Parking’s Growing Contribution to Non-Aeronautical Airport Revenue

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Parking’s Growing Contribution to Non-Aeronautical Airport Revenue

Once upon a time, airports had little competition and times were good – air travel was booming, travelers used the closest airport, and there were fewer major hubs. An airport’s main purpose was to be facilitators of airline operations, and aviation-related revenue was the primary driver.
But turn the page, and several decades later the story has changed. Economic downturns, unpredictable oil prices, lower airfares, increased unemployment, frugal leisure travelers, and reduced corporate travel budgets have thickened the plot. There are fewer flights, shrinking operating budgets and reduced profits.
At the same time, travelers are becoming more technologically savvy by leveraging the Internet and demanding better, faster and more personalized service. They have choices now, and seek to patronize the options and airports that best meet their needs.
All of these market forces have put a huge dent in aeronautical revenue and fueled fierce competition. Challenged airport operators are feeling the pressure to make up for this lost revenue and are seeking to gain a competitive edge.
For airports to survive and thrive today, their best bet is to diversify and provide new and improved non-aeronautical income streams that enhance passenger experience. By maximizing revenue from such channels, airport operators can strengthen cash flow, soften the effects of the economy, and attract and retain customers.
Parking is ‘the New Black’ for
Non-Aeronautical Revenue
As modern airports evolve from their origin of providing infrastructure for the airlines into a more dynamic element of the travel value chain, they need to offer diversified services. This requires more than just way-finding signage on the highways, a parking lot, and the basic amenities to maintain and grow profitability.
This has led to an increased motivation to find services that offer exceptional passenger experience while providing non-airline related income. The most viable channels for revenue now include retail services, food and beverage, parking, and passenger access. While most of these are predicted to remain flat, the contribution of parking is expected to rise and play a significant role in generating profits for airports, oftentimes ranking among the top two total revenue generators for airports.
Because of competition from outside operations, a lot of airports have already taken advantage of low-hanging fruit such as off-site parking and shuttle and valet services. However, this does not entirely leverage parking and ground transportation when it comes to generating non-aeronautical revenue, resulting in a potential that remains largely untapped for many airports.
The best way for airports to provide an exceptional parking experience and maximize revenue from parking and ground transportation is to partner with a full-service parking management provider. By outsourcing parking management to an expert, airports get the most innovative, passenger-centric parking solutions available. This, in turn, allows them to focus more on their core skills and responsibilities of making sure the airport runs smoothly.
Innovative Ways to Leverage Parking for More Revenue
Technology and the push to offer additional benefits for consumers have produced many new and creative ways for airports to leverage parking and transportation, resulting in optimized non-aeronautical income. Some of the most innovative and profitable ways include:
Mobile Apps
Modern travelers are on the fast track, and it’s all about ease, speed and convenience for them. Their main concerns include:
• Making travel arrangements.
• Getting to the airport quickly and efficiently.
• Having an exceptional experience while at the airport.
• Returning home as quickly as possible.
Mobile apps for smartphones and devices can address all these concerns and help make dealing with the misperception of parking chaos a lot easier. Whether the traveler is a frequent flyer or a first-time visitor, mobile apps connect the dots for them and put parking and travel information they need right at their fingertips.
The next wave of new parking applications for smartphones and mobile devices will allow drivers to quickly and easily make reservations, find the airport, pinpoint available spaces, and park their cars. The faster and easier we make it for consumers to park and get inside the airport, the more time they will have to indulge in other non-aeronautical transactions.
Fast travel is where it’s at, and airports are realizing the need to invest in this technology in order to capitalize on it. An expanding number of airports are seeing the need to work with outsourced parking management vendors that have pioneered this technology, have integrated parking into the mobility chain, and have developed customized applications to meet the needs of the traveling public.
Customer
Loyalty Programs
Incentive programs reward travelers for using airport parking facilities frequently. It’s free for customers, and is an easy and inexpensive way for airports to increase customer loyalty, create a competitive differentiator, and attract new consumers.
Airlines have offered these types of programs for years, and airports often integrate parking into the airlines’ mileage loyalty programs. However, rewarding loyalty with parking-related amenities has been received well by savvy travelers.
Airports are finding success in leveraging a customer loyalty program that a parking management vendor has created and integrated within the on-site operation. With such programs, consumers are directly rewarded with free parking or other car care services based on their activity – a true consumer perk!
Parking Automation
As mentioned, modern airport travelers are all about convenience. They expect the latest and greatest technologies and innovations to help them get in and out of the airport as quickly as possible. The most competitive airports need to stay at the leading edge of technology in order to reduce congestion, optimize operations, improve customer service and maximize overall net profit.
Automated toll booths, online reservations and parking guidance systems result in a highly efficient operation. These capabilities also help airport operators reduce payroll-related costs and capitalize upon displaced resources in the form of customer service ambassadors. Automation also supports “green initiatives” with less paper, provides better visibility into transactions, and improves reporting accuracy and timeliness.
Right-Sizing
Every airport is unique, and one of the best ways they can become more efficient, cut costs and maximize net operating profits is to work with a vendor that possesses inherent analytical capabilities that are supported by a sophisticated business intelligence platform. A highly skilled operator will ensure your system is right-sized for the specific demand at all times.
This means airports should conduct “deep-dive” analyses of their operations, including customer segmentation, travel patterns and peak demand periods. Once the as-is situation is known, customized programs can be created that optimize parking resources. By partnering with the right parking operator, several airports have realized millions of dollars in savings and improved customer satisfaction.
VIP Programs
To create competitive differentiation and build customer base/market share, airports are finding a need to add creativity in terms of customer service and amenities. Some of today’s most popular VIP offerings include:
• Executive valet parking.
• Car care services.
• Online reservations.
• EV charging stations.
By deploying sought-after services and amenities, airports are often able to charge a premium and enhance overall revenue.  
Lighting Retrofits and EV Charging Stations
Parking facility lighting can be a significant operational expense for airports. Most lighting is outdated, inefficient and requires frequent maintenance. Through a lighting retrofit, airports can take advantage of the latest in high-efficiency lighting and advanced controls to significantly reduce energy use and maintenance costs.
Also, lighting upgrades can reduce the overall electrical load of a parking facility, often allowing for electric vehicle charging stations to be installed without having to upgrade existing infrastructure.
What’s best is that some vendors can help airports leverage federal and local energy incentives, as well as offer creative low-cost financing options, making it possible to fund upgrades through guaranteed future utility savings. No upfront capital is required, and there is no impact on an existing operating budget.
Integrated Services
Even with all these technological advances and innovative programs, providing an exceptional passenger experience is still the best competitive advantage and income generator for an airport.
Providing end-to-end services – from helping park the car and getting to check-in and on the plane faster, to helping find the car upon their return – is what makes the traveler’s transfer enjoyable and aligns loyalty.
Working with the right outsourced parking management vendor that can run all these services seamlessly results in improved satisfaction and increased net profitability.
Leonard Carder is Executive Vice President of ABM Parking Services (formerly Ampco System Parking). Contact him at leonard.carder@abm.com.
Article contributed by:
Leonard Carder
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