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> Why Does a Plastic-Wrapped Turkey Sandwich Cost $15 at the Airport? Despite the "port authority" rules on 'street pricing', the real reason is lack of compet
by pwg 4y ago
> Why Does a Plastic-Wrapped Turkey Sandwich Cost $15 at the Airport?
Despite the "port authority" rules on 'street pricing', the real reason is lack of competition.
A single vendor receives the food contract for the airport, and they now have monopoly positioning and a captive audience. When business X is the only seller, and when the customers are held captive and unable to "go elsewhere" [1] then prices will naturally rise to the maximum the captive audience is willing to pay.
[1] How many air travelers are willing to exit the security perimeter, to then need to take a cab to somewhere (most airports are not located near dense shopping/restaurant areas) to purchase food, to then have to go back through security to return to their flight? And what few even have enough time between flight legs to even consider that "go outside the airport for food" trip as even possible? Plus by the time the "cab fee" is factored in, even if they could find the identical sandwich for 5.50 on the outside, the $10 + tip or more cab fee there and back would make the sandwich $15 or more in the end anyway.
- pduan 4y agoIt’s not about the lack of competition or the inconvenience to the traveler. It’s about the port authority not publicly revealing what the 3 market comparable prices are.
- prepend 4y agoI expect they won’t reveal because the inspector just takes a bribe and there are no valid comparisons done.
- smelendez 4y agoThe only reason I could think of not to reveal would be the fear of collusion. If they know the comparison stores are Alice’s Deli and Bob's Bodega, they could either collude with those owners to raise prices on select items or simply go and look at prices and only offer copies of the most marked up items in those stores (which could be as simple as loading the sandwich with cheap toppings that would be extra at the comparison shops).
- toyg 4y agoAny sane policy would rotate data points. How many sandwich shops are there in NYC, hundreds? Thousands even? How often do they shut down, open, change owners...? Burning a couple every year is not an issue.
- prepend 4y agoThe policy says lowest price. Not lowest price of three specific vendors. So if the three vendors names tried to collude, then they would no longer be the lowest prices.
- Swizec 4y ago> even if they could find the identical sandwich for 5.50 on the outside, the $10 + tip or more cab fee there and back would make the sandwich $15 or more in the end anyway And there you have it, a perfect description of value. The sandwich costs $15 at the airport, because at the airport it’s worth $15. It may be worth less elsewhere, but that’s its value there. They’re not selling a sandwich, they’re selling a sandwich you can have between flights.
- bannedbybros 4y ago[dead]
- chatmasta 4y agoThis doesn't account for all the people who simply don't buy the $15 sandwich, because they planned in advance and ate at home. Nor does it account for the people who decide that a $15 beer is a better value at the airport than a $15 sandwich. The value being measured is the markup, not the full price in isolation.
- Swizec 4y ago> who simply don't buy the $15 sandwich, because they planned in advance and ate at home /../ or beer Correct. A sandwich is worth more if you want a sandwich than if you don’t.
- KMnO4 4y agoI think the fact that you’re allowed to bring most[0] foods on a plane is not well advertised. I always travel with sandwiches that I either make at home or buy. Throw it in your carry on bag and eat it whenever you want. [0]: some restrictions on liquids or if you’re crossing a border with certain foods
- bluedino 4y agoYou still have to buy the $4 bottle of water
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- moomoo11 4y agoI’ve never seen a sandwich store sell sandwiches (talking normal sized sandwich not whatever small bite size they sell as “regular size” with shrinkflation) for less than 12-15 bucks in big cities.
- tempusalaria 4y agoIn London or Paris it’s $5-6 for a decent sandwich
- Scoundreller 4y agoOne thing I love about France is that they have a pretty good supermarket-store ready-to-eat sandwich culture as the inexpensive on-the-go meal option. At a US 7-11, you never know if the sandwich might be a week old or not.
- seanmcdirmid 4y agoQFC and Whole Foods in the states are similar. At least here in Seattle, although not quite as nice as LA, or abroad. 7-11 is ok in Japan or China (or say a Co-op Pronto in Switzerland). I wish we could get those in the states.
- deleted 4y ago[deleted]
- ericabiz 4y agoI guess it depends on the city. I live in Austin (metro population 2.28M), and most places price sandwiches around $10 or less here. Here’s Thundercloud, a popular chain (often described as “a step up from Subway”): https://thundercloud.com/main-menu/ https://thundercloud.com/main-menu/ I also checked Jersey Mike’s, another familiar chain, and a regular size “original Italian” is $9.95 here. I will say that generally Texas tends to have lower prices on food than coastal metros like NYC/SF/LA, but the airport prices mentioned in the article for NYC still seem absurd.
