Americans already have enough to worry about when flying. They must pack lightly, arrive early enough to check their bags, make it through security, and use the restroom facilities, if necessary. They must do all this before boarding a flight that may or may not leave late. The last thing passengers need is to spend more money to get to the airport. Yet, in many cases, that is precisely what happens when they use popular rideshare services.
In a new study, the American Consumer Institute highlights how airports nationwide increasingly impose fees on ridesharing services like Uber and Lyft.
Airports say these fees — which consist of pickup fees and occasionally drop-off fees — are needed to subsidize ground transportation services, fund road maintenance and reduce traffic congestion. However, such arguments are unconvincing.
Consumers should be free to choose the transportation service that best fits their needs. That requires airports to treat all services individually and sometimes be willing to scale down less popular transportation offerings. In addition, private vehicles, taxis and limousines each use airport roads but, in most cases, they are not subject to fees or are subject to lower fees. The low elasticity of demand for ridesharing services indicates that hiking fares would do little to reduce airport congestion. In other words, there is no evidence that raising fees on ridesharing services reduces consumer demand for those services, meaning the same number of vehicles remain on the road.
A better explanation for why airports want to levy such fees is that they represent a growing source of easy revenue that does not require consumers’ consent.
With the rapid rise of ridesharing as a form of transportation, airport authorities have quickly moved to capitalize on a new revenue stream, imposing fees on companies that are often, sadly, passed through to consumers in the form of higher fares. Consumers have little choice but to either use alternative transportation services or pay more for a ride to the airport. Neither outcome is acceptable.
Using data on Americans’ travel to and from airports annually, ACI estimates the total consumer welfare losses from ridesharing fees total $932 million yearly, with fees averaging $3.47 for pickups and $2.69 for drop-offs, respectively. Removing such fees would “return an estimated 22 million riders to rideshare services and boost annual income by $532 million in fares for drivers and rideshare companies.” This estimate does not factor in drivers’ tips, meaning the total economic gains from removing fees are likely much greater.
ACI also estimates that removing such fees would create significant downstream benefits. These include increasing economic output by $1.7 billion yearly, total household earnings by $510 million yearly, and creating 17,000 jobs. All evidence suggests removing such fees would be a boon to consumers and workers alike.
Unfortunately, airport authorities have provided little indication they intend to stop using them. In fact, in many cases, airports are increasing their fees. For instance, officials at Orlando International Airport adopted a $7 pick-up rideshare fee last year.
Rather than continuing to impose fees on ridesharing services, airports should shift their business model to accommodate changes in consumer preferences. There is no reason airports can’t downsize the overhead costs of other less popular forms of transportation services over time. Airports can also employ innovative solutions to problems like traffic congestion by repurposing unused parking spaces as new pick-up and drop-off zones for ridesharing services.
Americans should not have to pay more than they already do when traveling by air. Singling out ridesharing companies for additional fees lacks justification and imposes unnecessary consumer costs. Policymakers would be wise to re-examine airports’ ability to levy such fees without public approval.
Nate Scherer is a policy analyst with the American Consumer Institute.
