Transportation Network Companies threaten airport parking revenues but face competition themselves from ‘airbnb for cars’

New research from US airport consultant Steve Van Beek (ENO Foundation, ACI et al) has discovered Transportation Network Companies (TNCs) such as Uber and Lyft are adversely affecting the long-standing revenue streams that airports derive from parking facilities and rental car companies.


Summary:

  • New research highlights that Transportation Network Companies (TNCs) are continuing to impact airport car parking and car hire revenues;
  • It shows TNCs have become a preferred option for trips to California airports, where they account for as much as 70% of paid trips to San Francisco International;
  • Having been the original disruptors, TNCs themselves are now being disrupted themselves by a new breed of ‘private vehicle for hire’ operators;
  • As much as one fifth of airport non-aeronautical revenues can come from car parking charges.

While airports are often reticent to divulge detail on these matters, as a rule of thumb, if one is achieving 50% of revenues from non-aeronautical flows (including retail shops, restaurants, vehicle hire etc) as much as one fifth of that or more can come from car parking. In FY2017 Heathrow Airport Holdings had revenues of GBP2884 million of which GBP120 million (4.2%) came from car parking.

But Heathrow is well-served by public transport and has tasked itself with cutting down on surface transport emissions as part of its third runway strategy. In countries where the car is still king, such as the US, that 4.2% can easily be exceeded. At least it could, until the surge in the TNC business came along.

Mr Van Beek notes that TNCs have become a preferred option for trips to California airports, where they account for as much as 70% of paid trips to San Francisco International. Lyft is reported to have service agreements with 240 airports and Uber with more than 100. The CFO of Dallas-Fort Worth Airport said recently that on an average day it now uses only about 60% to 65% of available parking spaces.

Meanwhile, airports are also experiencing large-scale curb-side congestion from TNC vehicles, especially when several wide-body aircraft unload within a short period of time.

Another pressing problem for some airports is the growth of a kind of ‘Airbnb for private cars.’ Companies such as Getaround, Maven and Turo arrange for individual vehicle owners to make their cars available as an alternative to a conventional rental car. Major rental car companies are lobbying heavily that those vehicles be required to use airport rental-car facilities rather than the terminal curb-side and  that they be taxed the same as rental-car companies.

Legal battles are under way at Baltimore-Washington and San Francisco airports, where these companies argue that they are not rental car companies, own no vehicles, and are another form of TNC and hence should pay only the same fees as Uber and Lyft and have the same access to curb-sides.

Airports typically require TNCs to sign a service agreement and pay a fee to the airport for each pick-up they make. It is not yet clear whether the pick-up fees currently being charged are enough to offset emerging declines in parking and rental car revenue.

Airports should know the dangers by now, after all this issue was covered in the  report, AIRPORTS AND UBER: Transportation Network Companies now more welcome at airports, published by CAPA – Centre for Aviation back in 2016.

Airports need this information to assess how much parking will be needed in coming years. The world’s busiest airport, Atlanta Hartsfield-Jackson has for example has scaled back its plans for added parking decks, cutting the northside deck plan from eight levels to four, while plans for the eight-floor south deck are being reviewed.

Phoenix Sky Harbor may privatise its on-airport parking by inviting private-sector companies to bid to build a replacement facility when 3,700 current spaces are demolished to make way for a new terminal, and inviting the same company to operate all the on-airport parking. That would shift the risk of future excess capacity from the airport to the parking company’s investors.

Other airports are working to make airport parking more convenient. Dallas-Fort Worth is developing an online tool that would give discounts for those who book parking in advance, with similar systems already being in operation at Phoenix, Vancouver, and Ottawa airports.

Meanwhile, Parking guidance systems (PGS) are taking another approach, by which the system guides cars to the nearest vacant space; by making it easier for a customer to find one rather than giving up, PGS supposedly increases space utilisation by 10 to 15%. A basic system was trialled in Asia some years ago by which a balloon popped up at an unused space once a vehicle drove away from a trigger mechanism.

Surface transportation experts are uncertain whether the advent of driverless ‘robo-taxis’ will lead to significant declines in vehicle ownership. But eliminating the expense of a human driver should eventually make TNCs a more affordable alternative than driving to the airport and paying for parking or taking conventional taxis. This underscores the importance of TNCs fees to maintain airports’ planned revenue streams.

NOTE: Some of this text was adapted from a report that was first published in Airport Policy News (The Reason Foundation).