This Airline Stock Would Benefit From Some Government Spending

The situation at Miami International's customs line is getting out of hand.

Brian Stoffel
Brian Stoffel
Apr 12, 2014 at 10:54AM
The Business

If you ever want to see what kind of character people really posses, there's only one place you need to go: the customs line at Miami International Airport. Rarely will a traveler within the United States have a more trying experience than this.

Source: @MichaelWoods twitter feed 

Recently, my wife, daughter, and I had the opportunity to experience this circus firsthand while travelling from Costa Rica to Chicago via Miami. While I can't relay the entire experience, I can paint a quick picture.

Immigration is actually pretty quick, but when you have to collect your luggage and go through customs, the baggage claim area is chaos. There are few, if any, airport agents or personnel present to assist people. There are no clearly defined lines -- markings on the floor, ropes, or mazes to cordon you off -- to go through the two customs openings.

This means that, while lines naturally form and most people get in them, there are countless others who try and game the system by simply skipping. It didn't take long, however, for a mob mentality to gain control. When some people tried to skip, they were met with vocal opposition from hundreds of passengers. It was so contentious that I truly thought a physical fight might break out.

Apparently, this is par for the course
Back in early 2013, automatic sequestration spending cuts went into effect that limited the amount of staff available to process passengers entering the country. Local TV affiliates documented  the problems immediately after these cuts took effect.

And Miami isn't alone. Apparently, the problem is even worse in Terminal 4 of New York City's JFK Airport .

In August of last year, some news outlets  were reporting that the days of long lines would soon be dissipating. The catalyst, officials claimed, was funding for a partnership between the Department of Homeland Security and Customs and Border Protection (CBP).

But that hope seems to have fizzled out. In fact, my family arrived on a Tuesday afternoon, our wait was over two hours, and when we asked the customs official how often this happened, he responded, "Every day."

Why this hurts American Airlines
As one of the country's biggest airlines -- after having merged with US Airways -- American Airlines (NASDAQ:AAL) is particularly affected by these long waits. Along with Chicago, Dallas, New York, and Los Angeles, Miami is one of the principal hubs for the airline.

Source: American Airlines 

Usually, when a passenger is coming to the United States from any location in Central or South America, there's a good chance that he/she has to pass through Miami. And more often than not, Miami isn't the final destination. That means connecting flights need to be made.

According to the Wall Street Journal, American Airlines has been forced to realign its schedule of flights coming out of Miami to account for the increased waiting time for connecting international passengers.

But that alone might not be the biggest problem for the company. After we arrived back home, my wife and I decided that it simply wasn't worth going through that ever again -- no matter if American had the lowest prices. We've experienced Houston's lines many times -- which are about average. And we've never had a negative experience while travelling through Atlanta.

Source: InSapphoWeTrust, via Wikimedia Commons 

Because of that, we've resolved that on our next trip south, we're either taking Houston-based United Continental (NYSE: UAL) or -- preferably -- Atlanta-based Delta (NYSE: DAL). I can only imagine the number of business customers that American is trying so hard to woo that will come to the same conclusion that we have.

What this means for investors
This certainly doesn't mean that the customs line in Miami is a deathblow for American. The company has flights that go through hundreds of airports everyday. And the CBP and customs situation is hardly the fault of American Airlines.

But the fact remains that government officials need to take closer look at the budget CBP is currently getting. If and when that time comes, it should be music to American's shareholders' ears.