It's no secret New York's airports need an overhaul. Port Authority is bringing in the operator of one of the world's best-regarded airports to do it — but structural challenges in the U.S. remain.
New York City regularly is referred to as the greatest city in the world. But its airports? Those are regularly considered among the developed world’s worst.
New York’s airports reached another milestone in the road to modernize on Monday, when the Port Authority of New York and New Jersey announced it had reached an agreement with Munich Airport International (MAI) to operate and maintain Newark Liberty International’s new Terminal One. MAI will also run the terminal’s concessions when the $2.7 billion overhaul is completed in 2022.
MAI is a subsidiary of Flughafen München GmbH, the state-owned operator of Munich’s Airport. It provides management, training, and operations expertise to airports in projects all over the world, but a spokesperson told Skift the project at Newark is one of its first in the U.S. It is also involved in a joint venture, known as Reach Airports, which will manage the new Terminal One at JFK. All of these projects are part of the $28 billion transformation of New York’s three major airports, which will include an entirely new LaGuardia.
A press release from Port Authority did its best to play up the idea that the partnership meant one of the world’s best-regarded airports is going to have a stake in improving one of the worst, noting that Munich Airport has been awarded Europe’s Best Airport by Skytrax in 12 of the past 14 years.
“The Port Authority is committed to moving our airports from back of the pack to best-in-class facility standards and to a level of global best practices that our passengers demand,” Port Authority Executive Director Rick Cotton said. “Our partnership with Munich Airport International allows us to deliver on our twin promises of operational excellence and customer service based on global 21st century standards.”
Bringing in a European or international operator to shepherd American airports into the current century isn’t that unusual, notes Janet Bednarek, an aviation and airport historian and professor at University of Dayton. While American airports have, bafflingly, resisted the privatization of ownership for years, they have allowed for the private management of facilities like terminals and freight facilities.
She noted that Pittsburgh’s airport is often cited as bringing the AirMall concept — characterized by the street pricing at midmarket retailers common at airports like London’s Heathrow and Amsterdam’s Schiphol, all of which encourages travelers to shop — to the U.S. through its partnership with BAA, now Heathrow Airport Holdings Limited. “It might be interesting to see what ideas translate to U.S. from this deal,” she said via email.
Thomas Sineau, a senior analyst with CB Insights who focuses on luxury retail, including airports, says the biggest factor in whether Newark will be able to emulate a Europe-like airport experience will be what the terms of the concessions agreement are. If they are not as favorable to concessionaires as they are in Europe, it may be harder to replicate. Though he noted that bringing in an operator like MAI will likely result in some other kinds of improvements.
“One can argue that there are key learnings that can be derived from having multiple airports under the management of a single operator,” Sineau added. “I think that brings some sort of professionalization and some economies of scale at the very least.”
There are other structural reasons why New York’s — and by extension the entire country’s — major airports tend to fall behind that of similar-size cities in the rest of the world. In addition to the country’s profit-averse insistence on keeping ownership at the local or municipal level, Congress has not increased the passenger facility charge since 2001, which sits at $4.50 while strain from increased passenger volume has gone up. Lastly, revenues from parking — historically a cash cow in car-centric America — have steadily fallen in the age of ridesharing.
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Photo credit: Newark Airport security line. Bart Everson / Flickr