Larry Summers on Building Airports in China, Japan, and Washington DC

Former Treasury Secretary and Harvard President Larry Summers discusses infrastructure investment through bets on building airports.

You’re a rapidly growing Asian country, and you decide to build an airport somewhere where there aren’t very many people.

You do that because it’s going to be cheap to build it now, when there aren’t a lot of people around, and it’s important to establish the land. Then 15 years later, if you’ve grown fast, you’re a brilliant hero of masterful long-term planning, and if you’ve grown slow, you’re an idiot who’s building an airport where nobody wanted to go.

It’s hard to know which is the case. The Japanese probably look stupider than they really were because they built in anticipation of more growth than they, in fact, were able to generate.

I don’t know quite what’s going to happen with respect to China. It’s not unlike Dulles Airport. Today we think of Dulles Airport as an important strategic stroke that cemented and made possible a hugely vibrant technological economy in Northern Virginia.

I’m old enough to remember in the late ’70s or early ’80s when it was a generation after Dulles Airport was built. It was a ridiculous idea, built a million miles from anywhere, and like, “Why did we build that?”

So it’s very difficult to judge some of these infrastructure investments except in the very, very long run. Even when you judge them in the very, very long run, you can make a judgment ex post as to whether they were a good idea, but even then, it’s going to be even more difficult to make a judgment about whether they were ex ante sensible or ex ante not sensible.

I think he’s wrong about Dulles airport, by the way, because it’s been so badly managed through nepotism, poor environmental policies like forcing taxicabs dropping off passengers from downtown to return empty, and stupidity like building an expensive train that takes United passengers nowhere near their gates.

It was born by condemning African American homes. It’s super expensive precisely because of mismanagement.

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 InsideFlyer.com, 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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Comments

  1. Dulles would be a lot better if they were able to attract a variety of low cost airlines. Its a non-crowded, relatively delay free gateway to the world. Alas, IAD/DCA are NOT low cost. They are the second most expensive airport in the USA in terms of landing fees. (The corrupt and inept PANYNJ wins that one!)

    Not surprisingly, airlines like JetBlue pulled way back at IAD because they can’t hand over $25 to the Washington Airport Authority for every passenger they put on a plane. The $1.5 billion “train to nowhere” and the $1.5 billion basement (AKA “security pavilion”) has left IAD with massive debt. The only way to service this debt(given that passenger volumes are not growing ) is to keep raising enplanement fees. DC, MD and VA should be demanding answers and accountability from the WMAA….but all we hear are crickets.

  2. Summers absolutely correct on main statement that Dulles built prior to area being developed. Airport changed area totally. I am very familiar with the development in that area from farmlands to being a commercial area with substantial developed residential areas intermixed. Whether an airport has been mismanaged isn’t the issue he was discussing. Gotta focus!! Not relevant as Judge would say.

  3. There was a time in the 1980s and 1990s when we Washingtonians had every reason to believe that Dulles would quickly become the major airport serving Washington and Baltimore. It didn’t happen. Why not? There are lots of reasons.

    First, a series of mistakes in both the original design of Dulles and in the subsequent “improvements.” The 1960s futuristic concept of using people movers to take passengers from the main terminal directly to the planes was flawed from the beginning. When they admitted defeat and opted to build the midfield terminals B and C/D, they (poorly) designed those terminals with narrow corridors and small gate areas — with no means of access other than more people movers. More recently, they built an underground train, but unlike the properly-designed trains in such airports as Atlanta and Denver, they made numerous design compromises that made the train a joke. Finally, they designed a big, beautiful new international arrivals area, but still use the people movers to get the arriving passengers to the area.

    Second, the Congress opened up additional transcontinental flights from DCA, shifting business from Dulles to DCA.

    Third, BWI had been a fairly stagnant airport for most of its existence until Southwest decided to make it a major hub, suddenly causing the numbers of flights and passengers to soar, taking business from Dulles once again.

    Fourth, United made Dulles its major east coast hub, causing American and Delta to reduce their flights to Dulles. About the only American and Delta flights left at Dulles these days are to American and Delta hub cities. And, in case you haven’t noticed, American and Delta recently stopped flying to Europe from Dulles. No more American flights to London or Delta flights to Paris.

    Fifth, following the merger with Continental, United shifted its focus from Dulles to Newark for European travel. Many of the United flights to European cities are “seasonal” and to fly to those cities in the non-summer months, a Newark connection is required.

    Sixth, the delays in building the rail system from Dulles to downtown DC, combined with the increase in highway traffic, has made getting to or from Dulles a miserable experience during the afternoon rush hours — and of course that’s the peak moment for both international arrivals and departures.

    Are there other reasons I haven’t considered?

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