Current Trends in Airport Ground Transportation

Feb. 18, 2019
Changing landside travel habits means investments in technology to recoup lost revenues.

There is little debate about the source of major trends in airport ground transportation today. The introduction of Transportation Network Companies (TNCs) and their impact on airport revenues, airport congestion, competing ground transportation service operations – taxis and shared ride, and the consumer, have been dramatic. TNC operators like Uber and Lyft are known by various names across the country. On the West coast, where they began, they are referred to as TNCs, while in other parts of North America the services are referred to as e-hailing, ridesharing, or ride-hailing (New York City) private vehicles for hire (PVH).

Their impact on airports is best shown by results at California airports where TNCs have operated for some time. One airport that has monitored their impact closely has been SFO. As shown below, in only a few short years, TNCs are now the largest mover of commercial passengers off their curbs and gaining greater market share each year. This mode shift has been swift and dramatic.

Alternatively, as shown above, private taxi and shared ride operations have seen significant decreases in ridership. On the other hand, TNCs pay an access fee at SFO and most other airports that results in a new and significant revenue source for airports. A major concern for airport management is that revenue losses from traditional airport ground transportation operators, parking, and car rental revenues year over year outweigh the revenue gains from the TNCs. SFO officials estimate that overall revenues from these traditional sources of airport revenues will be less in 2018 than in 2017.

Fortunately, SFO, like most of our largest airports, has experienced significant airline traffic growth in recent years so the increased revenues from TNC, due to this growth in operations, more than offset the revenue losses from parking, car rentals, and other groundside operations. On the other hand, increased air traffic brings more airline passengers to the airport curbs.

The growth of TNCs has also impacted airports physically as well as financially. The significantly more personal cars (Uber and Lyft) dropping off and picking up passengers on the limited airport passenger curb has resulted in major traffic congestion and traffic management issues for North American airports.

Other major airports have been experiencing much the same results — TNCs are a major source of new revenue, but airport customers are using airport parking and car rentals less as a result of their growth and airports are spending more on curbside traffic congestion management. This revenue decline is important for airports because parking and car rental revenues are a major source of excess revenues to support airport development bonds. It is felt that this projected revenue “gap” from estimated revenue growth could negatively impact an airport’s future development capabilities.

Recognizing this airport groundside trend, current revenue losses due to TNC technology has airport officials and consultants pondering future revenue sources as car-sharing, and autonomous vehicles, when they become a reality. While AVs are decades away, car-sharing, especially at airports, is a trend that further decreases parking and car rental revenues. Senior airport consultants are suggesting that the future will mean repurposing car rental lots and newly built remote car rental facilities, and developing other sources of revenue. As a result, more and more airports are being urged to consider charging private vehicles for airport curb access.

Traditional Operators: Traditional airport taxi and shared ride operators have also been negatively impacted by the loss of passengers to TNCs. For airports with open taxi lots, where any licensed taxi can get into the airport taxi holding lot, this TNC trend has been most evident. Long wait times for taxi drivers were common, but the growth of TNCs has made these waits significantly longer. Waits of three, four, and even five hours have become common and taxi holding lots have overflowed.

As a result, airport officials are considering varied ways to reduce this wait time. Some are considering traditional methods such as allowing taxi drivers to access the holding lots only on alternative days. More aggressive airport officials are considering some form of virtual taxi holding lots whereby the taxi driver is given a spot in the airport taxi queue and not permitted to the airport curb until his spot is needed. An outstanding example of this has been undertaken at Minneapolis-St. Paul International Airport. MSP officials have deployed a virtual taxi system known as e-Dispatch for taxis.

eDispatch is the airport operated software taxi dispatch program connected to taxi drivers via smart phones which provides a taxicab driver the ability to drive his/her vehicle out of the airport taxicab queue and return when needed. The driver remains in a virtual queue and receives a text when they may go back to the airport. The system went live in July, and over 80 percent of MSP taxi drivers signed up for the service. Taxi drivers are very pleased with the service since it makes their day much more productive with the significantly shorter wait times at the airport.

eDispatch allows drivers the opportunity to avoid waiting in a long taxi queue at the airport and provides drivers with the ability to earn income during what would have been simply idle time. For the airport it allows them to significantly reduce taxi overflow lots and even main taxi holding areas. Such systems offer the airport user a less stressed taxi driver, while the airport has reduced holding lot costs. It’s a rare win-win-win, for the customer, the taxi driver, and the airport.

Shared ride airport operators such as SuperShuttle, GO Airport Shuttle, and similar others are not standing idly by as revenues from shared-ride to and from the airport decline due to low cost competition from TNCs. Shared-ride companies are investing in more cellphone and app technologies that make their services more customer friendly and easier to use. For example, SuperShuttle is moving to smaller capacity (5 seats) vehicles for better, faster, and more direct customer service featuring fewer stops. Their new app is also providing the customer with easier payment and information systems – similar to TNCs.

The Go Group of airport ground transportation providers is also upping their customer service levels through apps. They now offer the customer self-check-in at the airport, step-by-step directions to locate their van or SUV, and easier payment options. The GO Group providers are providing faster, more customer-oriented services, and as shown below, with much greater utilization of cell phone apps.

Both ridesharing companies have recognized that the quick growth of TNCs has also changed customer expectations about their airport ground transportation. The obvious trend is for lower fares and more personalized transportation in the form of smaller vehicles, SUVs, and ease of use.

In responding to their need to move as much curb-side traffic in higher occupancy vehicles, some airports have given additional flexibility to traditional shared ride companies in order for them to remain competitive. The industry has seen a path to improve customer service, move people out of the airport quickly and stay relevant in airport ground transportation through airport assistance.

Summary: As a result of the swift and dramatic trend of TNC use at airports, the ultimate winner is the airport consumer. The user now has more options for airport parking and car rentals, taxis, and other traditional airport ground transportation operators. The subsidized nature of TNCs (Uber and Lyft are running huge deficits) resulting in attractive lower fare alternatives, has forced airports to review their long-run development plans for parking and car rental revenues, and traditional ground operators now need to up their game with new and better customer services through apps as well as offering smaller vehicles and more immediate services. This trend has also shifted customer expectations for airport ground transportation. Customers now expect swift and cost-effective airport ground transportation. Yes, this trend in airport ground transportation has been traumatic for some, but both airports and ground operators are reacting and taking positive steps to adjust to this changing and challenging environment.

Ray Mundy, Ph. D., Executive Director of the Airport Ground Transportation Association and Professor Emeritus, University of Tennessee, Knoxville, has been an industry researcher, consultant, and commentator for over 45 years.