- 5 months ago
Airports rely on you spending money inside the terminal. In 2024, US airports generated over $1 billion of revenue off purchases like $6 bottled water, $27 beers, and pricey Chex Mix.
And airports are only getting more expensive. In the early 2000s, some tried to match the price of goods outside the airport. But today, many airports are raising or removing that limit. And there's little competition inside the terminal — much of the food and retail at the airport is operated by a few massive companies.
So how did airports become so expensive? And why are some raising prices even more?
And airports are only getting more expensive. In the early 2000s, some tried to match the price of goods outside the airport. But today, many airports are raising or removing that limit. And there's little competition inside the terminal — much of the food and retail at the airport is operated by a few massive companies.
So how did airports become so expensive? And why are some raising prices even more?
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TechTranscript
00:00Take a look at these chocolate bars.
00:02They're identical, except one costs 120% more.
00:08Because this was bought at the airport.
00:11You probably know you're paying a premium,
00:13but have you ever realized just how much more?
00:17This burger from Chili's is marked up 46% from its street price.
00:23There are so many airports across the U.S.
00:26where the management isn't answerable to the broader public.
00:30But the problem isn't just that passengers are a captive audience.
00:35It's a lack of competition.
00:37Like, look at this food court.
00:39All six of these businesses are operated by the same multibillion-dollar company.
00:45So how did airport prices get so high?
00:49And why are some airports raising them even more?
00:56To understand how we got five Starbucks in a single terminal,
00:59we need to go back to the early 20th century,
01:02when airports looked more like train stations.
01:06People complained about airports being overcrowded, dirty, dingy kind of places.
01:13The glamour came once you got on the airplane.
01:16See how neatly everything is arranged on the tray?
01:19But for the air travel industry to grow, airports needed to improve.
01:23They also needed to make money from passengers.
01:28They were making money any way they could.
01:30Observation decks, oil wells, swimming pools, tennis courts.
01:36Some of them began to charge for parking, which became a big moneymaker eventually.
01:41There might be a newsstand there.
01:43Airports tried things like pay toilets.
01:46And every nickel counts, I guess.
01:49By the mid-20th century, airports opened restaurants to attract not only passengers,
01:55but also those wanting a night out.
01:58These were very nice restaurants.
02:00In my hometown, you would go for an anniversary.
02:03People would go there for prom.
02:05This postcard described Janet's hometown airport as the Midwest's most distinctive dining and cocktail lounge.
02:12And in the 1960s, some new terminals were architectural marvels.
02:17These types of amenities were designed to bring people to the airport,
02:22maybe inspire them to fly, but also to generate revenue.
02:27Of course, airports are always looking for ways to make more money.
02:31This was the golden age of flying.
02:33Here in the cabin, it's like a gentle June morning.
02:38But compared to today, not that many people traveled by plane.
02:43Because tickets were expensive, it was mostly the wealthy and businessmen that flew.
02:49And those who did fly weren't spending much time in airports anyways.
02:54But that changed in 1978.
02:57Congress deregulated the industry, allowing airlines to decide their own rates and routes.
03:04Soon after, ticket prices fell.
03:07Deregulation led to literally a frenzy of fair wars.
03:12Well, you get what you pay for.
03:15You went from getting gourmet meals to getting the bag of pretzels, peanuts, and a soda pop.
03:21No more free cigarettes.
03:23For those who'd grown up in aviation during the golden age, their world was gone.
03:29Because as they lowered fares, the service on the airplanes also, as they would put it, deteriorated.
03:36The number of people flying in the U.S. each year nearly doubled over the next decade,
03:41thanks to cheaper tickets and bigger planes.
03:44I could afford to fly.
03:46And if you know about graduate students, they can't afford much of anything.
03:51In the 1980s, an increase in connecting flights meant passengers waited longer in the terminal.
03:57This big rush in there overwhelmed airports.
04:01They could shop at a newsstand or eat at a few quick service restaurants.
04:05But it wasn't a great experience.
04:07Even back then, passengers complained about 50 to 100 percent markups.
04:12The airports and the airlines began thinking, well, we need to do something to keep passengers happy while they're sitting here waiting for their connection.
04:24The solution?
04:26Malls.
04:27The Pittsburgh airport opens in the early 1990s and it catches on immediately.
04:33With more than 100 shops and restaurants, Pittsburgh's airport was the first in the U.S. to transform the terminal into a mall.
