The Impact of Ridesharing on Parking Revenue & How it Could Impact Infrastructure

Rosemarie Andolino

Technology continues to impact many industries, and the airport industry is not immune. As a result of technological advances, customer behavior has shifted toward e-commerce, with $395 billion of sales being made online in 2016 according to the U.S. Department of Commerce. In addition, it is estimated that smartphone and tablet devices will account for nearly 50% of online sales by 2020, as mobile wallets such as Paypal, Apple Pay and Android Pay provide customers with more streamlined consumer experiences.

The technology age has also witnessed the introduction of innovative ridesharing services that have disrupted the ground transportation market. Companies such as Uber and Lyft have resulted in significant declines for taxis, and they pose considerable threats to airport parking revenues. Not only is parking one of the most significant revenue streams at U.S. airports, it also plays a fundamental role in funding facility infrastructure projects that enable airports to meet future demand from ever-increasing passenger traffic. 

These companies also pose a considerable threat to airport parking revenues. Not only is parking one of the most significant revenue streams at U.S. airports, it also plays a fundamental role in funding facility infrastructure projects that enable airports to meet future demand from ever-increasing passenger traffic. 

Combating the threat to parking revenues requires a change in approach. U.S. airports must embrace technology and evolve their parking journey with new commercial parking products to address the challenges they face.

Common issues include:

  • full occupancy in some parking areas; spare capacity in others
  • the high cost of building garages for increased terminal parking
  • off-airport competitors capturing revenue and market share 
  • lost revenue due to popularity of TNCs such as Uber and Lyft 
  • overly rigid pricing structures for daily rates 
  • rates that are too cheap for short stays and too expensive for longer stays

To overcome these challenges, airports need to develop a technology-based parking ecosystem with multiple solutions that interface seamlessly. Because no two airports are the same, there is no one-size-fits-all solution for their parking challenges. A technology-based parking ecosystem essentially provides a variety of tools to address varying challenges. A flexible system can offer solutions that differ by airport, parking product, day of the week and time of year.

Examples of innovative solutions include:

  • pre-booking and dynamic pricing 
  • introducing original products and creating a product hierarchy
  • creating a distribution network enabled by flexible software solutions
  • leveraging online advertising analytics
  • leveraging valet operation analytics
  • analyzing turn up rates and evolving approach accordingly

Pre-booking facilitates dynamic pricing and yield management through occupancy-based pricing-principles that are fundamental in the airline and hotel industries. The introduction of a reservation system is only one small part of a parking ecosystem. To be effective, it must be supported by systems based on data analytics. Being responsive to the market is fundamental to success, and using data analysts is the only way airports can know which tools to deploy.

Rosemarie Andolino 

MAG USA CEO and President Rosemarie Andolino oversees the development of MAG's North American airport services business. MAG's ultimate aim is to become the 'go-to' organization for delivering market-leading commercial solutions that transform the customer experience at U.S. airports, including P3, retail and terminal developments; car parking services; and Escape Lounges. MAG USA is a subsidiary of Manchester Airports Group, which operates four U.K. airports-Stansted, Bournemouth, East Midlands and Manchester-that collectively serve more than 55 million passengers per year. 

Off-airport parking operators and ridesharing companies are gaining market share, especially amongst passengers traveling for longer than three days. Airports can win back these customers by offering them more attractive pricing and products. Using analytic-based parking ecosystems, airports can make their parking options more attractive to travelers than other modes of getting to the airport, such as taxis and TNCs. Deploying techniques to convert long-stay passengers away from alternative modes of transport and back to on-airport parking is key.

If airport infrastructure is to keep pace with forecasted demand, airports will need revenue for facility improvement projects. Airports must protect their largest source of non-aero revenue with more advanced technology-based solutions. Growing parking revenues with a dynamic parking ecosystem that relies on technology and analytics is the smartest approach. 

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