Does It Matter If An Airport’s Management Is Corrupt Or Incompetent?

Some of the most successful airports in the country are also frequently considered to be among the least well run or most corrupt. I’d put the New York area airports (Port Authority of New York New Jersey), Washington Dulles and National Airports (Washington Metropolitan Airports Authority), Atlanta and Detroit in this camp.

A reader wonders whether it matters if an airport is well run? I’d say it’s precisely the most successful airports, with the greatest demand and that lack competition, which are able to support corruption and incompetence and remain successful. Meanwhile, at the margin, an airport can at times generate outsized service as a result of being well-run.

How much influence does an airport’s management team have over their traffic? Obviously at the limit a totally incompetent team might pose problems but relative to the average airport management team competency in the US, how much does it matter?

In general what matters for the number of flights airlines offer is,

  1. demand for air travel (whether corporations and passengers will pay for enough seats at high enough fares)
  2. the infrastructure that’s provided (can the airport support the flights that an airline wants to offer)
  3. and cost (incompetent or corrupt airports may become too expensive).

Cost is a reason why for many years low cost carriers preferred Fort Lauderdale over Miami… although in a sense the high costs at Miami kept out competition and may have on net benefited American in the form of higher fares.

Terminal design also matters for smooth connections if building a hub, as well as for managing baggage and spare parts.

Sufficient facilities, design choice of facilities, and cost to serve an airport are all things that can dissuade an airline from serving an airport or offering as much service as they might otherwise. But a great and well-run airport alone isn’t going to bring flights which aren’t supported by passenger demand. Likewise, where there’s passenger demand, airlines put up with a lot.

Remember that there’s very rarely real competition among airports. It’s not like an airline can decide not to do business with an airport and just pick up passengers somewhere else. The major New York airports have the same management! And the City of Atlanta refuses to build a second airport because Delta doesn’t want one.

Meanwhile New York JFK and LaGuardia cannot get bigger, due to slot controls. At most airlines might upgauge flights and use bigger aircraft. But the number of flights is limited by the number of slots that are permitted.

If there were more slots, there would be more flights. A slot is valuable, and a corrupt or incompetent Port Authority extracts some of that value. At the current margin there are airlines willing to pay even more than they do today to serve these airports.

On the other hand, Charlotte gets outsized service from American Airlines because it keeps costs so low. The airport itself isn’t a great experience but that’s the point, there are flights at the margin the airline offers because it is less expensive to do so.

Put another way, where there’s more potential demand than an airport’s infrastructure supports, an airport authority can be corrupt or incompetent without costing service. However if an airport management had the ability to provide the infrastructure needed to support growth, those markets might have more flights.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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  1. If the corrupt airports were operating outside the United States, the US-flagged airlines and other vendors would be sanctioned under the Foreign Corrupt Practices Act.

    That aside, I’m always amazed at how the purported free-market United States allows virtually 100% of all US airports to be government-owned and government-operated. I believe only San Juan’s airport is the exception.

    Whether it’s a huge airport authority, like the Port Authority, or a regional airport run by a county government that knows nothing about commercial aviation, the US airport industry needs major liberalization. For example, Indiana did a 75-year lease on its toll road highways to an Australian company for $3.8 billion.

    Imagine what these airports would sell or lease for if government privatized them. We’re talking billions. That’s billions that could be otherwise spent on other things or refunded to taxpayers.

  2. As a taxpayer, this is distressing. As a flyer/passenger, I’ve had nothing but great experiences at LGA, JFK, and ATL…

  3. I’m a little surprised that O’Hare isn’t on this list. Or has that changed since the days of the Daley machine?

  4. Speaking of corruption (or just a bad business model) Marc Cuban is urging the Feds to pay off all Silicon Valley Bank (SVB) because “the little people” will be hurt most.

    Whenever a billionaire starts worrying about “the poors” watch your wallets! The gift is coming…..

  5. Anecdotes don’t prove systemic corruption or incompetence. The PA of NY and NJ is governed equally by the governors of NY and NJ and must get agreement by both to do anything in either state or connecting the states. The fact that the PA has managed the redevelopment of the three airports is a significant achievement in that environment. The problems encountered at JFK, for example, in at least one instance was due to lack of government control over all the terminals — when the big storm a few years back shut down the airport — a problem that didn’t occur in Boston where MassPort had control It’s also difficult to conclude Atlanta management is incompetent when they handle the first or second most flights and the most passengers annually. You’ve completely missed the boat on this latest diatribe.

