Infrastructure Tipping Point

It’s one of the few issues that both sides of the political aisle can agree on, yet neither has been able to do much about: the need to fix our nation’s infrastructure.

From Bush to Obama to Trump, promises to repair our roads, bridges and tunnels have made little to no progress in Congress, leaving our Eisenhower-era highway systems potholed and congested, our Jet Age airports unable to handle modern-day fleets and a surge in air travelers. Adding to the problem, our high-speed train network is almost nonexistent, and public transportation options are still scarce in many areas. 

And while rarely framed so in public discourse, travel industry leaders believe this is a travel industry problem. The U.S. Travel Association recently sounded the alarm that if the nation’s infrastructure is not improved, travel will stall. 

“If we don’t, we’re locked. We cannot grow the travel industry,” U.S. Travel CEO Roger Dow said at the association’s annual IPW conference in May. “We have to solve it, or it will be the pinch point that will shut off U.S. travel and not go further. 

“It’s critical, but we have to make it a priority. These things don’t happen overnight. We have to get Congress to take some action.”

As Dow sees it, the U.S. “fell asleep a little bit” when it comes to keeping up with its infrastructure needs. 

“We had 25 years where we had the top 20 airports in the world,” he said. “This year, when you rate different airports, we don’t even rank.”

Part of the problem in the U.S. may be the fact that tourism policy has no connection to transportation policy. The U.S. National Travel and Tourism Office is part of the Department of Commerce, whose mission is to promote job creation and economic growth, as opposed to the Department of Transportation. 

Jane Stacey, head of tourism for the Organization for Economic Cooperation and Development (OECD), said, “Tourism needs to be linked with the other policy areas that it impacts on and is impacted by, transport being one of them. Transport is absolutely critical to tourism. If we don’t have that transport infrastructure and transportation connectivity, tourism cannot happen. Transport is a key enabler of tourism.”

Stacey said the U.S. approach to tourism vs. transport policy is not unusual and that the Paris-based OECD has been working to better align transportation and tourism policies worldwide.

Interdependent transportation networks

While it is difficult to prove that decaying infrastructure is an actual deterrent to travelers, U.S. Travel has produced studies asserting that it is. 

Erik Hansen, U.S. Travel’s vice president of government relations, said, “We’ve found over and over again that our infrastructure investments are failing to keep pace with demand and what travelers require to travel as much as they otherwise would.” 

A set of U.S. Travel recommendations titled Building the Next Generation of Travel Infrastructure states that “our national transportation network is unable to cope with current, much less future travel demand.” 

It reports that 38% of travelers would avoid between one and five road trips per year if congestion continues to grow at its current pace and that Americans skipped more than 30 million air trips in 2016 due to airport hassles, with delays and cancellations topping the list. 

“Given airport congestion’s impact on passengers’ travel decision-making process, our industry will severely suffer if improvements aren’t made,” U.S. Travel stated. 

Hansen said popular U.S. destinations like Myrtle Beach, S.C., and Williamsburg, Va., have lost market share, not because they are less desirable than other destinations but because of traffic and congestion getting there. However, reluctance on the part of politicians to back any of the taxes or fees needed to build more roads and better transportation options means the ultimate challenge is funding necessary improvements. 

“At the end of the day, there is only so much a president can do; it falls to Congress to invest more and invest more smartly,” Hansen said. “Congress hasn’t had the political will to get to the finish line.”

Airports

The nation’s infrastructure shortcomings are manifold, but for the travel industry, airports might well be the top priority. 

In late 2016, the FAA estimated that airports nationwide faced a capital development funding shortfall of $32.5 billion.

The following March, the trade group Airports Council International-North America found that airports across the U.S. would need $100 billion in infrastructure upgrades through 2021 to rehabilitate existing facilities and keep pace with passenger and cargo growth. (Unlike the FAA’s estimate, that figure included parking structures and revenue-producing portions of passenger terminals.)

The high price tag for airport improvements is due partly to the nation’s aging facilities. Aviation industry professionals broadly agree that airport terminals in the U.S. typically offer a less modern, less passenger-friendly experience than those in Europe and certainly in Asia. 

But the long list of airport improvement needs is also a result of the surge in air travel. In 2017, the FAA estimated that the 61 largest airports in the U.S. would see passenger boardings grow from 726 million in 2016 to 1.37 billion in 2045.

To address those needs, the Airports Council has long lobbied Congress to increase the cap of $4.50 per flight leg on the Passenger Facility Charge (PFC), which airports levy to raise money for improvements. Congress has not increased the PFC cap since 2000.

