The Larry Summers view of airports

By Felix Salmon
September 29, 2010

It doesn’t matter whether you fly private or whether you fly commercial: you still have to fly from an airport. Which clearly annoys the Obama administration’s top plutocrat, Larry Summers. Justin Fox was in Washington on Tuesday to hear Summers give a speech on the inadequacies of US infrastructure. And he came up with a truly classic example to make his point:

“Compare the quality of our great resorts with the quality of the airports you take off from to visit those great resorts.”

It’s clearly not easy, being Larry Summers. For all his millions, he still needs to travel from A to B, and keeps on finding himself stymied. First of all he lost his Harvard town car and chauffeur when he moved to Washington, and stood out there for demanding a similar car and driver in recompense for not getting the job of Fed chairman.

And now, it seems, the poor chap has to navigate airports fit only for the masses, while making his way to luxury resorts designed to pamper the every whim of the gilded elite.

As an economist, Summers should know that it makes perfect sense for great resorts to spend enormous amounts of energy on the kind of quality he’s talking about: that’s their comparative advantage, the very heart of what they’re selling. Meanwhile, Summers isn’t really even the customer of the airports he’s passing through: the airlines are the customers, and the passengers are the goods being transported. So the airport doesn’t have much in the way of economic incentives to ease Summers’s way.

I’m sure that Summers has encountered lots of shiny new airports in his travels around the world, in comparison to which US airports look decidedly crumbly. But a lot of that is simply a function of age: it’s easy for Chinese airports to be super-modern and efficient, just because they’re brand new. (And have the advantage of very low construction costs.) It’s much harder for Delta’s Marine Air Terminal to be as Summers-friendly: it was built in 1939, long before anybody ever so much as imagined the TSA. (Indeed, it was before the planes which landed there even landed on solid ground: it was designed to service sea planes.) But because the terminal is one end of the Delta Shuttle from National Airport, I’m sure Summers knows it well.

More to the point, a lot of the money spent on shiny new airports around the world is simply wasted, from an economic perspective. National governments, especially in developing countries, like to show off when it comes to the airports where luminaries like Summers arrive. But all that expense isn’t really necessary for the smooth functioning of the airport.

Summers has been a vocal proponent of infrastructure investment, but if his idea of good infrastructure investment is cosmetic airport revamps which give him plusher lounges and colder drinks, then that’s just depressing. The really crucial infrastructure investment is in things like the national electricity grid, or NYC’s Water Tunnel 3 — expensive, yes, but decidedly unglamorous.

So let’s leave the provision of luxury to America’s great resorts, and maybe to the airlines trying to upsell Summers to a first-class seat. When it comes to infrastructure investments, there are much more important priorities.

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Comments
9 comments so far

National governments, especially in developing countries, like to show off when it comes to the airports where luminaries like Summers arrive. But all that expense isn’t really necessary for the smooth functioning of the airport.

Except that US airports tend to be crummy AND dysfunctional. It’s not a matter of “it’s ugly but it works”; there really is a crisis in US air transportation infrastructure.

Posted by seewhydee | Report as abusive

“Summers isn’t really even the customer of the airports he’s passing through: the airlines are the customers, and the passengers are the goods being transported”

interesting thought. I guess it depends where you live. In NYC, for example, that’s not really true at all – you have 3 choices of airports, and I certainly considered myself a customer of them. I would regularly choose flights based on what I knew about the specific terminal that each airline flew out of at each airport.

I guess the vast majority of America doesn’t have choice like that though (maybe the SF Bay Area does too, with SFO and Oakland)

Posted by KidDynamite | Report as abusive

Summers should have just stolen Galbraith’s line about private opulence and public squalor.

Posted by chrismealy | Report as abusive

“The really crucial infrastructure investment is in things like the national electricity grid” Is that why the US has so many brownouts?

There are limits to a throwaway culture where it is more important to extract profits for shareholders than it is to reinvest in the business. In some areas the US is in danger of copying the mistake made by British industry in the 1960s. A lack of reinvestment gifted many markets to the Japanese. Today, it’s China who benefits.

Posted by FifthDecade | Report as abusive

I hate to agree with Larry, but after being stuck on the Hertz bus for 25 minutes in the wholly inadequate departure area at Logan today, I’m for better airports. This is ridiculous.

Posted by maynardGkeynes | Report as abusive

Just because an airport is expensive doesn’t mean it has to be wasteful. Hong Kong International Airport is easily one of the best in the world, and it was also incredibly expensive to build. While not all of the airport’s efficiency comes from the cost (after all, it’s about the people doing the work as well) there’s certainly a non-zero correlation there as well.

Posted by MarshalN | Report as abusive

American airports really are terrible though, at least for international travel. O’Hare’s international terminal, for instance, is one of the busiest in the world, and yet it has the feel of a tiny provincial airport. Almost all the (terrible) food is located on the land side of security, so if you get peckish while you’re waiting at the (uncomfortabe)gate you have to go back through security, which of course increases the wait for everyone else. It has almost none of the amenities you’d expect from a leading international airport. And God help you if you’re flying on a Sunday or out of office hours, because most of what there is will be shut.

Posted by GingerYellow | Report as abusive

So, you are a snob and an elitist if you prefer to spend hours and hours of your life in a functioning, 21st century facility instead of a dysfunctional shithole where nothing is done well?

It is like American airlines themselves. Are they crappy because they are old? No, they’re crappy because they are not run for the benefit of their consumers. The superiority of Asian carriers is about attitude; ditto their airports.

If there’s no edible food at JFK and there’s acres of sushi and champagne bars in Bangkok’s Suvarnabhumi it has nothing to do with how old JFK is. It’s because Americans don’t give a damn and Thais do. And to say that hub airports – by being opulent – don’t attract billions in revenue on many levels is highly questionable. I bet they do, and I’m sure they make money for their countries too.

But aside from that it’s also a question of pride. So American carriers and airlines are getting to feel distinctly third world. What’s the upside?

Posted by gamlet | Report as abusive
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