also diverts profits from the airports to other projects, meaning passengers’ money isn’t reinvested in better terminals or additional runways. Federal law generally requires that airport revenues be spent on aviation, but that statute, passed in 1982, contains a grandfather provision excluding the Port Authority.
Mayor Rudy Giuliani moved in 2000 to reassert New York City’s control over LaGuardia and JFK. The city considered bids from four private managers and chose the British firm in charge of Heathrow. “We drafted an agreement to privatize the airports and began negotiating with the Port Authority,” recalls Anthony Coles, then a deputy mayor. “They were resistant, but we were making some progress on it in 2001.” Then came the 9/11 attacks. After that, says Mr. Coles, “it wasn’t anyone’s priority anymore.”
A decade and a half later, plenty of experienced managers remain eager for the job, says John Schmidt, an attorney at Mayer Brown who has negotiated such deals. “The universal view of the world’s major airport operators,” he says, “is incredulity that it wasn’t done long ago, particularly at LaGuardia.”
If you want to see how much better American airports could be, take a plane to Puerto Rico. Until four years ago, the main airport in San Juan was run, and neglected, by an unwieldy bureaucracy, the Puerto Rico Ports Authority. The terminal was a confusing jumble of dim corridors. On rainy days, the ceilings leaked; on hot days, the air conditioning faltered. The stores were tacky and the restaurants greasy spoons, often rented at bargain rates to politicians’ friends or relatives.
Worse, the instrument landing system, used to guide planes descending in bad weather, didn’t work: its antennas were blocked by trees. No one wanted to take responsibility for cutting them down, as the airport waited years for bureaucrats to decide who had the authority. Airlines switched operations to other Caribbean hubs.
In 2013 the Ports Authority leased the airport for 40 years to Aerostar, a partnership operating airports in Cancún and other Mexican cities. The new managers agreed to make capital improvements, reduce landing fees and pay the Ports Authority $1.2 billion—half up-front.
The result, three years later, is an airport nobody would call Third World. The redesigned concourses are sleek and airy, and revenue from new retail and restaurants has doubled. The tree impasse was resolved. “We went out there and cut down the trees ourselves,” says Agustín Arellano, the Aerostar executive in charge of the airport. “I knew we’d have to pay a fine, and we did.”
Airlines no longer control the gates, but they’re reaping other benefits. “We’re paying lower fees for a much better airport,” says Michael Luciano, who runs Delta’s operations in San Juan. “Almost every area has been renovated. You go into any restroom, and it’s bright and clean—things like that are really important to our customers.” Passenger volume has been growing 4% annually, well above the industry average.
This year, as Congress debates legislation to reauthorize the Federal Aviation Administration, lawmakers should make it easier for airports to emulate San Juan. The FAA’s current program allows only a few experiments with privatization, and then only with the airlines’ permission.
A step for New York would be getting rid of the grandfather exemption that allows the Port Authority to divert airport money. In 1999 the Giuliani administration asked Congress, unsuccessfully, to repeal the clause. But perhaps President Trump can help. It would be one place to start, if he wants his hometown’s airports to catch up with the rest of the world.
Mr. Tierney is a contributing editor of City Journal, from which this essay is adapted.
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