Air travelers almost uniformly complain about being gouged on the price of necessities such as water and snacks at our airports. Sometimes these costs are even vigorously defended by the Port Authority, a powerful airport operator in New York. For example, they highlight the operational challenges that vendors encounter when they come into secure locations. At peak congestion airports like JFK, New York’s busy international gateway, prices can rocket. You’ll see much cheaper rates the farther you search from on-airport.
At JFK, a 24-ounce flip-top bottle of Smartwater costs $4.99. For just $3.99, you can pick up a snack-sized bag of Snyder’s of Hanover Mini Pretzels. All together, these things would cost somewhere around $9.47 at Hudson news, a convenience store in the airport. The 7-11 on the next corner in Queens, NY charges $3.29 for that same bottle of Smartwater. Pretzel prices at this retailer ranged from store brand for as low as $1.69 to premium brands up to $3.69.
As the Port Authority explains, price differences are due to a multiple number of factors. One of the biggest reasons is the higher operational costs of conducting businesses within a secure perimeter.
“To offset higher operational costs, many airports add a 10% to 15% margin on local street prices, reflecting the higher costs of operating in secure, high-traffic environments.” – Port Authority
The Port Authority has finally released their new Concessions Street Pricing Policy. Retreating on street vendor fees. This policy has enabled vendors to charge on average 15% less than local street prices. In addition to the IMT requirements, this policy allows for an optional employee benefits and retention surcharge of up to 3%. For one, airport vendors have to contend with much higher cost of operations. These costs come from cover rent, security, utilities and a costly staffing matrix for 24/7 operations.
“Operational costs include higher rent, security, utilities and staffing, which is more complex and expensive than at smaller airports or off-airport properties, as well as guaranteed cost-of-living increases for its on-property minimum wage workers.” – Port Authority
Even with these explanations, though, pricing experts say the pricing strategies should be more straightforward. Alex Jacquez, chief of policy and advocacy for Groundwork Collaborative, calls for more transparency in how that comparable price is decided. He argues that strong and transparent guidelines are necessary to ensure an equitable price.
“They need to lay out strict standards for what they mean by comparable prices.” – Alex Jacquez
We’ve heard similar pricing complaints from other major airports around the country. Portland International Airport (PDX) uses a hard street pricing model. This practice ensures that concessionaires never pay more than off-airport rates. This policy encourages a healthy competitive environment where local vendors scramble to break into the lucrative airport market.
“By focusing on local shops and restaurants, and having those businesses charge the same as they would outside the airport, travelers get an authentic experience of what our region has to offer.” – Port of Portland spokesperson
These further differences in pricing models emphasize the different approaches taken by airport operators. Some facilities work hard to undercut their competitors on price through a robust regulatory apparatus. JFK has some distinctive challenges that make it more expensive.
The Port Authority also performs internal audits and a yearly market analysis in partnership with Deloitte. To do this, they contrast airport prices against similar goods throughout the entire metropolitan area. Differences are still obvious to travelers who do not have an insider’s grasp of the underlying logic that leads to these different price tags.
“If language is vague, that gives a lot of leeway in interpretation for a vendor to decide what is comparable.” – Alex Jacquez
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