UtilityMinimization

Douglas Adams once wrote, “It can hardly be a coincidence that no language on earth has ever produced the expression ‘As pretty as an airport.’” Airports provide all sorts of mind-bogglingly stupefying experiences. Maybe this is because airports are about as screwed up a place as you are likely to ever visit. Or, maybe it is because of the immense time spent waiting around during various points of the flying process. In any case, every time I am in an airport, I am left wondering, “how can that be?” One of the most curious things (and there are many) about New York City’s LaGuardia Airport (LGA) is the taxi cab situation.

For the uninitiated, cabs at LaGuardia amass in a giant holding pen. When there is a need, they are dispatched to cab lines around the airport to pick up waiting passengers. If the process works smoothly, an exiting passenger goes to a designated taxi area and quickly jumps in the next cab that is waiting in a line of five or six cabs. Of course, things at airports and things in New York rarely work as planned. Put them together, and you end up with that sad, pathetic thing that is known locally as ‘the LaGuardia cab situation.’

There are a number of things wrong with the cab situation. First, even though the holding pen is usually full of scores, if not hundreds, of waiting cabs, there are often times during which there are no cabs at the actual taxi stands. Second. the line is set up so that when a passenger requires a cab, the go to the waiting cab, load their luggage, tell the dispatcher where they are going, enter the cab, tell the driver where they are going, and then finally pull away. After all of this, the next passenger can go. Each cab takes between 10-30 seconds to load and pull away, if cabs are available at the stand. Since passengers enter the cab line at a rate much faster than every 10-30 seconds, the result is that at peak times, there are often 30-60 minute waits to get in a cab–even though the taxis are sitting right there.

Why such a situation has developed is a complete mystery to me. The drivers have an incentive to move quickly, as time is money to them. The faster they pick you up and drop you off, the faster they can return to the airport for another lucrative fare. The passengers have an incentive to move quickly because who wants to just stand around at an airport? I suspect the problem lies in the fact that the New York New Jersey Port Authority, who runs the airport system in the New York area, has little incentive to fix the situation. Airports do compete with other airports in the area, and this competition should drive them to upgrade and modernize the taxi situation. Unfortunately for us, the alternatives of Kennedy and Newark are also run by the NYNJPA, so there is no real competition among the airports.

I once asked one of my friends who works as a transportation policy analyst at the NYNJPA about what they are doing to fix the cab situation, and he replied that there was really little they could do about it. A lot of people need cabs at LGA. This answer makes me really mad. First of all, a city that has what it calls the best public transit system in the world has no trains that go the LGA. Second, this is the answer of a lazy monopolistic organization that is not interested in innovating to serve its customers because they don’t have to. I think that the NYNJPA people should take a trip down to Disney World and see how Mickey Mouse gets people into the park and into rides. The faster Disney does this, the more people they can serve, and the more money they make. In the case of the cab lines, there is no marginal revenue to the NYNJPA. They are paid a fixed airport fee that is included in your ticket. Any increase in the pace of the cab line goes directly to the cab drivers. Since there is no incentive to innovate, no innovation takes place.

So how do we fix it. Economics tells us that we need to provide incentives to make the line work faster. This amounts making it more profitable the faster we move through the cab lines. One solution is to charge passengers for the privilege of taking a cab from the airport–a ticket, like the admission fee to Disney World. This creates a marginal revenue stream for the NYNJPA, and the faster they move us through, the faster we go through. We could add this fee to the airport tax that we already pay when we get in the taxi (In other words we can add it to the fare listed on the meter). If this fee is high enough, it may even reduce the lines by discouraging marginal riders into taking other forms of transportation from the airport such as the public and private buses.