Why airports should stop relying on car parking revenues - PTE2017 recap

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Milda Manomaityte

Director

Global AirRail Alliance

 

EVENTS: Earlier this week I had a privilege to speak at the annual Passenger Terminal Conference, celebrating its 20th year anniversary in Amsterdam. With nearly 7000 visitors, speakers and conference participants, the Passenger Terminal Expo & Conference is clearly the biggest and most important annual gathering for global airports and suppliers.

PTE2017

Among 11 different conference tracks “Airport Cities, Transport Connections & Tourism” session discussed various airport access issues.

Over the years, as the director of the Global AirRail Alliance, I have been asked one question so many times, that I thought it would be a good idea to address it in my presentation, titled “Why airports should stop relying on car parking revenues”, and maybe challenge the “we’ve always done it this way” thinking.

And the question that I’m asked very often is – “why should we, the airport, invest in rail links when most of our revenue comes from people parking their vehicles at our car parks?”

That is a fair question, as according to the Airports Council International (ACI), car parking revenue brings about 20% of total operational (aeronautical and non-aeronautical) revenue for airport hubs of all sizes. In the meantime passenger airline landing fees bring about 18% of total operational revenue. The numbers shift a little bit if you look at Large (19% car parking and 16% airline fees), Medium (15% and 24%), and Small (10% and 26%) airports.

And even though car parking and car rental concessions are still a core revenue stream for airports, they can no longer be taken for granted as a consistent source of business.

According to ACI, real per-passenger revenues from each fell by -3.6% and -4.2% in 2013 alone. Compared to 2008 levels, revenues are down -14% and -25.1%, respectively.

So will future airport car parks become something like Olympic stadiums from the past? Probably not, but there are two major disruptors that will impact car parking business at airports – new technology and change in behaviour.

The biggest disruptor for this business model will be the arrival of driverless cars. A report by KPMG found that 74% of UK automotive executives think that by 2025, more than half of car owners today will not want to own a vehicle, as self-driving technology and Mobility as a Service will take priority. This massive change is less than a decade away and now is the time for airports to seriously consider how it will affect their ground transport services and terminal design. 

The increase in uptake of ride hail and shared economy is also making a significant impact to car parking business at airports. Beijing International Airport reported car parking revenue dip in 2015 due to the decrease in long-term car parking because of the rise in the car-hailing and valet parking services.

Uber is available at airports in over 400 cities worldwide and Lyft serves over 130 airports in USA.

At the Passenger Terminal Conference sessions airports emphasized the struggle they are facing in dealing with car-hailing companies where this service is still illegal. That includes blocking the Uber app on the airport wifi or working with taxi drivers who spot and report uber drivers lingering at the airport.

But this approach in no way benefit the passengers. And one passenger group is bringing a massive change in the way we will travel in the future - Millennials are the biggest generation that is now approaching their peak spending age.

According to the American Public Transportation Association, the reasons and motivations for transportation choices are pragmatic - 46% of millennials state that a need to save money drives their choices; 46% also note convenience, 44% want exercise, and 35% say they live in a community where it just makes more sense to use transit.

Millennials are multimodal, they choose the best transportation mode (driving, transit, bike, or walk) based on the trip they are planning to take. Communities that attract Millennials have a multitude of transportation choices. So, naturally, they will want the same from airports.

In fact, in the beginning of March a national public opinion survey found that 93% of Americans believe airport terminals could be better connected to the region’s ground transportation and transit networks.

To cater the future travellers airports must think about multimodal hubs that will integrate rail, bus, car hailing or sharing, driverless, cycling and walkable travel options. By doing so, airports really need to think about the passenger journey experience and create a seamless and intuitive flow and wayfinding to, from and through terminals.

Airports cannot afford to be protective of the car parking revenues, because the market is changing rapidly and this business model is no longer reliable to sustain its financial growth.

Nobody really knows how the new technology and the new generations of travellers will affect car parking business, but one thing is clear, there needs to be a focus on providing multimodal seamless travel options for the connected passenger.

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