How the John F Kennedy International Airport can improve its operations in the future

Introduction

The United States aviation system accounts for roughly 5% of the US GDP (Federal Aviation Administration, 2011). It occupies a very storied and rich history in the minds of Americans. Airplanes often symbolize man’s triumph of nature and their ability to accomplish a goal that was once thought impossible. Today, airports are critical elements within the global infrastructure framework. For one, air transportation is a key component of the wider economic, political, and social processes that have been developed throughout the world. They provide much needed access to efficient and cost-effective modes of travel. The also help increase adoption, utilization rates and growth of certain industries. The travel and tourism industry for example, is heavily predicated on efficient and properly functioning airports. They also help facilitate the exchange of goods and services around the world. In fact, much of the increase in globalization that has been realized in recent years can be attributed to airports (Button, 2000). According to the International Air Transport Association, international passengers contribute $116 Billion to the United States economy annually (International Air Transport Association, 2020). These globalization benefits compound if international travelers stay in the United States for an extended period. Likewise, a lack of severe decline in air transportation can have an adverse impact on the overall health of an economy as goods, services, and people are transported in a much more inefficient manner.

As it relates to American airports, one of the most frequented and controversial airports is John F. Kennedy International Airport. As one of the three major airports servicing the New York and New Jersey metropolitan area, it occupies an entrenched position within the community and the overall American economy. Its services over 50 million passengers annually and is heavily influenced by foreign tourism. The airport was the first to pioneer the unit terminal concept in which a central terminal is comprised of other separate terminate with distinct characteristics related to each. This system has since been improved upon using 8.1-mile guideway system known as Air Train. This system essentially connects passengers within the JFK terminals with a subway system that helps to increase efficiencies, reduce congestion, and enhance the overall customer experience. Through these innovations, JFK looks to position itself as an efficient and effective airport that can help facilitate commerce.

Section 1 - Airport’s history, ownership, management staff, budget, and financial status

John F. Kennedy International Airport first opened in 1948 as New York international airport. Today, John F. Kennedy International Airport is the nation’s busiest airport as it is a central hub that connects America to the rest of the world. Currently the airport support roughly 300,000 jobs within the New York area, paying out $18 Billion in wages. Due in part to heavy tourism, the airport generates roughly $56 Billion of sales annually. The port authority of New York and New Jersey manages the airport. The current budget is allocated $76 million for new air train operations within the John F. Kennedy International Airport. The agency is allocated a total of $2.1 Billion to New York’s three airports. As noted in Section 6, the agency along with the state of New York are providing funds to significantly improve the operations of John F. Kennedy International Airport. These operations, which are expected to be completed in 2023 will redevelop terminals, relocate cargo facilities, create new roadways and much more. As it relates to the financial status of the agency, according to its latest report, it has over $69B in assets and $30B in liabilities. On the asset side of the balance sheet, its assets consist of $60 in investment in facilities. The largest liabilities form the agency are related to bonds and other financial obligations.

As it relates to the financial position of the agency that governs John F. Kennedy International Airport, it will be interesting to see how COVID-19 has impacted operations and the eventual 2021 budget. According to the 2020 budget, most of its income is derived from passing facility charges, grants, and other revenues. As the pandemic has halted flights most of its revenues and thus its ability to service the corresponding debt have diminished. This reduction in revenue will not adversely impact the operations of the business as it currently has over $4B in reserves.

Section 2 - Airside operations including airfield information (runways, taxiways, ATC facilities, FBOs, cargo operations, noise abatement, etc.)

As noted in the introduction, John F. Kennedy International Airport is one of the busiest airports in the nation. As a result, it also one of the most congested. John F. Kennedy International Airport is unique in that its is heavy focused on travel and tourism from international customers. This presents unique circumstances with the overall operations of the business relative to other airports. First, it must have a much stronger and unified security offering. As most of its patrons are from foreign countries. The security procedures most be much more robust. Not only does John F. Kennedy International Airport need to handle terrorist threats a much higher rate, it also must look to mitigate the threats of other white-collar crime. In particular, the airports must be particularly mindful of drug trafficking, human trafficking, and counterfeit money entering the United States. This international component also presents capacity issues for John F. Kennedy International Airport. Chart 1 below indicates the overall percent of international travelers at John F. Kennedy International Airport relative to other major airports in the nation