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- martin8412 4y agoWhy award the contract for the entire airport to a single company though. My local Spanish airport has a bunch of different options. It's way cheaper, while definitely more expensive than outside the airport. The only price control enforced is on bottled water which can't cost more than 1 EUR.
- bombcar 4y agoWhat's really fun is when you have a ton of apparently completely different stores at an airport and then you realize they're all just fronts for the same company. Part of the answer is that people going through airports are often buying expense account ones, and they're quite price flexible.
- marcosdumay 4y agoWhy would the airport enforce competition within their property and reduce the profit it can take from the sellers? I bet the government is involved on that decision from your local one.
- jrockway 4y agoIf you're the contract negotiator, finding a single company that won't complain about the kickbacks you ask for is easier than finding a bunch of them, right? And what's the point of working for the Port Authority if you're not going to be corrupt? This is the agency that snarled traffic in the town of a mayor that wouldn't endorse a candidate of the opposite political party, mostly just for the lulz. Predictably, the structure of the Port Authority ensures that nobody can ever be held accountable, and indeed, nobody was. (If you didn't follow Bridgegate when it was happening, strap in for the most petty government overreach you've ever read about. I've read this article a number of times and honestly, you start reading and you can't look away. It's so good! https://en.wikipedia.org/wiki/Fort_Lee_lane_closure_scandal https://en.wikipedia.org/wiki/Fort_Lee_lane_closure_scandal)
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- Overtonwindow 4y agoI think this sums it up best. Airports charge more for food because, well, they can. Travelers or a captive market, and have no other choice. I'm old enough to remember when people thought you couldn't bring food through security.
- lordnacho 4y agoBut the contract itself is also sold by a monopolist. The sandwiches have to pay for rent somehow. In the end you can extract X amount of money from all the passengers and that gets split between the landlord and the vendor. So it's not just that the vendor has a monopoly, if they didn't have a monopoly there would still be some amount they'd pay in rent for the captive audience.
- treeman79 4y agoSame reason raising taxes on companies doesn’t work. It either gets passed onto the consumer or company goes under if business drops too much.
- bandyaboot 4y agoDoesn’t the blanket statement that “raising taxes on companies doesn’t work” naturally imply that the only tax rate that “works” is zero?
- PebblesRox 4y agoI think the implication is that it doesn't work as a way to avoid raising taxes on regular people.
- rocqua 4y agoIt taxes regular people differently than taxing them directly. VAT rates on food tend to be regressive. Taxing company profits has little effect on prices.
- stu2b50 4y agoOnly if the product has completely inelastic demand? Also, that'd depend on the goal of the tax in question?
- fuckingbonkers 4y agoIt works in the sense that some people feel better about paying higher taxes if they pay them by paying higher prices to corporations that then pay the tax. And other people feel better about raising taxes on people if they do so by raising taxes on corporations that then raise prices on people.
- lp4vn 4y ago>Despite the "port authority" rules on 'street pricing', the real reason is lack of competition. I guess that the lack of competition isn't the only answer, in many cases there are many restaurants/stores in an airport and all of them are very expensive. The price of the rent in the airport also has to be taken in account. In many airports the restaurants pay outrageous rent values that won't allow them to sell cheap food.
- Kalium 4y agoIt's my understanding that in most cases, the many restaurants/stores aren't actually separate and in meaningful competition with one another. I have often seen airports with the same packaged food for sale at every store. I'm pretty sure they're in effect many faces of the same business.
- ganoushoreilly 4y agoThis is usually the case, most of the restaurants are Franchised to the same company, so ultimately one company is dictating all of it.
- Scoundreller 4y ago> in many cases there are many restaurants/stores in an airport If you lift the peel off, many times they're still operated by the one contractor that has a contract for the whole airport. Even restaurants that typically don't franchise will still run operations under a franchise arrangement in airports. E.g. The Starbucks employees at an airport will be employed by HMS Host (a common airport food concession contractor). Another captive element is alcohol. Many places only allow licensed establishments to sell it (ie: bars/restaurants), so no competition from the convenience store type concessions. And may be forbidden to consume alcohol outside licensed establishments so can't just buy a beer if convenience stores were legally allowed to sell it so they don't. (Can recall good times at Amsterdam Schiphol where you could buy a beer for a not-too-insane markup from the convenience store and consume wherever, while in Philadelphia, you were paying like $10+ for one to consume wherever, ugh).
- wolpoli 4y ago
- pastacacioepepe 4y ago> Despite the "port authority" rules on 'street pricing', the real reason is lack of competition. The real reason is greed. Competitors can work together to fix prices and they usually do. The reason again is greed. Competition lowering prices only works when the barrier of entry to the market is very low and it's possible for many actors to compete. For SaaS businesses, where competition can virtually scale infinitely, that's true. Not at all for airports, where competition can only be very limited due to material constraints.
