Why US Airports Are So Bad

Singapore’s Changi Airport is considered by
many travelers to be the best in the world.
Have a long layover? Stop by the butterfly garden or catch
a Disney film at the airports movie theater. In Qatar’s Hamad Airport
for a few hours? For about 50 bucks, travelers can swim laps in a 25
meter indoor swimming pool or workout in a fully equipped gym. Traveling during Christmas? Each year Munich’s airport puts
a pop-up holiday market, complete with an ice skating rink, a
microbrewery and 450 real Christmas trees. And then, there’s LaGuardia
Airport in New York City. The 1950’s and 60’s have often been
described as the Golden Age of flying. Traveling by air meant three
piece suits for men, high heels for women, lavish meals and
lots of leg room. Today, at U.S. airports, passengers are
forced to wait in long security lanes and then line up
for fast food, before boarding overcrowded airplanes with
no free meals. So why are U.S. airports so
cash strapped compared to their international counterparts? Airports in the U.S. started to
take shape in the early 1920’s. At the time, passenger service
was virtually nonexistent and airlines were flying mostly mail. While a few airfields were
built before World War I, airport construction really began in the
United States when the post office began to experiment with
carrying the mail by air, they needed places to land. During the Great Depression with
big improvements in technology, passenger service suddenly
took off. In 1930, America’s airlines
carried about 6,000 travelers. By 1938, that number soared to 1.2 million. Flying was loud, cold and
only business travelers or the wealthy could afford it. Most of
the passengers during the 1930’s were business people and they
understood that time is money. As aviation grew, as new airplanes
came in, they understood that this could move them faster, but
also could move financial instruments faster. By 1940, modern
airports started to evolve. Planes got bigger, grass gave way
to pavement and terminal buildings grew, from simple structures that were
small and dingy, to art deco buildings designed by architects. With massive amounts
of public financing, America was well into the jet age. By 2019, thanks in large part
to government cash, the U.S. has more than 19,000 airports. For the most part,
airports in the U.S. are publicly owned and operated by either
a city, a county, a state or in some cases
a public authority. There are thousands of airports, big
and small, but about 500 are consider public use
commercial airports. In its latest ranking of the
most profitable airports in the U.S., the American City Business Journal’s said,
the top five airports by revenue were JFK, Newark, San
Francisco, Los Angeles and Miami. Every airport has its own model
for how it brings in cash. Revenue is also dependent on a whole
lot of factors outside of an airport’s control, including airline
routes, passenger flows, plus local and
international regulations. But generally speaking, airport
income in the U.S. can be boiled down to
three categories: aeronautical operating revenue, non-aeronautical operating
revenue and non-operating revenue. That first category pulls
in the most cash. Airports in the U.S. make most
of their money from the airlines. And that revenue is everything from
landing fees to terminal rents to fuel sales. In 2016, the most recent year,
the FAA made this data publicly available, U.S. airports collected revenue of $11.3 billion dollars from the airlines,
including landing fees of $3.7 billion dollars, terminal rents of $5
billion dollars and cargo and hangar rentals of
$661 million dollars. Because they are government owned
and receive taxpayer subsidies, airports try to keep costs low. Airport revenue streams are really
based historically on minimizing costs for the airlines. And that kind
of harkens back to the pre-1978 days when the airlines
were regulated by government. As a result, the airports are run
in this kind of cost recovery framework where they collect
revenues from various sources. Non-aeronautical revenue brought in 35
percent of all income for airports across the U.S. For many airports, the biggest
non-airline revenue is from parking. In 2016, U.S. airports collected $5.8 billion dollars from parking
and rental cars. Parking is a big way
that airports can earn money. And so you can see why some
airports might be a little reluctant to have, say, mass transit, because if
people are coming out there on mass transit, they aren’t
parking their cars. We’re in an unsettled period in terms
of how people are going to choose to access the airport. Ride sharing has been
growing very fast. There is a debate
about autonomous vehicles. Food and beverage operations is another
big source of income pulling in $1.5 billion dollars across
all airports in 2016. And then there’s non-operating revenue,
which includes grants from the government and interest earned
on surplus cash when airports invest in things like bonds. The biggest source of income within
this category is the passenger facility charge, that goes to the
upkeep and maintenance of the airport. It accounted for 48
percent of all non-operating revenue. U.S. airports, particularly smaller ones,
also rely heavily on funding from the government. In 2018, the Airport Improvement Program
gave out over $3 billion to more than 1,600 airports. The Airport Improvement Program supports
the runways, taxiways and overall quality and
health of airfields. Despite America’s capitalist driven
economy, it’s actually Europe that has taken the lead
on privatizing its airports. In the 1980’s and 90’s, deregulation
and an increase in demand for air travel, along with a scarcity
of public funds, forced many airports worldwide to seek out
some form of privatization. Starting with the UK airports in
the mid-1980’s, privatization is now widespread across Europe. In 2018, more than 50 percent of
European airports had some form of private ownership. Many of the European
airports are run by private entities that are looking to maximize
shareholder return and gain a profit. In the United States
there is no profit motive. The European airports have found better