“Airports are continuing to modernize, but at a price,” said Airports Council CEO Kevin Burke. “They aren’t getting the financing they need ahead of time, so they have to do it in spurts. It is moving too slow.”

Still, despite the results of U.S. Travel’s traveler survey, there is little evidence that the deficiencies of U.S. airports broadly impact tourism.

According to IATA, 204 airports worldwide don’t have the runway, ramp or gate capacity to handle all the flights commercial airlines and other air service providers would like to operate there. But in the U.S., only New York JFK is among them. Chicago O’Hare, Los Angeles, San Francisco, Newark, Seattle and Orlando are classified as facing congestion during peak hours or peak times of the year. 

Samuel Engel, an aviation analyst for the consulting firm ICF, said he believes there is plenty of opportunity for airlines to add capacity at U.S. airports, even at capacity-constrained ones such as New York LaGuardia, O’Hare and Washington Reagan National. At each of those airports, regional aircraft with fewer than 100 seats make up between 48% and 57% of departures, according to ICF, meaning airlines have opportunities to increase capacity with larger aircraft without clogging runways and airspace with more flights.

Even at airports where capacity constraint is a problem, Engel said, the main impacts are longer scheduled flight blocks and poor customer experience, rather than actual service caps.

“The kind of effects you’ll see is that an airport will get oversubscribed at the most popular travel hours,” Engel said, explaining that more flights might be scheduled for 8 a.m. departures than can actually take off then, “but that won’t stop the airline from scheduling the 8 a.m. flight. They’ll just extend the schedule.”

At some airports, however, officials say new facilities will not only improve the customer experience, but also ease capacity constraints. 

O’Hare is in the midst of an eight-year, $8.7 billion expansion and renovation that is expected to increase its gate capacity by 25%. A separate $6.6 billion airfield project slated for a 2021 completion will expand the airport’s airfield capacity by more than 50% and includes four new runways. 

A $3.6 billion redesign at Salt Lake City will result in a new, two-concourse terminal, the first slated to open in 2020 and the second in 2024. An expansion could have a direct impact on tourism, said Bill Wyatt, the airport’s executive director. The facility was built to handle 10 million passengers, but this year it expects to service 26 million flyers, in large part due to it being a Delta hub. As a result, he said, in recent years the airport has stopped trying to recruit new service.

But that should change with the completion of the expansion, enabling Salt Lake City to go after a range of low-cost air service to compete with Delta and feed Utah’s ski resorts and other attractions.

“It probably creates additional lift for the ski industry from a wider range of markets, but it also creates a lot of opportunity in the summer, which is also very strong for us,” Wyatt said.

Chicago and Salt Lake City are among many U.S. airports where, funding shortfalls notwithstanding, improvement projects are underway. 

LaGuardia, for example, is in the midst of an $8 billion overhaul. A $14 billion improvement project at LAX has been ongoing since 2008, and that figure that doesn’t even include the $1.9 billion Delta is kicking in. This summer, Denver began a $3.5 billion expansion and terminal renovation.

And New Orleans’ Louis Armstrong Airport in February plans to open the first entirely new terminal at one of the 50 busiest U.S. airports since Indianapolis in 2008.

New Orleans airport aviation director Kevin Dolliole said the $1 billion project will make the passenger experience better in a variety of ways, providing tourists with a more welcoming experience with consolidated TSA screening areas, access to more restaurants, modernized baggage handling systems and more efficient roadways into the terminal. Airfield improvements creating dual taxi lines will mean less hold-ups for jets in and out of gates.

“It’s a brand-new front door,” Dolliole said.

Still, he doesn’t expect the new terminal to drive more tourism to the Crescent City, because the existing facility isn’t experiencing capacity constraints, and the new terminal won’t add more gates than the 35 Louis Armstrong has now. 

Airports aside, an enduring problem with aviation infrastructure is that the U.S. air traffic control system uses radar-based, World War II-era technology to manage the nation’s airspace.

The FAA has been working to implement what it calls the Next Generation Air Transportation System (NextGen), a GPS-based navigation system the FAA says will increase airspace capacity and significantly reduce delays once it is fully implemented in 2030. 

However, the FAA has already spent $7 billion on NextGen, and it is mired in setbacks. A March report from the Inspector General found that the $36 billion project lacked “effective management controls.” The FAA called those findings “inaccurate” and has blamed budget instability for the setbacks.

Airlines are keen on getting NextGen implemented as quickly as possible, betting on the technology to reduce delays and cancellations, especially in markets like the congested Northeast corridor. The largest U.S. airlines all backed the failed effort to transfer control of U.S. air traffic control from the FAA to a private, nonprofit entity governed by a board of stakeholders, including airlines, arguing that it would lead to quicker implementation of the NextGen system. 

