Markets At Work

The jury is still out on trickle-down economics, but trickle-down cost cutting is a reality. On May 17 The Wall Street Journal (WSJ) ran a front-page story on how airline cost cutting is putting pressure on airports. This story is sorta the reverse of the song about the green grass growing all around, all around. This is more about penny pinching growing all around, all around. The airlines are hurting so they cut costs where possible. As Wal-Mart proved years ago, one way to do that is to put pressure on suppliers, and airports are definitely suppliers to airlines. Airports, says WSJ, have had a tendency to build "palatial terminals to showcase their cities and passed on the costs to airlines and passengers." Airlines, "which have already won concessions from employees, travel agents and suppliers, are now putting pressure on airports to cut costs and fees."   The struggle, says WSJ, highlights a "strange fact about the airline industry." Airlines historically have "struggled to earn profits." Those dependent on airlines, however, including "maintenance firms, leasing companies, manufacturers like Boeing Co. and city-owned airports feed off the money-losing airline business, but are profitable themselves." I have long wondered about all this. I tend to think that all public buildings should be concrete block structures with four straight sides and a roof, no art, few windows and no frills. I am big on convenience and price, short on elegance. Several years back, when our local airport, Huntsville (AL) International (which does most things very well, BTW), paid just short of a gazillion bucks for aviation art for the then-new terminal, I wondered how that was going to help me get from point A to point B. Still wonder. Frankly, this seems like a good thing to me. Airline passengers have proved that they want low prices and will put up with a lot to get them. Seems perfectly logical to me that market forces be applied to airports. Of course it makes absolutely no difference what I think. It is happening. It will continue to happen. There’s nothing I can do about it one way or the other. Good airport managers will adapt to the new market forces. Others won’t. As usual, it’s fun to be watching! We want to post your comments. Please click on the comment box at the top.