New York Airports Promise Lower Priced Beer, Refunds For Overcharged Passengers

Last summer a customer on Twitter revealed that airport concessions operator OTG charging $28 plus tax and tip for beer at Newark airport. This clearly violated their lease to abide by ‘street pricing’ rules.

OTG, famous for making you order everything via an iPad, quickly claimed the pricing was a mistake, corrected it, but still argued that it really wasn’t such a bad deal after all because it was a big pour ($28 beer was better value than they’re being given credit for). Several members of Congress sprung into action.

The Port Authority of New York New Jersey conducted a nearly year-long investigation and now says it will begin “proactive enforcement” of its street pricing rules to make sure that passengers aren’t charged $28 for beer in its airports.

The Port Authority Office of Inspector General found that 25 people actually paid $23 – $27 for a single “seasonal beer” at New York LaGuardia last summer. While the Port Authority gives lip service to their being proactive on this, they implicitly acknowledge that they won’t really do anything about it proactively because they’re… calling on passengers to tag their airports on social media when concessionaires charge exorbitant prices in the terminal.

According to the Inspector General, airport concessions company OTG claims to have contacted the 25 people who bought overpriced beer and refunded the charge, effectively buying them a beer. It seems more likely that individual charges were reversed than that any actual contact was made.

Going forward concessionaires will have to,

  • abide by policies that were already in place
  • self-report that they are complying, at least for their 40 most popular items, on a quarterly basis

Airlines and retailers pay airports. There are facilities charges remitted by passengers as part of airline tickets (a ‘head tax’) but those are regulated by the government. As a result passengers aren’t an airport’s customers, they’re the product.

However airports in the U.S. are mostly owned by governments, and managed by politically-appointed boards. So customer outrage matters, too, and that’s why many have rules that require vendors to charge only a little more than ‘street pricing’. It’s common for prices to be capped at 10% more than you’d pay outside the airport. However, in addition to being bad it’s not at all surprising that airport food vendors are expensive,

  • Rent is often far more expensive at the airport than anywhere else nearby. Labor costs are too, whether because of the need to find people who can pass background checks or because local laws often mandate higher minimum wages (New York airports are going to $19 in 2023). Bringing supplies and ingredients into the airport is also costly, because it involves using separate vendors and bringing goods through security. That’s the cost side.

  • Meanwhile passengers are a largely captive audience. The government forbids them from bringing liquids through the security checkpoint, “no outside beverages” isn’t just a movie theater rule it’s the law. And in many airports there’s limited competition across vendors, since so many of the businesses that have familiar names – be it Wendy’s or TGI Friday’s – are really the same management company like OTG or Delaware North licensing the brand. Customers, facing long lines and little time during connections, often don’t have much time to comparison shop in any case.

Meanwhile this is what street pricing continues to look like at New York airports. Remember that airport renovations have been done with private dollars with the intention of being recouped.

You have a choice not to buy $28 beer (or $18 tuna rolls). You don’t need it that badly and the beer is even a whole lot cheaper on the plane.

(HT: Harry S)

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. Outside of political grandstanding why is this even an issue? Agree airport cost and operations are more expensive so vendors should charge more. No way any airport should mandate same price as local non-airport locations (and I haven’t found an airport yet that doesn’t charge more so apparently there is some tolerance within the street pricing concept).

    Also, and I like beer as much as anyone, beer isn’t a required purchase. They could charge $100 a glass and people can just say no. Are we now that weak minded we need the nanny state to protect us from overpaying on discretionary items? Sad

  2. The PANYNJ is probably the worst-run public agency in the country. Research their insane costs at the PA Police, JFK Airtrain, PATH, etc. They now claim the EWR Airtrain needs to be replaced despite it finishing a major refurbishment less than 10 years ago! Not to mention that major positions at the ports are run by organized crime-adjacent figures making $200K with overtime in no-work jobs.

    OTG’s iPads have made the EWR experience much much worse.

  3. What is the current cost (street pricing) for a draft beer at NY/NJ airports? At my local pub a !6oz (pint) domestic draft beer is $2.75.

  4. The people I know who buy at those prices all expense it to their company as part of business travel.

  5. The OTG iPads at EWR are way out of line price-wise. I was charged $5.00 for a cup of coffee and their suggested tip was 20%. That would be $6 for a cup of luke-warm coffee that I watched the guy tap out of a needs-to-be-cleaned coffee urn. I added the tip out of fear of what would happen if I didn’t.

    A cup of better coffee at a fast-food vendor at LGA cost me $2.

  6. @AC

    Well, we are sort of trapped consumers at airports. Granted, I don’t “need” a beer or a glass of wine, but the OTG food is also way out of line price-wise. Now that we have to get to the airport 2 hours early because some religious nuts ran airplanes into buildings, most of us either carry our lunch or pay the exorbitant costs for average food and average service.

  7. Further evidence supporting the privatization of government run business enterprises. Newark LaGuardia. JFK. The US Postal Service. How many more examples do you need!

  8. The government spends a year investigating beer pricing at one airport and makes fixes yet millions of illegals invade the U.S. each year and they are given tens of thousands in benefits instead of being deported and the border sealed.

    When people get angry, it is justified given how evil government is; they can investigate beer pricing but not hundreds of thousands of fraudulent mail ballots and voting machines that can be hacked.

  9. I have no memory of airport beers ever being priced at a 10% premium. According to my beer-fogged recollection, airport beers have always been ~50% overpriced.

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