Chart 1 – International Travel Statistics

Airport

Total Passengers

International Passengers

Percent International

Passenger Growth (2010-2020) (PRE- COVID)

JFK

49.0M

24.7M

51%

68.7%

ORD

62.6M

10.1M

16%

5%

ATL

91.5M

9.5M

10%

21.4%

MIA

37M

18.5M

50%

33.9%

LAX

62.6M

16.5M

26%

20.3%

As can be seen irrespective of the region within the United States, John F. Kennedy International Airport still commands a premium position at it relates to international travel. Miami is very comparable but its international travel patrons are primarily from Hispanic or Caribbean countries. John F. Kennedy International Airport is much more diversified which many its international patrons coming from China, the Middle East, and Europe. In addition to the chart above nearly six of the nations top ten most heavily travelled routes travel through John F. Kennedy International Airport in some form. When accounting for Liberty Intonational Airport, and LaGuardia International Airport, nearly one third of all air travel passes through New York. The combination of a large international focus, and the heavy volumes of travel present for critical infrastructure and security challenges. We have seen this recently as it relates to COVID-19. The threat of chemical and nuclear security concerns is much higher in John F. Kennedy International Airport than in other domestic airports. For example, the COVID-19 virus originated in China. John F. Kennedy International Airport, with its focus on heavy international traffic, services a large portion of the Asian community with through its operations. As such, as consumers continued to use the airport for travel, they may have unknowing spread the virus from China to the United States. In addition, the airport is one of the busiest in the nation and handles at some stage of the flight nearly 1/3 of domestic air travel. Again, this too compounds the issue airside operations and the ability to leverages these services safely.

As noted in the Section 6 below, John F. Kennedy International Airport has made significant plans to address the issue of airside operations through an expansion of capacity within the many of its key terminals. It also plans to increase efficiencies so international customers can much more safely access runways and taxiways. In addition, the plan includes upgrade facilities for proper ventilation to also mitigate the influence of chemicals, diseases, other airborne viruses on the international patrons of the airport.

Section 3 - Terminal operations (terminal types, airlines [names, non-stop destinations], traffic counts, concessions, international operations, etc.)

By 2030, demand for the three largest New York region airports is expected to increase by 50 million passengers. To properly service these future patrons, John F. Kennedy International Airport will need to address future capacity concerns related to airport operations. Currently, John F. Kennedy International Airport is major hub for three large domestic carriers which include JetBlue, Delta, and American airlines. JetBlue initiates roughly 40% of its flights from John F. Kennedy International Airport. In addition, roughly 70 international carriers use the terminals and facilities offered at John F. Kennedy International Airport. In 2019, over 20% of all departing flights connected through John F. Kennedy International Airport with roughly 12% connecting from an international flight and 8% connecting domestically. This presents interesting challenges as it relates to terminal operations. The capacity constraints mentioned earlier are heavily influenced by the design of John F. Kennedy International Airport. The airport currently has four runways which can operate a maximum of 81 flights per hour. However as noted above, by 2030, more than 50 million passengers will be being using the facilities at John F. Kennedy International Airport. As a result, the future demand will exceed the airports current capacity. According to projects John F. Kennedy International Airport will need 110 to 120 flights per hour to properly address future demand. Currently John F. Kennedy International Airport has eight terminals and 117 gates. Many of these terminals have not been updated in years, with becoming obsolete and inefficient as it relates to operations. As noted in the section above related to congestion and airside operations, this results in inefficiencies throughout the entire airport. These inefficiencies can also lead to security and health threats such as COVID-19. Terminals 5 and 4 are the most recently updates as they are frequented by the airports most active domestic carriers. JetBlue is terminal 5 which now has more gates, and new international facilities. Delta is terminal 4 which was a $1.4B investment designed to add nine new gates while also streamlining once inefficient operations. Although the remaining 6 terminals need heavy investment, the New York Port Authority along with the state of New York have initiated capital improvement projects

Section 4 - Landside operations (roadways, parking facilities [on and off airport], ground transportation [taxis, door-to-door shuttles, limos, buses, trains], APM, etc.)

