Which are the most expensive American airports?

by on May 22, 2014 at 9:45 am in Economics, Travel | Permalink

Per mile traveled, the new list is this:

1. Cincinnati

2. Birmingham

3. Memphis

4. Dallas Love Field

5. Charlotte

A few points strike me.  First, not too long ago Cincinnati was rated as the very best U.S. airport by global standards.  At the time I thought that was silly and now we can see further reason why.  We should rate airports by consumer plus producer surplus, not by whether they scare away enough customers to make the experience a more pleasant one for the remaining diehards.

Second, these airports may have relatively high proportions of business travelers, as cited by the original article linked above at the top.

Third, theories of market power and fixed costs might predict that the most expensive airports, in per mile terms, should be found in the middle of the country or at least clustered near a lot of other airports.  Let’s say a consumer has to pay for (at least) two items in a fare.  The first is the marginal cost of the fuel and the labor, which will vary with distance in traditional fashion.  Second, consumers must pay to cover the fixed costs of “flying at all,” which would include for instance upkeep on airport facilities, maintenance, meeting FAA regulations, teaching the pilots how to land, and so on.  A lot of these costs do not vary proportionally with the length of the flight and you have to incur them for even very short flights.  Airports with a lot of very short flights thus will be more expensive on average, in per mile terms.  We also can expect these airports to be clustered in the middle of the country near a lot of other airports.

Which is the cheapest American airport in per mile terms?  It’s not in the fifty states at all — San Juan, Puerto Rico.

Bill May 22, 2014 at 9:57 am

I think it is interesting in how you framed the question: how costly the airport is, whereas the real driver is how many different carriers have slots at the airport (competition) and the carriers route and hub structure outside of that airport. Also, the explanation of the change for Cincinnati is the merger between Delta and Northwest, which changed the hub structure of Delta to favor Detroit. It’s not the cost of the airport but the greater use of a hub that was acquired in the merger.

But, there is an element of cost that is overlooked: slots and slot availability. If you are Delta with slots at an airport, would you give up the slot because traffic declined for your large plane, or would you substitute a smaller aircraft to retain the slot and keep out Southwest who would get the slot. Guess.

Chappy May 22, 2014 at 10:20 am

Exactly. I’m from Michigan and not but 5-10 year ago would routinely connect through Cincinnati rather than Detroit. Now Detroit, and sometimes Chicago are the only connecting option. I wonder how this study calculates the price per mile of connecting flights. I would think this is highly distorted. The cost per mile of me flying from Detroit to Lansing is surely high, but the additional cost on a ticket to Lansing compared to just Detroit is low. Of course, this is for all the reasons you state–the hub essentially subsidizes connecting flights relative to originating/terminating flights at the hub–so any metric on per mile pricing is also going to be distorted.

Dan Lavatan May 22, 2014 at 3:38 pm

Very few airports are slot limited. They may be gate limited, but the airline could probably keep a gate with a small number of daily flights.

Bill May 22, 2014 at 5:53 pm

Dan, Your statement on an adequate number of slots at major airports is untrue. Please read the 2012 GAO report on airport slots, and in particular, beginning at p. 29, the GAO comments on how allowing airlines not to use some slots may hinder competition.

The report is entitled: Slot Controlled Airports: FAA Rules Could be Improved to Enhance Competition and Use of Available Capacity. (2012).

Now, what is the support for your claim.

Matthew Ernest May 23, 2014 at 12:24 am

From the very report you name:
“For each takeoff or landing at Ronald Reagan Washington National Airport (Reagan National) and the three major New York City area airports–John F. Kennedy International (JFK), LaGuardia International (LaGuardia), and Newark Liberty International (Newark)–airlines must obtain an operating authorization, also known as a “slot,”[Footnote 1] from the Federal Aviation Administration (FAA). Although more than 150 airports are slot-controlled throughout the world, including all major European airports, only these four airports are currently subject to slot controls in the United States.”

I think that four is close enough to “very few”.

Bill May 23, 2014 at 9:34 am

Matthew, Sorry, but slot controlled is a term of art…it is a regulatory framework. Try getting a slot at Logan in Boston.

Bill May 23, 2014 at 9:43 am

Also, Mathew, here is an article in Bloomberg regarding sitting on slots and the capacity constraints and slotting limitations at other airports as well:
http://www.bloomberg.com/news/2014-02-21/southwest-airlines-to-let-bonus-reagan-flight-slots-sit-idle.html

Matthew Ernest May 23, 2014 at 2:31 pm

” slot controlled is a term of art”
Then cite a report that refers to slots in the way that you think is relevant. The GAO report you point to only refers to “slot controlled” in the strict sense. Also, the Bloomberg only refers to airports on the same short list that are “slot controlled” in the strict sense.

