Human flight via airplanes was invested in the United States, by the Wright Brothers, near Kitty Hawk, North Carolina. The country that invested flying should have many of the greatest airports in the world, but sadly, none of ours rank in the top 25 worldwide. Just as President Dwight D. Eisenhower championed the creation of the Interstate Highway System, President Trump can lead the way toward the United States having the best airports in the world.
We currently have an antiquated federally controlled system of building and maintaining airports under the Airport Improvement System (AIP), which provides federal grants for capital improvements at public-use airports. AIP grants have many restrictions on their use, and while 90 percent of all air traveler use the largest 60 airports in the U.S., they receive 27 percent of AIP grants while smaller airports that serve less than one percent of commercial fliers receive 30 percent of the grants. The AIP program should be eliminated by Congress and the grant revenue replaced by user-fees controlled by the airports, allowing them to operate as self-reliant enterprises run like free-market businesses.
Despite billions spent on our airports via the AIP program, many politicians over both parties point out that our airports are wholly inadequate, including President Trump as a candidate calling them “third world.” Michael Sargent of the Thomas A. Roe Institute for Economic Policy Studies, writing for the Heritage Foundation, suggests eliminating regulations that restrict how airports raise and spend revenues, reducing costly federal taxes while eliminating inefficient federal grants, and allowing “self-sufficiency and privatization to move U.S. airports towards a modernized, free-market funding system.” Clearly, our airports would be orders of magnitude better in serving the needs of our businesses and consumers if they operate as private sector enterprises rather than bureaucratic government entities.
Taxes paid by fliers account for nearly 14 percent of the cost of a domestic airline ticket, Sargent points out. These taxes raise $14.3 billion annually only to be spent, under an excessively federal regulated system, by government-run airports that operate with the efficiency of old state-run bureaucracies. The AIP program takes much of this revenue from the airports that carry the most flier traffic and disproportionately re-distributes it to airports with less traffic. The AIP program is clearly broken beyond repair and Congress should do away with it. Repealing the Anti-Head Tax Act that restricts airports from charging fees to customers and reforming Grant Assurances would go a long way to allowing airports to operate more efficiently and effectively. Limiting oversight and regulation (including burdensome environmental regulations), along with privatization, would allow airports to operate as free-market enterprises.
In a November 21, 2016 paper for the CATO Institute on the issue, Robert W. Poole and Chris Edwards strongly outlined the advantage of privatizing our airports. They noted that the British privatized their airports because “disillusionment with the generally poor performance of state-owned enterprises and the desire to improve efficiency of bloated and often failing companies.”
Poole and Edwards cited a 2016 study by the Airports Council International (ACI) that shows 47 percent of airports in the 28 European Union countries to be “mostly” or “fully” private, an increase from 23 percent in 2010. The study also found that most of the larger airports are privatized, and that 75 percent of passenger trips use those private airports. The report concluded there is “no denying the tangible benefits” off efficiency, higher quality service, and improved overall airport infrastructure that comes from privately run airports.
President Trump knows from his own business experience how much better hotels, commercial, and residential buildings can be built and run. Likewise, he knows that privatization will lead to vast improvement in America’s airports. The Trump plan will no doubt take shape legislatively after consideration in the House Transportation and Infrastructure Committee chaired by Rep. Bill Schuster (R-PA), while the support of conservative-libertarian members of the committee such as Rep. Thomas Massie will help insure free-market ideas are strongly represented in any airport infrastructure legislation that ultimately will be signed into law by the new president.
The priorities of the airlines have not always lined up with those of air travelers. While the Air Traffic Control system may need upgrade, it should also be privatized and removed from control of the FAA. In many instances, airlines have promoted the very ideas that have lead to the bad airports and the lack of competition, which result in high prices. While the airlines have often displayed a sharp-elbowed mentality toward preserving the oligopoly they have, and dilapidated airports, they seem unconcerned about the degree to which air travelers are quite unhappy with the status-quo of American airports.
The time for real reform is now, and working together, President Trump and Congressional Republicans can truly enact and implement a plan that will harness the advantages of the free-market to make America’s airports great again.