Optimizing Operations

Oct. 21, 2009
Airport parking strategies that improve the customer experience and enhance revenue

Airports look to boost non-aeronautical revenue to both keep costs down for tenant carriers while also maintaining normal operating standards and a healthy operating budget. Customer parking can be a major income generator for airports, says consultant Michael Civitelli, a commercial parking industry veteran and former airport operations manager. “Airports are where the really big money in parking is,” he says, “Especially at the larger hubs.”

Walker Parking Consultants’ Michael Civitelli spent more than seven years at the Seattle-Tacoma International Airport, eventually becoming senior manager of land side operations, managing parking operations for both the public and employees of the airport. He then spent a year and a half as operations manager for the Colorado Springs Airport before moving into his current position at Walker.

Walker Parking has been around for about 40 years, relates Civitelli, and is a leader in comprehensive parking services. Walker performs operational consulting for many airports, mostly in the areas of rate-setting analysis and parking audits.

“The company also conducts operational program analysis, where we come in and take a look at the entire operation; how it runs — is it efficient and effective?” says Civitelli.
“A large part of our business is in helping airports restore older facilities so they can get additional life out of them; that is the kind of service that’s in demand in an economy like we have now.

“We come in and do a condition assessment and provide the airport with guidance all the way through documentation and managing the construction process to basically rehabilitate an aged facility.”

A profit center
When asked about the common ways airports can lose potential revenue in relation to parking, Civitelli says two ways come to mind immediately:

1) “If there are any kind of internal issues. Airports are where the really big money in parking is; we are talking tens of millions of dollars in revenue, often more than $50 or $60 million per year. Airports can have a difficult time if they don’t have good systems and technology in place or don’t have the right kind of oversight making sure that the revenue the airport should be earning gets into the bank.

2) “On the business side, there are a number of airports that face very stiff competition from the private sector. As customers approach the airport they can see a number of private economy parking operations that are competing with the airport every day for both business and leisure travelers.”

Civitelli explains that a number of airports have really started to compete better, in terms of both the diversification of parking programs and the implementation of new technologies.

“Before the recession, airports were diversifying their parking programs, offering anything from new customer amenities to new types of parking programs, including anything from reserved parking to valet parking to monthly parking; and offering discounts to business travelers,” says Civitelli.

“Since the economic downturn, the trend this year in terms of generating additional revenue has been the old-fashioned strategy — raising rates.

“Airports are also certainly looking at cutting expenses; that’s how parking has changed…as the economy changed.”

According to a report published late last year by the National Parking Association (NPA), first hour on-airport parking rates in the U.S. averaged $3.78, with 24-hour service averaging $16.95. The report also indicates a lower average rate for 24-hour off-airport parking of $11.61.

Explains Civitelli, a lot of airport parking rates have gone up a dollar or two for long-term parking, with little change regarding short-term parking. In terms of cutting costs, he says airports look to labor first; and balancing staffing needs without negatively affecting the customer experience or service aspect.

There has been a real recognition that airports have to compete with the private sector for dollars in relation to parking, says Civitelli. Emerging technology plays an increasing role in that competition. Because airports can generate so much revenue from parking, they are often at the forefront of new parking technology, he says.

“Airports were some of the big movers in terms of installing technologies like pay-on-foot machines and other automated systems, such as parking guidance systems and AVI technology (automated vehicle identification),” says Civitelli. “There are several airports now that allow customers to use highway toll tags for parking; users end up with a ticketless, paperless parking experience which can be a lot speedier and much more convenient.”

South Africa Installation
Working in the business development South Africa division of Intelligent Devices Inc., Peter Ashley was a key official in the implementation of his company’s parking guidance system, Intelligent Parking, at the O.R. Tambo International Airport near Johannesburg.

O.R. Tambo serves as the primary airport for domestic and international travel to and from South Africa, and is Africa’s busiest airport, handling some 19.5 million passengers each year. According to Ashley, its parking facility gets more than 15,000 vehicles entering and exiting every day; the airport has some 25-30,000 parking spaces.

