South Africa Airports’ Revenue Growth Defies Ride-Hailing Service Expansion
At a time when many airport operators in the globe are reporting a drop in earnings from their parking and car rental business on the back of a fast-growing ride-hailing service, South Africa’s biggest airport operator is posting an increase in fees collected from 19,000 parking spots in the nine airports it owns and operates.
Parking and car rental are major revenue streams for airport operators across the world, and in South Africa that share of revenue is estimated at 18 percent of the total income earned by Airports Company of South Africa Limited (ACSA), which operates the country’s top nine airports.
ACSA has recently said it has taken measures to protect and enhance its parking revenue from the nine airports against the upsurge in use of ride-hailing and shuttle services.
Contrary to general expectation, the introduction of ride-hailing service in South Africa in 2013, when ride-sharing firm Uber launched operations in the country, has not slowed down growth in parking earnings for ACSA, which operates the ports of O.R. Tambo International, Cape Town International, King Shaka International, Bram Fischer International, Port Elizabeth International, Upington International, East London Airport, George Airport and Kimberley Airport.
What the entry of Uber and later Taxify may have achieved in South Africa, and several other Africa countries, is to change the narrative on the region’s urban public transportation that has hitherto been associated with chaos and inefficiency.
Airport Parking Use Still Growing
However, the impact of the rise in ride-sharing platforms on performance of airport parking and rental car services could appear to be quite insignificant, at least in South Africa where the top nine airports recorded a total 41.49 million travelers in the 2017/18 financial year, which is 4 percent growth compared to previous financial year when a 3.2 percent increase in passenger was reported.
For example, in 2018, ACSA’s car parking division’s revenue grew by 2 percent to $38.4 million. The revenue was an increase from the $37.5 million “reflecting evolving transport trends, including transport network upgrades, an increase in drop-offs and e-hailing services such as Uber.”
ACSA has recently said it has taken measures to protect and enhance its parking revenue from the nine airports against the upsurge in use of ride-hailing and shuttle services with little demand for parking spaces at the airports’ parking facilities as they drop off and pick passengers. More and more travelers are opting to leave their cars at home for ride-hailing cabs or shuttles.
Some of the measures ACSA has taken to cushion parking revenue gains include increasing parking fees in 2018 at all the airport parking facilities.
The airport operator has also introduced a yield management model “which adjusts car parking tariffs relative to traffic volumes to increase revenue and optimize utilization of parking facilities.”
In addition, ACSA says it has entered into “partnerships with public transport providers to introduce park-and-ride services between Central Business Districts (CBDs) and airports.”
Creating Partnerships with Rideshare and Taxi Services
Meanwhile, ACSA is negotiating with ride-hailing service provider Uber for a revenue-generating partnership “to accommodate its drivers in dedicated parking areas and users in mini-lounges in airport terminals.”
Separately, ACSA has partnered with meter taxi operators at O.R. Tambo International Airport to curb illegal touting by offering accreditation to the taxis to cover all major towns and suburbs within the airport’s vicinity. While hotels adjacent to the airport have been allowed to offer shuttle services to their facilities.
Currently, the country’s Competition Commission says both Uber and Taxify are the largest players in the app-based taxi services. Uber was the first to implement e-hailing services on a large scale in 2013 ahead of Taxify while others such as SnappCab, Ryda, Scoop A Cab, Cabbie, Yookoo Rider, and Unicab followed soon after.
These ride-hailing cabs drop off and pick up travelers at designated points at airport terminals competing with metered taxis that have taken up at a fee parking slots at airports’ parking facilities.
The entry of ride-hailing service has attracted anger and protest especially in South Africa and Kenya where regulation of e-hailing transport is still not fully structured, as is the case with traditional metered taxis.
In South Africa, despite strong opposition from traditional taxicabs especially in major cities of Johannesburg and Cape Town, Uber has expanded with at least 679,000 active riders and 12,000 drivers by 2018, although no precise study has confirmed what impact this growth has had on ACSA’s non-aeronautical revenues such as parking and car rental.
Car Rental Companies Offer Potential
ACSA’s non-aeronautical income stream, which represented 48 percent of the airport operator’s total earnings for 2018, has been boosted by fees from car rental companies that have leased parking space at South Africa’s airports.
Car parking share of the non-aeronautical revenue stood at 48 percent for 2018, with ACSA projecting the figure could rise to 49 percent this year and 50 percent and 49 percent in 2020 and 2021 respectively. Last year, the airports’ car rental business cumulatively grew by 35 percent on average to $21 million up from the $15.8 million earned in 2017.
Currently ACSA is seeking to attract potential car rental companies to take up more parking space at its nine airports under 10-year tenders that have already been advertised as it seeks to increase this income stream in the long-term.
Some of the car rental companies operating at ACSA airports’ parking facilities include Avis, Bidvest, Europcar, First Car, Hertz, Tempest, Thrifty. Select, Capital and Woodford.
The nine airports operated by ACSA in South Africa have nearly 19,000 parking bays, which are managed under a contract by Katanga Parking Services. The parking facilities include those for people with disabilities and are paid for through cash, credit and debit cards as well as with Chip n’ Pin facility. Katanga also offers battery jump start and flat tire assistance.
O.R. Tambo International Airport has the largest share of parking bays, estimated at 11,500, while Cape Town International Airport has about 7,400 parking bays.
Meanwhile, ACSA predicts total revenue from the company’s aeronautical and non-aeronautical operations could increase from $507 million last year to about $516 million this year, an equivalent of 1.8 percent. But bigger growth on total earnings is expected from the nine airports in 2020 and 2021 at $549 million and $600 million respectively.
Shem Oirere is Parking Today’s on the ground reporter in Africa. He can be reached at email@example.com.