Why you have to walk so much in new airport terminals
Larry Summers, former Treasury Secretary under Clinton, senior economic adviser under Obama and president of Harvard University, noted last year that “the newer the (airport) terminal, the less convenient it is” due to long walking distances, and wondered why that was.
The reason for this is actually quite simple economics. To see this, however, one must understand the details of terminal financing and how airport revenue agreements work.
I just traveled through the new LaGuardia airport. It confirms one of my theories. The newer the terminal, the less convenient it is to use because all the routes are longer. I wonder why?
— Lawrence H. Summers (@LHSummers) 26 April 2023
When an airport authority uses private companies to finance the construction of a new terminal, it is rarely discussed how those companies will make their money. One of the main ways is from concessionsThey will rent space in the terminal to retail stores.
- The more revenue these businesses make, the more they can charge for rent
- And the deals are generally structured so that the terminal owner also receives a percentage of the revenue.
- Particularly if there is a market-dominating airline, it is often also entitled to a share of the concession revenues.
LaGuardia Central Terminal, New York
Passengers are not the customers of an airport, but the product that an airport (and an airline) sells to merchants who rent space in the terminal.
Long routes are often designed to provide more shopping opportunities and more retail space in the terminal. And airports don’t want passengers not to shop!
This seems obvious if you know anything about airports, but many very smart people are unaware of it, so it seemed worthy of an explanation.
Why? The reason LaGuardia was redesigned was because everyone was fed up with the absurd overcrowding…no places to sit, nothing to eat but fried pretzels. That sounds like asking, “Why did they expand the airport to make it bigger and less crowded?”
– Stuart Buck (@stuartbuck1) 26 April 2023
Designed to improve on-time arrival and departure, which is measured gate to gate. This is also why airports like Denver are so far from the city. Ironically, these things make your door-to-door time worse.
— Bill Gurley (@bgurley) 26 April 2023
This principle is not limited to large, newly built terminals. Both Dallas-Forth Worth and Chicago O’Hare Moving walkways removed assisted passengers with their journey and speeded up the flow of the terminal (reducing the risk of passengers missing flights!). Dallas spent A million dollars to remove theirs. The reason for this is that passengers on a conveyor belt skip all the shops along the route!
You will often see international airports direct you through the duty free area on the way to your gate, forcing you to take a detour. Sydney Airport is famous for this, as is London Heathrow Airport. In fact, British Airways reportedly pays Heathrow £1 million a year to have a door just past security on the right-hand side that gives first class passengers direct access to the Concorde Room lounge, rather than having to take the long route through the shops.
Retail is not the only reason that terminals are often larger. They may need to accommodate more and larger aircraft than those that a previous facility was built for. You may need a central concourse for that, given what other structures are already in place. But what all airports have in common is that the incentives are geared towards getting travelers to walk past more shops because that is a huge source of revenue.
Ultimately, The purpose of an airport is to get somewhere quickly. You want an airport that you can get to quickly, get through security quickly, and get to your gate quickly. New, larger terminals may be nicer and have higher revenue, but that doesn’t make them “better.”