- chongli 4y agoHow many air travelers are willing to exit the security perimeter, to then need to take a cab to somewhere… It doesn’t need to be anywhere near that extreme. Lots of people pay exorbitant prices for food at movie theatres and those facilities tend to be in commercial high traffic areas with tons of food service options such as malls, downtown streets, etc. It’s really not hard at all to grab a bite before going into the theatre yet people still end up buying the ripoff theatre food!
- standardUser 4y agoPeople like the distinct food offerings that movie theaters have and are willing to pay more because it's part of the experience. Not true at all with airports.
- chongli 4y agoThe only thing distinctive is the popcorn. Everything else is candy you could buy at any grocery/convenience store or fountain soft drinks and mediocre burgers/hotdogs that can be beaten by any fast food joint or street vendor. And most theatres don't even give you real butter on the popcorn anymore. It's now this "artificial butter sauce" junk.
- standardUser 4y agoThe candy offering is absolutely distinct. You can find some of it at standard stores, but not all of it, and not necessarily next to a theater. The popcorn is of course an iconic part of the experience. And if you want your Twizzlers and popcorn, why not just buy the $6 soda to make life simple? But all that aside, the process of going to the theater and standing in line and getting your overpriced junk food does add to the experience for many people, even if just due to nostalgia. Waiting in line to buy an overpriced sandwich at the airport is not an experience many people crave or are nostalgic for. EDIT: I don't know what to tell you all. The specific set of junk food at movie theaters in the US is a culturally significant phenomenon. Like most cultural phenomena, it is not universal, but it is universally known (or close to it by anyone who grew up in the US). And for some people, sneaking food into theaters, in response to those high prices, is a culturally meaningful experience! The point being, food and theaters have a cultural history that is meaningful and nostalgic for many Americans. Not so with airports - where hungry people buy shitty food at outrageous prices because they have no choice.
- 13of40 4y agoThe really silly thing is that unlike at a movie theater, you can make yourself the same sandwich for $1.50 and bring it with you to the plane. The US has plugged this loophole, at least to a certain extent, by seizing your food even if you just have a stopover between two other countries. (They took my banana in NYC on a flight from Paris to Vancouver and I'm still bitter about it.)
- walterlb 4y agoYou can bring food into a movie theater without too much trouble in my experience.
- pixl97 4y agoMany places don't allow the transfer of uninspected fruit and vegetables to prevent the spread of disease.
- docandrew 4y agoFresh fruit is usually subject to customs restrictions for international travel due to concerns about agricultural pests, I don’t think this particular case was collusion with the airport vendors (but these days you never know).
- 13of40 4y agoYeah, I know that, but the import restrictions for Canada should apply, and they're different from the ones in the US. (I'm not trying to imply collusion so much as overreach.)
- LorenPechtel 4y agoNo, this isn't malice. There's plenty of stuff you could legally bring. Fresh fruit is decided not permitted, though--while the odds of a pest coming along are low the consequences can be severe. We don't permit food to come in that might be carrying pests that are not endemic to the US. Australia is more isolated and thus even more strict because there are more things they want to keep out.
- lostlogin 4y ago> the real reason is lack of competition. If my limited experience with hospital shops is anything to go by, yes, but it’s not the shop killing your pocket. The landlord says some variation of ‘you’ll be the only coffee shop’ and the rent is about 8x what is sane. The shop gets guaranteed business but has to charge a lot to pay the rent.
- karaterobot 4y agoI believe you when you say there is a lack of competition, but it seems like the system is set up to prevent that from being consequential: as I understand it, the price should be set as a function of the prices of competitors outside the airport, per the Port Authority's own pricing rules. So, lack of competition inside the airport would not by itself be able to explain this pricing. Corruption or incompetence within the Port Authority would explain it, and though I will withhold judgment, it's hard to think of what else it might be. It's even easier to jump to that conclusion when they also deny and conceal when asked for an explanation.
- thfuran 4y ago>as I understand it, the price should be set as a function of the prices of competitors outside the airport, per the Port Authority's own pricing rules. That sort of regulation is never very effective. The VA requires that vendors that sell them medical devices do not sell those devices at a higher price elsewhere. They end up buying a lot of SKUs that are only sold to the VA.
- woobar 4y agoI am not sure why do you think it is a single vendor. JFK has 50+ shops in just the "Grab and Go" category. [1] I've been to a plenty of airports that have a lot of different vendors of overpriced crappy food. It is not the competition. It is about extracting maximum of what the customer could pay. Same reason beer is expensive at the event venues. The second part of your comment explains it perfectly. [1] https://www.jfkairport.com/at-airport/shops-restaurants-and-services https://www.jfkairport.com/at-airport/shops-restaurants-and-...
- piperswe 4y agoMany, if not most, of those are franchises owned by a single operator.