The Greatest Con at the Airport Actually Has a (Somewhat) Reasonable Explanation
Last week, New York Times columnist David Brooks—a man who seems to have a “kick me” sign permanently taped to his back—caught a huge amount of flak for a tweet he made from Newark Liberty International Airport. Brooks was enjoying a rhapsodically grim pre-flight dinner that consisted of a hamburger stripped bare of its lettuce and tomato, a fistful of crinkle-cut fries, three Heinz ketchup packets, and a monstrous three-finger pour of bourbon. “This meal just cost me $78,” wrote a cranky (and, ostensibly, tipsy) Brooks, alongside a photo of his tragic platter. “This is why Americans think the economy is terrible.”
Brooks, I think, was attempting to concoct some sort of commentary on the specter of inflation, and how a dedicated right-wing psyop has convinced the country that Joe Biden’s economy has left the country in a financial tailspin where dystopian $78 airport meals are the norm. (This is not the case.) The columnist would go on to apologize for his mischaracterization on PBS a few days later, but it was a fun internet game for a few days.
Except. Except. They do rob you at the airport, don’t they? I don’t want to play devil’s advocate for David Brooks, but I do think we might have missed the forest for the trees here. Who among us hasn’t forked over $23 for a vodka tonic during an interminable layover? Perhaps a pint glass half full of bourbon should cost $60 or whatever, but we all know there’s a long con here. That’s why I reached out to Blaise Waguespack, a professor at Embry-Riddle Aeronautical University who specializes in the air-travel industry, to get to the bottom of this mystery. Waguespack explained the huge network of factors—some understandable, others totally sinister—that add up into that onerous airport upcharge and offered some hope that maybe, just maybe, we’ll inherit a future where a burger, fries, and double whiskey will cost a little less than 78 bucks. Our chat has been condensed and edited for clarity.
Luke Winkie: Have restaurants always been expensive at airports? Or is this a more recent trend?
Blaise Waguespack: In the past, you were dealing with a monopolistic situation. You may have had one vendor, or one master concessionaire, that controlled the space in the entire airport. And in America, airports are still operated by government entities—a port authority, a county board, an aviation authority. They’ve always understood the value of that space, and wanted a return for that space. It just works differently now.
As a layman, I’ve always assumed that the reason food was expensive in airports is because those restaurants are selling to customers who are stuck in a terminal and don’t have any other options. Is that the primary reason why? Or is it more complicated than that?
There’s a lot more going on. From a passenger’s perspective, think about everything it takes to go from land side to air side. You hit the terminal, you have to go through security, and then you’re finally in an area where the planes and gates are. The same thing happens with a supply chain. You don’t see 18-wheelers parking at a terminal in the same way they might pull up to a local McDonald’s, right? So there’s a whole security process for the airport’s supply chain. The employees of those restaurants have to go through a badging process and get background checks. Extra cost issues can pop up that way.
There are a bunch of structural issues as well. Some airports, for the longest time, never allowed Burger Kings, because they used a gas flame. Everything needs to be electric, so how do you adapt in that regard? There’s not a lot of storage space in those concessionaires. So not only are you clearing security to get on the property, you might also be going to a central warehouse, where you have a facility, to refill your stock. Some restaurants might be making multiple runs in a day. There are just tons of operating challenges to selling food in an airport.
I’m curious to hear more about how restaurants on the property keep enough product on hand to feed customers. Because you’re right, it’s not like a semitruck can idle in Arrivals and unload ingredients. How does that work?
It varies between airports. Some airports will have a central distribution warehouse—for common use—where all the vendors in, say, Terminal A, will have their own supply cabinet. Maybe, once in the evening and once in the morning, an airport will allow those cabinets to be restocked. The timing of that will all depend on how busy and how much traffic that airport is getting.
And I imagine the vendors are paying some sort of fee to keep a spot in that warehouse.
Yes, as a rule of thumb, you pay fees on everything when you have a business in an airport. Most concessions are put out through what’s called an RFP, or a request for proposal. An airport basically says, “I have this space, here’s what I want in it, so give me proposals for that space.” The fees in that proposal are broken down in different ways. The big one is the MAG—minimum annual guarantee. That’s essentially the rent.
And are airports also taking a cut on, say, the Big Mac I order before flying to Dallas?
Yes, airports will break down royalty rates, in percentages, for each item. They might want 15 percent taken off of every alcoholic beverage you serve, or 12 percent for every meal you serve, and 10 percent for every bottle of water you serve. The airport is not only getting its rent, but it’s getting a cut of every sale you make. There can be additional fees like a contribution to the airport marketing program, or contributions for the airport’s facilities—if you have a big food court, you’ll be expected to pitch in to pay for those who are picking up the trays and cleaning the trash.
What are the differences between the rental agreements for a commercial space in an airport versus the lease you might sign to open a restaurant anywhere else in America?
MAGs are clearly stated and non-negotiable. They’re going to say, “We want this amount, per month, paid on this date.” You’re not going to go to the airport board and try to negotiate a rate. In commercial real estate, there’s more flexibility.
Airports have also made an effort to become more boutique and upscale with the restaurants they’re housing. The airport in Austin is now home to multiple craft beer bars, and there isn’t a McDonald’s in sight. Surely, that must be affecting the prices we’re seeing, right?
Absolutely. At the Atlanta airport, there used to be a Checkers. That Checkers is long gone. Now it’s a Smashburger, or a Five Guys. Those places aren’t going to be selling you a $7 value meal anymore. If you’re going to a Smashburger in an airport, you’re lucky if you’re out for under $20 with fries and a drink. Airports would say that they’re just adjusting to their passenger mix, but it’s not their complete passenger mix. They’re targeting those high-end travelers. More money-conscious folks, who are being more conscious about what they fly, can see their budget get busted by those food options.
This all seems pretty punitive on passengers. And it helps me understand better how, in New York, airport watering holes were selling $27 pints. The state government actually intervened in that case and reduced the surcharge airport vendors could impose on customers. That gets to my biggest question: Do you think this is a system in need of reform?
In some regard, reforms started to happen years ago, but then it faltered. As I mentioned, in the past, airports had exactly one concessionaire who controlled all of the space, and could set the tendencies and prices with impunity. Eventually, airports moved away from that monopoly and introduced more opportunities into the marketplace. Programs came about to help disadvantaged businesses, and outreach efforts to bring more variety and choice to the airport. Along with that came this concept called “street pricing”: the idea that whatever you buy at an airport will match the cost of the same item outside of it. This was never totally true—street pricing always carried about a 10 percent upcharge, but that was accepted because of the extra business costs you need to cover by operating in an airport.
Well, some of those airports started pushing the boundaries. They started doing research in the market and tried to find the breaking point for their customers. The point where they go from, “Well, I’ve seen the higher prices in movie theaters and sports arenas, and these costs are in line with that,” to a flat-out unwillingness to spend. With that research, airports were able to say, “Maybe we can move that 10 percent to 15 percent, and still be a viable product in the market.”
Yeah, some people can put the black card down and it’s not going to matter to them. But a lot of business passengers still need to live within business accounts. So I think airports have pushed the pocketbook a little too far. As airports have gotten more upscale—in terms of some of the restaurants and locations they’re adding to the terminals—the prices have gotten to be out of range for a lot of travelers.