  6. I get to use airports in Washington and New York primarily. A good sing of corruption and mismanagement is how much they spend for goods and services. When IAD built their infamous “train to nowhere” t cost well more than $1 million per liner foot and it doesn’t even go to one of the three terminals. They had all the rights of way – that’s just the cost of digging the tunnel and pouring the concrete. Total rip off. All info on the project were hidden. Meanwhile 1/4 of the airport and all international pax still use 1960’s era moon buggies. Its a national embarrassment.
    The airport authority is run by non-elected bureaucrats with a long history of failure. Yet nothing ever changes.

  7. We’ll agree that corruption is bad. But, does the cost to extinguish corruption exceed the cost to tolerate corruption? Is the consumer worse off economically?

  8. I didn’t know there are major airports that aren’t mismanaged, controlled by corrupt political machines or both.

  9. “A slot is valuable, and a corrupt or incompetent Port Authority extracts some of that value” — Please tell us how that works. The FAA’s rules control slot allocation. Under some circumstances airlines can sell/trade slots but airports don’t have a say in that process, and they don’t get any of the proceeds. Slot distribution is one of, if not the most, contentious economic regulatory issues in the US airline industry.

  10. The world’s best airport is Changi, which is de-facto run by a government. You can get a good, freshly cooked, meal for $3 in the canteen, which is open to anyone. and store prices are exactly 8% less than what you pay downtown (8% being the VAT, which doesn’t apply to departing passengers). Doha is a very good airport too (government-run), as are Munich (government-run) and Zurich (government-run).

    The US has a corrupted government, full of “lobbyists” and “think tanks” and so on. Fix government corruption, and airports can be as good as Asian and European ones. Let the airlines run them, and they’ll look like Spirit (or Gatwick or Luton airport in the UK).

  11. Yes, I just flew UA out of IAD. After taking the $5 billion dollar Metro to get there. I ended up on a 1960’s Mobile Lounge to travel to the D Gates. The fairly new underground train that I took to the A gates to Europe does not go to the D Gates! I’m used to the 1960’s Mobile Lounge on international arrivals to get to customes; but, on a simple domestic flight?

    Trump was right. Let’s privatize these absurd airports. Maybe then, even if we have to retain the 1960’s Mobile Lounge for historical purposes of the Golden Age of Travel, can’t we cocktail waitresses and cigars???? Some live jazz musicians? Less bureaucracy! More capitalism!

  12. You are dangerously incorrect on both counts.

    Ask a network planner if they ever even TALK about airport costs when developing routes. It just never happens. It’s all about yield, and since airport costs are only a tiny fraction of airline expenses (generally around 4% per USDOT-mandated airline financial reports), and since a tiny fluctuation in the price of crude oil can overwhelm that effect by an order of magnitude, individual airport costs are simply not part of the equation. I’d suggest that FLL’s ability to attract LCCs came down more to gate availability and the proximity of the leisure-oriented market in the Miami airport to that area.

    It’s also entirely untrue that airports have influence on slots once they’re doled out. Now, let’s put away the fact that your second gripe only applies to JFK, LGA, and DCA – this country’s only slot controlled airports, despite myths to the contrary – and read IATA’s Worldwide Airport Slot Guidelines. Essentially, once an airline has possession of a slot, they can only lose it if they don’t use it. The airport has no say over the destination or the equipment, either. And even then, the slot coordinator (NOT the airport itself!) must follow prescribed rules about reallocation.

    Your main argument about mismanagement is fine in general, but you’re pinning it on two arguments that are simply factually wrong.

  13. @Chris – airport costs absolutely matter, AA wouldn’t have nearly the operation at CLT if that airport was higher cost. For years low cost carriers eschewed Miami in favor of FLL due to costs.

    And the point about slots is illustrative (and applies equally to gates) – when there’s more demand for flying from an airport than capacity, there’s an opportunity for airport management to extract rents without costing service.

  14. @Gary, thanks for the direct response. I’m still going to ask for objective evidence that airport cost is a deciding factor in regional airport choice. I’ve researched it and found nothing except anecdotes and political lobbying.

    The topic of how limited airport capacity is doled out is worthy of several dissertations, and fortunately the Transportation Research Board has been more than obliging. But the fact is that airport use and lease agreements are more often than not a legacy of 1978 era deregulation principles and the idea that airlines were more stable investments than airports (ask Pan American and TWA how that assumption went!). When left to their own devices, airports are absolutely interesting in creating policies that allow new entrants and foster competition. But those leases favor a majority-in-interest model which favors incumbents. That’s the real corruption that holds US airports back.

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