04:41It not only makes passengers a lot happier, but it's a great revenue source.
04:47Because every one of those shops are going to pay a rental fee to the airport.
04:52In fact, the airport's revenue soared 75 percent within six years, according to one report.
05:00And the airport achieved that without price hikes.
05:03It used a model called street pricing.
05:06Basically, what you buy inside the airport should cost the same as outside.
05:11The county commissioner even said, we're the first airport not to gouge people.
05:16The air mall concept was a great one to make a lot more money.
05:21Other airports poured tens of millions of dollars into renovations, hoping to emulate Pittsburgh's success.
05:28And in response to passenger complaints, other airports also followed the street pricing model.
05:34But if airports had this policy back in the 90s and early 2000s, why does this chocolate bar cost more than double what you'd pay outside?
05:47Nowadays, most U.S. airports use something they call street pricing plus.
05:52That is, a product's street price plus an additional 10 to 15 percent.
05:58The authority that controls the airport sets this price cap.
06:02Fifteen percent, a fair and reasonable adjustment for our concession heirs.
06:07Businesses aren't supposed to go over this additional percentage.
06:11And in most cases, the airport audits prices a few times a year.
06:16Under this model, prices should only be a little bit higher.
06:22But how an airport determines street price can be a bit... confusing.
06:29That $14 chocolate bar is from LaGuardia in New York City, which is run by the Port Authority of New York and New Jersey.
06:36It requires businesses to set prices based on the average of comparable items sold outside the airport, plus an additional 15 percent.
06:45This is what the Port Authority said District Market was citing for the chocolate bar.
06:50But when we checked in person, we found a different story.
06:55One location didn't sell this bar at all.
06:59The other two sold it for less than District Market said.
07:03In response, the Port Authority didn't say it would be adjusting any prices.
07:09Because enforcement and repercussions are lax, examples abound of companies charging more than 10 to 15 percent above street price.
07:18Let's say Janet flew out of MSP and wanted to buy her favorite airport snack.
07:24Oh, M&Ms. You know, they melt in your mouth, not in your hands.
07:28In August 2025, the Minneapolis-St. Paul Airport told Business Insider it uses street pricing plus 10 percent.
07:37But at this Hudson News store, Janet would pay 69 percent more than she would at a Walgreens outside the airport.
07:44A Chick-fil-A chicken biscuit meal costs over 16 percent more.
07:51And one of the worst offenders we found was a yogurt marked up 84 percent.
07:57A spokesperson from the Metropolitan Airports Commission told Business Insider that locations are audited two times annually or on an as-needed basis.
08:07But it did not comment on the price disparities.
08:12Even though most airports have a pricing policy, a lack of enforcement means passengers often get a bad deal.
08:19But some in the industry say that charging street prices isn't sustainable.
08:24Because it's more expensive to run a business inside an airport.
08:29All employees, products and equipment need to go through security, which increases construction and labor costs.
08:36The exact numbers vary, but development reportedly costs 30 to 40 percent more than it does outside.
08:43On top of that, some cities set a higher minimum wage for airport workers.
08:48And we're also asking you to generally run your business from 4 a.m. to midnight.
08:53If you're a pasta place, we're saying, OK, what's for breakfast?
08:58And businesses pay a percentage of their sales to the airport. That's part of their rent.
09:03The businesses here at the airport pay anywhere between 6 and 20 percent.
09:07But the vast majority are paying between 10 and 16 percent.
09:12But there's one thing that usually doesn't get brought up by these companies.
09:17Competition. Or the lack of it.
09:21In the U.S., the vast majority of airport food and retail is managed by six large corporations.
09:28You might not have heard their names before, but these companies have their footprints everywhere.
09:34Worldwide, they operate more than 13,000 locations.
09:39Remember this food court? It's in the Minneapolis-St. Paul Airport.
09:44It might seem like you have six options, but inside the airport, these restaurants are all operated by one company.
09:51HMS Host.
09:53And it goes even further.
09:54Evolta, the company that owns HMS Host, also owns the duty-free and Hudson News stores at this airport.
10:02But even that's not the full picture.
10:05A store like this prairie market seems like a different business.
10:08But it's operated by Hudson under the Evolta umbrella.
10:13You can see it advertising Evolta's rewards program.
10:18But it's not just this airport.
10:20In parts of LaGuardia and New York City, you can't escape Evolta's signs.
10:27Another big player, OTG, operates 350 locations in North America, including this Chibo Express gourmet market that sells yogurt for 84% above street price.