ways to extract higher dollar amounts from their passengers. In 1996, Congress created the
Airport Privatization Pilot Program, allowing for experimentation with
public-private partnerships at a limited number of airports. But it wasn’t until the
mid-2010’s that privatization really started to gain momentum in the U.S. In the face of decaying
infrastructure, a handful of U.S. airports have started to abandon the
public model and turned to private money to fund
billion dollar projects. Just take LaGuardia. In numerous
customer surveys, LaGuardia Airport has consistently ranked the
worst in the U.S. In 2018, 28 percent of LaGuardia
flights were delayed, placing its second to last in the
ranking of America’s largest airports, according to the
Department of Transportation. Laguardia Airport was very crowded,
it had low ceilings, the furniture was very tired. After 9-11 where you had to put
in all these security lines, you would have lines everywhere. In 2016, New York State and
the Port Authority partnered with Delta Airlines and LaGuardia Gateway Partners
to completely rebuild the airport. The airport is now
getting an $8 billion overhaul. The public-private partnership model has become
more of a trend at airports around the world, according
to the World Bank. Public-private partnerships are a very,
very important part of the planning, I would say
at most airports. The government has limited funds. LaGuardia Gateway Partners, the group
that will finance, construct and operate Terminal B, said
the redevelopment, expected to be finished by 2022, will provide a
host of new services to passengers, including restaurants like Shake Shack, La
Chula and stores like FAO Schwartz. We’ve introduced the shops,
the amenities, larger hold rooms, higher ceilings, lots
of natural light. Behind me is a
park area with trees. There are many things that private
enterprise does much better than public agencies. And one of them, we believe,
is actually operate both the commercial and the operational side
of an airport. And more airports across the U.S. are also on the way to
getting massive multi-billion dollar makeovers thanks to cash
from private companies. New York’s JFK Airport is planning
to spend $13 billion, including $12 billion in private funding
for improvements including two new international terminals. Los Angeles Airport is spending $14
billion on a giant expansion. LAX Integrated Express Solutions was
selected to design, build and operate the terminals
passenger train. The Automated People Mover is
LAX’s first public-private partnership project. Since 2000, U.S. airports have had to withstand a
number of critical events that have had a major impact
on their bottom line. Following the September 11th attacks, for
the first time since World War II, the number of airline
passengers declined for two consecutive years. Additional security at U.S. airports has placed an even
greater burden on airport operations. This puts a lot of
capital requirements onto the airports. So they had to take on a lot
of debt, in order to reconfigure their terminals. The financial crisis that started
in 2007 was another blow to airports. In 2008, air passenger
traffic dropped again at airports around the country. What I think was
a larger impact was the slow recovery following the
Great Recession. In historical recessions there’s been a
pretty quick bump back in terms of passenger traffic increasing
once the recession was over. Here, we saw a multi-year period of
a malaise with low growth in the 1 to 2 percent or less than
1 percent and that really started to challenge airport finances. Another factor, dragging down profit
margins for some of the country’s medium to
smaller size airports. There are fewer airlines flying today
than there were in 2009. In the 10 years to 2018,
the airline industry has experienced multiple mergers and acquisitions. In 2008, Northwest Airlines
merged with Delta Airlines. In 2010, Continental Airlines
merged with United Airlines. And in 2013, U.S. Airways and American Airlines
parent AMR merged. That was good news for a few
larger hub airports, but many smaller airports were forced to deal
with the economic fallout. A hub airport has a large
number of connecting flights from one dominating airline. The mergers that have been happening and
the shrinkage from 10 or 12 major airlines in this country
down to what, three, four? That’s been a huge challenge. Airports can really grow, look
at Atlanta, Chicago, Dallas. Those that have maintained hubs,
they’re dealing with growth. Airports that had been hubs, they’ve
had to deal with decline. According to Airports Council
International, industry consolidation had a big impact on
several regional airports, including Pittsburgh, St. Lewis, Cincinnati,
Memphis and Cleveland. If part of a business is severed and
you have a lack of cash flow, that money is not flowing into
an airport, you’re going to suffer. That means restaurants closed down. That means employees get laid off. That means revenue is not
coming into that airport. While flying is generally cheaper and
safer than it’s ever been. An increase in travelers will
put massive pressure on existing airport infrastructure. U.S. airlines and foreign
airlines serving the U.S. carried about a billion passengers in
2018, up 5 percent from the previous year, according to
the Bureau of Transportation. Millions of people go through
LaGuardia, just for everyday maintenance and wear and tear, to keep
the floors clean, to keep the lights on, that takes
a lot of money. And U.S. airports are getting
older, according to the Airports Council International. They say airports will need
over $100 billion in infrastructure spending over the next five years. A useful time period for an airport
to exist is between 25 and 30 years before it
becomes non-competitive. Right now, the average age of a
terminal in the United States is a little over 40 years, so we’re
way beyond the international number. While airports in the U.S. have shown signs of improvement
in recent years, additional passengers, tightening budgets and
growing competition will force cash strapped airports to seek out
new sources of financing to compete on the world stage.