You attempted to refute Dan Lavatan’s claim that few airports are slot limited in the broad sense but have supplied only data that refers to to “slot controlled” in the strict sense which you in turn dismiss for being in the strict sense.

Mike May 22, 2014 at 4:40 pm

Consumers also prefer more flight options, so if total traffic is down, more small planes may be a better option than one large plane/day on a route.

Steven Kopits May 22, 2014 at 10:06 am

This is a nonsense metric: per mile traveled.

Airport costs are largely fixed as a function of its infrastructure which has precious little to do with how far planes fly from there.

Dallas Love Field, for example, is the home of Southwest Airlines. Due to the Wright Amendment, Love was limited to short haul flights, and there are many such flights out of Love today.

If you want to measure airport cost efficiency, the appropriate metric would be departing passengers or commercial airline departures.

Ray Lopez May 22, 2014 at 11:13 am

I’m don’t know what the cheapest airport is, but surely (don’t call me Shirley!) one of the most expensive is the “John Murtha” airport, named after the late congressman (http://en.wikipedia.org/wiki/John_Murtha_Johnstown-Cambria_County_Airport -”Although the airport has only three commercial flights and little other activity, as of April 2009, the airport had received almost $200 million in federal subsidies.”) Your tax dollars at work, for a good cause, fighting terrorism in the former American Indian territory of Pennsylvania.

Willitts May 22, 2014 at 1:41 pm

I agree.

On another note, anyone flying from Puerto Rico has to go 1000 miles to keep their feet dry. This will dilute the costs per mile. I would guess Hawaii is near the bottom too.

Ted Craig May 22, 2014 at 10:17 am

I feel for work a lot out of Detroit. The worst cities for me are Dallas (DFW) and Indianapolis. I once booked a Southwest flight to Chicago so I could take a Northwest flight to Minneapolis, despite hundreds of flights between the two cities daily. And Buffalo was so bad I drove there.

sch May 22, 2014 at 10:23 am

Must have been left out on account of size, but Huntsville Al airport is regularly on the highest cost list, total costs versus per mile. They do get some international freight there. Bham to Chicago flights are typically half what it costs to fly from Jackson MS to Chicago, though the distance is the same.

Errorr May 22, 2014 at 9:29 pm

What percentage of Huntsville business traffic is government related? GSA gets good rates and Engineering contractors do too.

ant1900 May 22, 2014 at 10:33 am

How many of these airports are hubs for major airlines? I know Charlotte is, and Cincinnati used to be. If these airports have a high proportion of direct flights, then higher fares make sense. Direct flights are a luxury that a lot of fliers would pay for if they could.

Chad Horner May 22, 2014 at 11:04 am

Expect to see Cleveland (currently #8) shoot up the list in the years to come, as United cuts off service there. The de-hubbing of airports post-merger is a big reason why Cincinnati and Memphis, former Delta and Northwest hubs respectively, are at the top of this list now. Traffic at each of those airports is about half of what it was five or six years ago, before Delta and Northwest merged and Delta began directing Cincinnati traffic through Detroit and Memphis traffic through Atlanta.

Now United will do the same with Cleveland, which had been protected as part of the merger agreement with Continental. By June, the airline will officially no longer be a hub of United, and daily departures there via United will have dropped to 72, from 199 earlier this year. Fares will almost certainly go up as a result.

Dave Barnes May 22, 2014 at 11:32 am

Cincinnati, OH does not have a large airport.
Covington, KY does.

prior_approval May 22, 2014 at 12:07 pm

Technically, in that listing, it is called ‘Cincinnati/Northern Kentucky Intl Airport’

JWatts May 22, 2014 at 3:39 pm

The name of the airport is: “Cincinnati/Northern Kentucky Intl Airport”

David Chudzicki May 22, 2014 at 11:34 am

That seems to say per mile is the wrong way to look at it. Using your A + B*miles model, do airports really have similar B’s as you suggest? How do the A’s vary? (and of course, is that a good model?)

prior_approval May 22, 2014 at 12:07 pm

‘First, not too long ago Cincinnati was rated as the very best U.S. airport by global standards.’

Coming in at an awe inspring 30th place. Germany only managed to place 3 airports in the slots between 11 and 27, by the way. Yes, Cincinnati couldn’t beat out Düsseldorf. But it was close, real close.