Motorcoach tours

Once travelers step off airplanes, U.S. roads become an issue for the many motorcoaches taking them on tours.

Peter Pantuso, CEO of the American Bus Association (ABA), called the condition of the country’s roads “deplorable.” 

“Everybody knows what the roads are like. They’re in deplorable condition,” he said. “I was in Europe a couple weeks ago, and you can’t help but be struck by how nice the road system and the overall transportation is. No potholes. Everything flows well. The highways are not congested.”

Pantuso said a huge difference between here and Europe is that across the pond, people pay up to $5 per gallon in fuel tax, something that would be very difficult to get Americans to do.

“You’d be lucky if you can get a 20-cent increase in fuel tax over the next four or five years [here in the U.S.],” he said. 

And while Pantuso acknowledged that the U.S. needs more funding to adequately upgrade its roadways, he said the ABA was disappointed that the House Transportation and Infrastructure Committee’s recent infrastructure proposal would shift a lot of that burden to the motorcoach industry. 

The proposal suggested eliminating the motorcoach industry’s 17-cent fuel tax exemption and raising the gas tax by 20 cents, which the association argues would result in an overall increase of 37 cents per gallon on motorcoach operators. 

“You are not going to balance the nation’s infrastructure issues on the back of the motorcoach industry,” Pantuso said, arguing that motorcoaches help reduce congestion and air pollution and often present a more affordable transportation option.

Despite the state of the roads, Pantuso thinks motorcoach travelers are not put off by them, because “riding on a modern luxury motorcoach is such a pleasant experience.” Passengers, he said, “might not even notice how deplorable our roads are.”

Many of those passengers are en route to some of the country’s most popular attractions: national parks. 

Derrick Crandall, counselor for the National Park Hospitality Association, a trade group representing park concessionaires, said America’s parks, which he called the “yardstick” against which other nation’s national parks are measured, have not reached the point where people are disappointed in the experience. Even so, he said, the parks could also use infrastructure updates. 

From WiFi availability to a lack of interactive apps with information and storytelling accessible from mobile devices, Crandall said the parks are falling behind on the technology front. He said improved web-based fee payment options could help reduce a backlog of cars at park entrances, and augmented reality games and tools could engage a new generation.

“We’re capable of doing a much better job with urban visitors and younger visitors,” Crandall said. “Just look at the popularity of augmented reality and things like Pokemon Go. We hear a lot about physical activity. We are struggling particularly with younger Americans to get them outdoors and active. But we could do that if we use technology.”

Crandall said one funding option for modernizing parks are private-public partnerships such as one that succeeded in reinvigorating the Golden Gate National Recreation Area in and around San Francisco. 

“Many abandoned federal sites were turned into something that really is pretty darn exciting,” he said.

Park modernization, he said, is “never going to happen without some extraordinary new thinking.

Cruise ports

One area that is rarely part of conversations about crumbling infrastructure is cruise ports. That could be because in the U.S., cruise ports tend to be well maintained, with terminals staying up to date mostly because the cruise lines pay fees to dock and discharge passengers. This revenue is then poured into improvements.

The largest ports have long-term contracts with major cruise lines that guarantee a minimum number of annual passenger movements. Using those contracts as collateral, ports sell bonds for new terminals and other upgrades. These contracts also prevent local governments from diverting cruise line fees to general funds for noncruise purposes.

An example is the T25 project expected to open in October at Port Everglades in Fort Lauderdale. T25, which will replace two smaller terminals, will be the home for Royal Caribbean Cruises Ltd.’s Celebrity Cruises and its new Celebrity Edge.

At $121 million, it will be the costliest terminal in the port’s history. The port is paying the majority of the tab “as part of our long-term agreement with RCCL,” port spokeswoman Ellen Kennedy said.

The agreement includes a minimum annual throughput of 1.3 million passengers.

Ports without a critical mass of ships have more difficulty leveraging cruise line contracts to swing big port projects.

The Port of Baltimore, for example, has a single terminal to serve two homeport ships weekly, one each from Royal Caribbean International and Carnival Cruise Line. Port executive director James J. White recently said he doesn’t see the $60 million to $80 million cost of a second terminal as feasible without help from a strapped state Transportation Trust Fund.

But White did find $4 million in 2016 to add a VIP lounge the cruise lines requested for their high-end suite guests. 

Michelle Baran and Tom Stieghorst contributed to this report.