100 thoughts on “Why US Airports Are So Bad

  1. I enjoyed the 12 minutes of propaganda about how we should privatize essential parts of our society so a few people can make more money.

  2. I'm from a middle eastern country. I travel to the US at least once a year. When I land in JFK, LAX, IAD or O'Hare I get the 1960s sense of look and feel. Why the US doesn't update is just beyond me. More importantly, why the US runs a $1 trillion/year deficit even though they don't spend much on infrastructure is incomprehensible.

  3. US airports aren’t BAD. Travel around the world and you’ll see what BAD really is. And Asian airports are shiny spectacles of light and glass. But will they last 50 years, like most things made in Asia, they won’t.

  4. USA should cut military budget and build up their infrastructure!
    Their train and subway system sucks! Look at New York the trains need upgrades!

  5. Restaurants like Shake Shop. The fast food place Shake Shack is not something to crow about. Sorry LaGuardia. And I don't believe Newark is worst.

  6. Ridiculous spending on infrastructure is why college tuition has spiked so high. You can handle discomfort from time to time just fine.

  7. US is still top, busiest airports in the world and most revenues, more movies are shot here than anywhere, celebrities too

  8. Someone : How to become a millionare?
    Warren Buffett : That's simple. Become a Billionare and then buy an Airline company.

  9. Not just airports. Airline services are so bad as well. Gone are the days of free luggage, free seats, free little snacks and sodas, very uncomfortable seats which results in back pain, neck pain, arm pain and super combusted seats worse the flying experience even more. U.S airlines used to take pride in providing top KNOTCH experience but not anymore. Every CEO in the world just cares about himself/herself flying private, staying is luxury hotels, eating good meals and give a middle finger to customers and share holders both.

  10. Boise Airport is dead empty almost all the time. And Boise isnt a flyover city yet has tons of aircraft that fly over and dont show up on flight trackers. These same untrackable planes also make our beautiful blue sky hazy almost everyday for the past 3 years. Solar halos are common throughout the year yet are supposed to be a rare phenomenon.

  11. Presidents take office only 4 years for a maximum of 2 terms in office. How on earth do you expect they will think long term beyond their tenures. After an election their approval ratings drop. Something is wrong here with one man one vote system. The electoral only vote for those presidents giving them “candies” not for those giving “medicines”. If the majority prefer the earlier then they have what they deserve like in this, a crap infrastructure.

  12. Airports in the US can pay less in taxes if they are "under construction, or in repair" that's why there always seems to be something new under construction with it never getting done

  13. The video is trying to say that if we want US airports to be better, we need to privatize them. But the 3 airports they cite as awesome examples of wonderful airports are all state-owned ¯_(ツ)_/¯

  14. is it fair to say "why is it US airports are so cash strapped compared to our international counterparts" when only showing us the glamorous Rich Singapore airport as the only international airport comparison?

  15. You want the 50s experience? Put on your high heells/three-piece suit and pay as much as they did back then. Suddenly you're in first class getting served lavish meals. It's just that behind you is an economy cabin with 200 people who weren't able to fly in the 50s. But who cares? You passed by them with your priority ticket while they waited in line for their slow security check and cheap fast food.

  16. I've been going and through LAX for almost 40 years. It's amazing how it's continually under construction and yet how little it changes. Improvement? Minimal at best.

    The Bradley International Terminal in the past few years has finally become what it should've been in the first place. In the 80s when the terminal was brand new international arrivals was a long walk through a dim low ceiling narrow corridor of blank drywall. "Welcome to the United States, this is what the basements of our high schools look like!"

    There is a Metro Rail option that is a failure. The Green Line doesn't go to the airport, otherwise it might impact parking revenues. Instead it's a series of false starts. The Flyaway Bus from downtown and other locations was, before the Greenline, and still remains the best and easiest way to get to and from LAX. Way Finding and signage at LAX remains at best a cruel joke. The difference between a now older Narita and LAX is inexplicable. One works the other causes endless headaches. How difficult is it to simply copy a good system?