And South Africa and Australia had two airports in that top 30, with Johannesburg and Melbourne rounding out the 28 and 29 slots. Though Autralia does manage to place 3 in the top 31 – Sydney Airport is just after Cincinnati.

So lucky the discussion has shifted to cost – quality, a nebulous term that requires one to recognize it when one sees it, is not the sort of metric the U.S. cares about these days.

All Hail Efficiency May 22, 2014 at 12:32 pm

At least no plane flies off the tarmac with an empty seat!

Ted Craig May 22, 2014 at 12:41 pm

That prior list was nonsense, as anybody who has taken the bus between terminals in Cincinnatti knew.

Sean P. May 22, 2014 at 12:17 pm

I have found that Charlotte is almost always the cheapest place in the South to fly from Seattle, usually by $100 or more. A mystery for the ages. Let’s hope that the AA-US Airways merger leads the airlines to compete in a place that’s actually interesting.

Roy May 22, 2014 at 1:04 pm

It is a very nice ultramodern airport in an area with additional ATC capacity that is way to large for its community, yet it is conveniently located for transfers.

I don’t see it as a mystery for the ages.

Jon May 22, 2014 at 12:48 pm

How would one measure the consumer surplus?

Willitts May 22, 2014 at 7:53 pm

No one knows.

If there is perfect price discrimination, CS is zero. Airlines are pretty good at this.

If you know the maximum price anyone would pay, and you know the quantity, CS + PS = 0.5 x Pmax x Q added for each flight.

Jon May 22, 2014 at 8:52 pm

If one develop’s buyers regret, is the consumer surplus then negative? But then the fact that the person bought the item is proof it is greater than or equal to zero.

The consumer surplus is useful as a thought exercise; but one has to be careful that one does not over use it or one can end up proving a tautology or producing a bias study.

dan1111 May 23, 2014 at 3:57 am

If there is perfect price discrimination and no competition, consumer surplus is zero. Competition among airlines is cut-throat.

PStu May 22, 2014 at 1:11 pm

The Memphis story is largely a result of the Delta-Northwest merger. Memphis has gone from being a busy airport to deadzone once they decided to close down the Northwest hub – too close to Delta’s larger hub in Atlanta. I used to have a reasonable choice of direct flights, but now there are very few and all expensive.

Dan Lavatan May 22, 2014 at 3:36 pm

Fuel costs would also very with trip length, it takes a lot of fuel to takeoff and reach cruising altitude even for a short flight. Actual wear and tear on landing gear depends more on the number of landings than the number of flight hours although some maintenance costs are essentially fixed (like inspecting electronics) and some vary with total flight time.

Virginia Postrel May 22, 2014 at 7:36 pm

If you’re going to Dallas, ground transportation is a lot cheaper (and faster) from Love Field than DFW.

Willitts May 22, 2014 at 7:57 pm

Jan = He

Something struck me as odd, but I couldn’t figure it out. Now I see.

Errorr May 22, 2014 at 9:53 pm

I was surprised to see Memphis but then read that it closed as a hub after the Delta NW merger and passenger traffic dropped 34%.

I though Memphis would be cheaper because passenger flights make up the smallest percentage of movements of any airport I’m the US and the fixed cost would mostly be paid by FedEx.

Errorr May 22, 2014 at 10:46 pm

US airports have much higher usage then most because they have a huge number of regional flights and smaller planes than any other Airports in the world. The top 4 have no Intl. passenger flights. Charlotte is weird. It is a major hub (although Philly is now the primary east coast Intl. hub) and has a good number of long flights. Maybe a disproportionate number of flights to Atl.?

I can’t seem to get the dot report to download but I really want to know which is the Airport that is the most expensive to fly from (in terms premium over average ticket to that destination) one list had Houston at #1.

Another piece of data I found suggested the most expensive city pair by average price was NYC to Jackson WY. On a per mile basis it was Charlotte to ATL.

When talking about airports i’m still kinda amazed the ATL is the worlds busiest airport and has continued to keep Beijing from overtaking them in volume.

Vivian Darkbloom May 23, 2014 at 1:40 pm

The metric used in the study was the average cost per mile travelled. What is lacking from the published material, however, is the average distance of a trip out of each airport. The cost per mile travelled for a long-haul flight should be lower than the cost of a mile travelled on a short-haul flight. Without the average distance per flight, this data is pretty useless.

6th May 23, 2014 at 7:17 pm

If the “per mile” calculation is without the stage length adjustment, it could be misleading – I suspect DAL and CLT as origin (or destination) of a trip is dominated by shorter distance. (For shorter distance, the per mile fare is high)

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