Landside operations such as roadways, parking and ground transportation are experiencing many of the same issues as the airside operations. Namely these operations were not constructed to handle the projected increase in international patrons. As such it possesses a national security risk to not properly update and oversee these operations. In addition, they are currently very congested as the operations have not been updated in nearly two decades. As noted in Section 6, many updates and enhances are scheduled to address these very issues.

Section 5 - The economic, political, and social roles your airport plays in the community

Currently, within the United States, the aviation industry generates between $1.2 and $1.3 trillion in annual economic activity and provides between 9.7 and 10.5 million jobs. International travelers contribute over $116 billion annually in direct spending to the U.S. economy. Further, in 2011 international visitors contributed $1 billion to the economy in indirect expenditures. Passenger numbers are growing and are projected to continue to increase. The Federal Aviation Administration (FAA) estimates in 2016 the U.S. aviation system will provide service to 800 annual passengers, potentially swelling to 1 billion annual passengers by 2027. To capture the economic value associated with this passenger travel, the aviation system will have to adjust to accommodate the demanded capacity.

Section 6 - Capacity status, current and future O&M, and capital improvement construction projects

Over the last two presidential election cycles, candidates from each respective party indicated a need for a vast infrastructure overall haul. Here, it was believed the infrastructure is needed to help the United States compete with their more innovative and capital-intensive rivals. China has been investing heavily in infrastructure to lower idle time and increase productive capacity within their country. In fact, many Asian countries have eclipsed American as it relates to their infrastructure innovations. According to CNN Travel, Asian countries occupy 3 of the top 5 airports in the world according to a global survey (Cripps, 2020). Due in part to globalization and the need to compete on an international level, many countries have looked to heavily invest in their airports. For one, as noted in the introduction, airports greatly help to facilitate the exchange of good, services and people around the world. By being more efficient in this regard, not only can countries increase their productivity, they can also attract businesses looking to leverage theses efficiencies to increase their own productivity. This ultimately serves the enhance the overall economy as people are more efficient, businesses are more efficient, the country can take in more tax revenue, and the country can grow. Recognizing this, the New York legislature has embarked on an aggressive campaign to enhance the John F. Kennedy International Airport to make it more competitive on a global scale with its Asian counterparts.

To begin, the future capital improvement related to John F. Kennedy International Airport are designed to make the airport a much better representation of American infrastructure standards. As of the busiest airports in the world, John F. Kennedy International Airport is seen as a reflection American value and innovation. As such the project is designed to position John F. Kennedy International Airport as the premier airport destination in the world. The development consists of 6 critical components and is schedule to be completed in 2023. The key concepts are listed below (Renderings are in the Appendix):

1. Create a unified terminal layout designed to improvement efficiency

2. Create world class amenities designed to generate increase revenues, improvement in consumer purchasing behavior and drive overall consumer enjoyment

3. Redesign the airport traffic pattern to better accommodate increase traffic due to tourism while also minimizing congestions

4. Further enhance, improve, and centralize ground transportation options

5. Further expand gate capacity

6. Provide state of the art security protocols and mechanisms.

The overall proposal will cost roughly $13 Billion. Roughly half of this amount will be allocated to a 2.9 million square foot terminal. The current plans call for replacing JFK\\\\\\\'s Terminal 1 and Terminal 2 as well as the area left vacant when Terminal 3 was demolished in 2014.The primary catalyst for this plan is that terminal 1 is roughly twenty years old and doesn’t meet the currently transportation needs of patrons as it is currently undersized. As a twenty-year-old terminal, the overall number of flights and passengers has nearly tripled since its initial construction. This heavily impacts congestion, passenger inconvenience and inefficiencies arising from a nearly two-decade older terminal. Likewise, Terminal 2 is fifty-six years old and is currently obsolete. This terminal was chosen as it simply cannot meet the demand placed upon it after fifty-six years of wear and tear. When completed, it will yield a net increase of over 2 million in square feet from the existing terminals and provide 23 international gates, 22 of which will be designed to accommodate larger, wide-body aircraft such as the Boeing 787 Dreamliner or Airbus A380, which provides seating for over 500 passengers. The new terminal will contain at least 24 security screening lanes, over 230,000 square feet of retail, dining, and other concessions, 116,000 square feet of airline lounges, and 55,000 square feet of interior green space, children\\\\\\\'s play areas and cultural exhibits.