    Recently on a trip to Hong Kong, our tickets were purchased through American Airlines, after asking for help from three airport employees the last one read on our tickets, "Operated by ANA" looked at us like we were stupid and said we had to check in at ANA. We had to walk all the way back to Bradley where we had been sent to the #7 American terminal. We walked over two miles before sitting down in the plane. Almost four decades and LAX is not any more efficient.

    The Homeland Security theatrics? Every time I have to take off my shoes I think, "the shoe bomber wins again.' They have bigger bins, a plus, but all the walking between terminals heated me up, which I was scolded for and my testicles hand probed. I had to be escorted outside to finish the dregs of coffee in my mug, and then go back through security. At Narita they let you pour out any liquids. I've always loved airplanes and flying but I hate (most) airports. Anything within 500 miles I'll drive instead of fly. Trains? I will look for any excuse to take a train.
    Where will that people mover for LAX actually go? The animation seems to indicate it parallels car and bus traffic, but it also appears to be far away from any terminals. Does it go to the Greenline Metro? That only took 20 years. But then you have to transfer to the Blueline at the 110 freeway. For all of west Los Angeles and the Valley, this is inefficient. It fits my route home, but I see no reason, except maybe a one time train ride, to stop using the Flyaway Bus. Rant over.

  17. Cuz everywhere else has caught up and Merica still think they’re the best…same for everything else and not just airports

  18. Because Americans prefer spending their money on wars, Americans are busy spreading democracies and freedoms all over the world.
    Look at the middle east, Libya, Ukraine, and HongKong.
    So nice, USA, USA, USA, USA, USA, USA, USA
    Trump =king of the entire Universe, best president ever.
    Trump 2020.

  19. privatize everything, private enterprise does everything better than the gov. Its no surprise gov is looking to private partnerships just to stay competitive. Why do students and parents love charter schools more than public schools?

  20. I have not flown in YEARS!
    Train or I drive.🚞🚙

    US airports are death traps. Poor design. Idiot management.😶

  21. If you think US airports are so bad, just come here pal 😀 😀 You will learn the definition of Bad. Our customs officers are directly from hell, corrupted to the core, sins flows through their body, their blood is black in color 😀 😀

  22. I don’t get it. Your at an airport for 2-3 hours a day and hardly ever past 12 hours so I don’t get why airports need to be that fancy. It’s literally like a waiting station.

  23. These shorts are awesome!, keep it up CNBC! I can learn about anything from bananas to airports. I don’t even see this stuff on your regular channel. Not sure what the incentive is for you but thanks.

  24. Has anyone notice how stores like The Hudson purposely don't have prices label anywhere for drinks and snacks? For me, I don't see a price marked anywhere, I don't buy.

  25. Welcome to the United States of America! Many 3rd world developing countries actually have much better airports than America. Kuala Lumpur International Airport in Malaysia and Suvarnabhumi Airport in Bangkok, Thailand are good examples of world class airports. Moreover, their roads and bridges are also in much better shape than in the United States.


  27. There's a reason people WANT to hang out with their kids at Japan's airports on the weekend. Awesome variety of food, shopping, fancy rooftop viewing decks to watch the planes, popup museum exhibits, even a mini chocolate factory so you can see candies being made, gorgeous architecture, fountains, top notch public transportation to and from the airport, etc…

    Convenience, entertainment, and affordability designed FOR THE CUSTOMERS. Also, revenue generated by those who don't even come to fly.

  28. Around the world- luxury flying experience…
    America- take off ur shoes so we can check u for bombs… then we'll grope u for 5 mins …bourderline sexually assault u…then we'll lose half ur stuff somehow.. even thou it's just a bag with ur name and address and where it should be going on it… 😑

  29. Why is LaGuardia airport being compared with other "world class international airports?" LGA is a domestic airport. It's not a fair comparison.

  30. The music in the background: im imagining a 1970's heist movie with Caine, Connery and . . . . . . . who would you have in it?

  31. Airports do not need to be Theme Parks with 5-star restaurants, spas, pools, movie theatres, butterfly gardens……just get me from point A to point B and there will not be a need for this "infrastructure". Airports are not destinations, they are a means to a destination. How did we get to this point?

  32. US airports are horrible. A few years ago I had a layover in Boston and since then I've literally planned trips around not having layovers in the US. The staff were unhelpful and/or had no idea where anything was, it was ugly and the layout was confusing, the buildings were old and down, the bathrooms were dirty and most of the toilets were plugged, the food was disgusting, and the American-style security was very unpleasant.

  33. It's not just Europe where airports are privatised. In Australia, Sydney Airport is listed on the ASX with code SYD. Last check, it was trading at $8.22 per share.

  34. And trump is trying to get out of the Middle East and spend money on infrastructure and you idiotic liberals hate him for it. Damn war mongering fools.

  35. An airport trying to sell you natural light as a bonus. Natural light is free but private companies charge you for it.

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