Why airport food and shops cost so much: concessions, caps and captive customers
Airports have adopted pricing formulas, higher operating costs and revenue-driven concession models that often push prices above street levels, experts and officials say
Airport retailers and restaurants routinely charge significantly more than equivalent stores outside terminals, a practice industry officials and historians say stems from revenue-driven concession models, higher operating costs and pricing formulas that allow a percentage premium over local street prices.
A year after U.S. airports generated more than $1 billion in revenue from concessions, reporting by Business Insider and other outlets highlighted stark price differences on everyday items. In one example, a bar of Tony's Chocolonely cost about $6.59 in a typical store but was listed for $14.49 at LaGuardia Airport in New York.
The expansion of shops and restaurants in airports dates to the mid-20th century, when terminals began adding amenities to attract travelers and generate non-aeronautical income. "These types of amenities were designed to bring people to the airport, maybe inspire them to fly, but also to generate revenue," Janet Bednarek, a history professor at the University of Dayton, told Business Insider. As passenger volumes and terminal footprints grew, concessions became a standard revenue stream for airports.
Today the structure of concession agreements and the costs of operating inside secure and regulated terminals help explain higher prices, airport officials and concessionaires say. Airports face elevated rent, tighter security requirements, higher staffing costs and logistical challenges moving goods into secured areas. Many airports also permit concessionaires to add a percentage above comparable off-airport prices—a practice industry observers call "street pricing plus."
At LaGuardia and other New York-area facilities overseen by the Port Authority, concession pricing is capped at 15 percent above comparable street prices in the region, with an optional 3 percent employee benefit surcharge. The Port Authority told the Daily Mail that the region's "comparables" often include higher-cost Midtown locations, which can push allowed prices above typical grocery-store levels. The agency said concessions must provide value options such as $2 bottled water and that audits lead to price corrections when discrepancies are found.
Business Insider scrutiny of select product prices found apparent mismatches between the comparisons used by concessionaires and the retail prices reported outside the airport. The Port Authority responded that an item's submitted price may have differed from the price at the time of the reporter's check, and said it requires operators to fix pricing issues flagged in audits.
Some airports have rejected the premium model. Pittsburgh International Airport historically applied a uniform "street pricing" rule so terminal shops charged the same as their off-airport counterparts; other hubs later copied the approach. Portland International Airport currently enforces street pricing for its concessions. "It's clean street pricing, whatever they charge downtown in their stores or in their street locations is what they have to charge here at the airport, there are no fees, no additional charges," Dan Pippenger, chief aviation officer at the Port of Portland, said. Portland officials say the model has been successful in balancing concessionaire viability with traveler expectations.
Concessionaires argue that higher prices reflect genuine additional costs of doing business inside airports, including higher wages to meet union agreements or living-wage policies, security screening for employees, higher insurance, and premium rents tied to captive foot traffic. Airports counter that they must generate non-aeronautical revenue to fund terminals, pay for infrastructure and keep airline fees lower.
Regulatory oversight and contract language shape how much above-street prices are permitted, and that varies widely across airports and operators. In some systems, the list of comparable off-airport stores used to justify a price can include high-end downtown locations, skewing the allowable cap upward. Where operators exceed allowed margins, airports say audit mechanisms compel price adjustments.
For travelers, the combination of convenience, time pressure, duty-free exceptions and limited competition inside secured areas leaves them with fewer alternatives and less price sensitivity. That captive audience dynamic is why concessions remain important revenue sources for airports even as carriers and regulators debate how to balance consumer protection with airport financial needs.
Some airports and passenger advocates have pushed for greater transparency in how concession prices are set and for mandatory low-cost options. Others call for broader adoption of street pricing to keep costs aligned with local retail markets. The variety of approaches across the U.S. demonstrates there is no single standard: some hubs cap premiums and require value items, others allow a percentage above street prices, and a small number maintain parity with downtown outlets.
As airport travel rebounds and terminals continue to rely on non-airline income, pricing at shops and eateries is likely to remain a contested issue between concessionaires, airport authorities and travelers. Officials say audits and contract enforcement will continue to be the primary tools for keeping prices within agreed-upon limits, while individual airports weigh whether to adopt stricter street pricing models or retain the flexibility to charge premiums to cover higher operational costs.