10:40After we reached out, OTG said it lowered the yogurt's price down to about what you'd pay outside the airport.
10:48Many airport businesses have multiple owners, but the large concessionaire is usually the majority stakeholder.
10:56And because a few big companies have a hand in most of the airports in the country, there's hardly any competition within a terminal.
11:05Mergers and acquisitions are consolidating the industry even more.
11:11And these companies often advocate for airports to raise their street pricing cap.
11:16The Phoenix, Arizona airport abandoned street pricing entirely in 2019, after two large concessions companies, HMS Host and SSP, asked for the cap to be increased.
11:28That means there's theoretically no limit to what businesses charge.
11:33But if everyone charges high prices, passengers don't have anywhere else to go.
11:39This became more of a problem after 9-11.
11:44New security measures greatly increased what's called dwell time, basically the time spent waiting in the terminal.
11:51And studies have shown that for airports, more waiting means more food and retail revenue.
11:57About 63% of passengers on the airplane side will make some form of purchase.
12:05Some of it is based on boredom because the average time spent at an airport is roughly two hours.
12:11It is only the very experienced travel that will often go through security with an empty bottle and then take it to a water fountain and fill it up.
12:21But that is a tiny percentage of passengers.
12:26The whole goal of moving them through quickly is one, to reduce the stress time that they have.
12:31But two, provide them with the opportunity to spend more time post-security, hopefully supporting the concessions program.
12:41For more than two decades, airports have capitalized on dwell time.
12:45And the concessionaires have made heaps of money.
12:48It's usually impossible to get to your gate without walking past food or retail.
12:54If you get someone's saliva glands working, they tend to buy more.
12:59That's essential to the business model.
13:01U.S. airports earn almost half their revenue from non-aeronautical sources.
13:06Like passengers parking their cars or buying food.
13:09Diversifying non-aeronautical revenue and getting more of it is really one of our highest priorities
13:15to kind of protect ourselves from these unknowns.
13:19In 2024, U.S. airports made over twice as much food and beverage revenue as they did in 2010.
13:27So are there any airports in the U.S. where you don't pay a premium?
13:32One of the few that doesn't use Street Pricing Plus is in Portland, Oregon.
13:37It's clean street pricing.
13:39Whatever they charge downtown in their stores or on their street locations is what they have to charge here at the airport.
13:46There are no fees, no additional charges.
13:48At PDX, the percentage the airport takes is relative to a business's sales volume.
13:54If you're working with them to make them successful and have a financial structure that allows them to flourish,
14:01then I don't think they're so against the street pricing cap.
14:06And it's been a success.
14:08The passenger spend per what we call per and plane passenger at PDX is about $15.03.
14:14That's about 20% higher than the average through the nation, which is around $12.50.
14:20PDX has used street pricing for decades.
14:23But Dan doesn't expect the industry to follow suit.
14:26I think that airports that don't have the model today, it's hard to turn the dial back.
14:35In fact, some airports are moving in the other direction.
14:39Since 2010, LAX used street pricing plus 18%.
14:45But it removed that cap on most items in 2025 in response to complaints over rising airport minimum wage.
14:54And the Airport Restaurant and Retail Association wants flexible pricing.
14:59Or in other words, no limit.
15:02It says that overall passenger satisfaction is more important than price.
15:08But the six big airport food and retail operators are very focused on increasing profitability.
15:14Part of Evolta's long-term strategy is to continuously drive spend per passenger and optimize the profitability of our commercial spaces.
15:26And so far, it's been quite successful.
15:28At a time when everything feels more expensive, some passengers might be reaching a breaking point.
15:40J.D. Power's 2024 survey of North American airports found that passengers spent less in the terminal than they did a year earlier.
15:47It also found that food and beverage prices have been the lowest-scoring attribute on its survey for years.
15:54In May 2025, members of Congress wrote a letter asking the Federal Trade Commission to investigate concession prices at airports and stadiums.
16:03They said that with few options, travelers face extreme markups for drinks and food before their flights.
16:09I experience the same frustration at some airports when I have a beer on the way home from a business trip and pay $16 for it.
16:21Having worked on airport retail now for almost 40 years, it could definitely be better, no question.
16:29I believe fervently that amenability and profitability are linked.
16:34That the friendlier the space is, the more money you tend to make.
16:41And buying your favorite snack before you reach the airport might save you more than you realize.
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