The Intelligent Parking guidance system went live at Tambo in 2007, and the airport has since experienced some very positive results. Relates Ashley, “The airport spent $2.22 million on the system; before Intelligent Parking, average time to park was eight minutes; with the system, that time has been reduced to two and a half minutes.”

A myriad of additional benefits has accompanied the increased operational efficiency of the parking facility, including a reduction in vehicle emissions by 70 percent (saving some 1,500 tons of CO2 emissions each year while saving users some $560,000 in total fuel expenses), a 5-6 percent increase in revenue resulting in a two-year return on investment, and most importantly, a major increase in customer satisfaction, says Ashley.

“The parking system was the single most successful project from a customer relations point of view,” states the Airports Company South Africa landside manager in a recent press release.

Ashley relates that the airport rarely received any response from customers in terms of parking; any responses they did get would be negative. As soon as the parking guidance system was installed, he says, large numbers of anonymous customers began calling and e-mailing the airport to express their gratitude.

“The biggest factor always comes down to customer satisfaction,” says Ashley. “Everyone is always trying to increase their revenue, and yes the system will do that; the actual underlying fact is that it brings more customers to the airport.

“Other studies have shown that revenue has gone up at the retail shopping centers within the airport as well. Generally what happens is people get to the airport earlier and less frustrated, they check in earlier, and end up spending more time and money there.”

The operating principle behind Intelligent Parking is simple: at every single decision making point, the customer is given accurate information via dynamic message signs, related to airport parking. The customer is directed, from well outside of the airport environment, all the way to a specific parking stall within the airport parking facility.

“Tambo has more than 20 external signs over the freeway before entering the airport,” says Ashley. “They are electronic signs telling customers which lanes to stay in and where the available parking spots are.”

It has been an expensive system to install, says Ashley, yet the price has come down dramatically during the last couple of years, mainly due to innovations in technology.

“Originally these systems cost some $500 per bay,” relates Ashley. “Now these systems are down to some $350 per bay, and that’s including pretty much everything.”

Ashley says the system may be expensive, but the company offers leasing mechanisms if capital isn’t immediately available; “basically a lease to own agreement.

“We have found that many U.S. airports do have parts of the system, such as level indicators that count the number of parking bays, but they are atrociously inaccurate,” says Ashley.

“Some airport vehicle counting systems are so inaccurate that officials close parking bays that are only 85-90 percent full. The airport then loses the potential revenue that could be gained by filling up those bays with use of a more accurate counting system.”

The system is considerably cheaper if installed as part of new parking facility construction as opposed to retrofitting an existing structure, says Ashley.

He also relates that Web technology can work well in conjunction with the parking guidance system. Tambo features an online website that indicates the availability of airport parking spaces, and a cell phone application which users can connect with while en route to the airport to receive parking guidance. The airport also offers a premium parking program that allows customers to reserve parking stalls.

Program diversification
The Minneapolis-Saint Paul International Airport (MSP) has found success in offering a variety of parking programs, creating various profit centers within the parking operation.
“Our goal is to make parking a non-event for the customer,” says Jeff Courteau, manager of parking systems for the Metropolitan Airports Commission (MAC). “Especially with regard to the ePark system.”

ePark is an electronic self-payment system that offers users a quicker service (the system is fully automated) at a discounted price; customers pay $2 per day by inserting a credit/debit card into the reader at the ramp entrance. “The customers get in and out faster and we save money,” says Courteau. “Electronic payment parking has improved our operational efficiency drastically.”

Other programs include value-parking, or use of the new multi-level parking facility at a discounted fee; valet parking, available at one of the airport’s two terminals; and surepark, a real-time parking availability system offering three ways for customers to obtain instant parking information before arriving at MSP: an audible phone message, an online web site, and a text messaging service.

As for technology, MSP’s automatic vehicle identification system (MAVIS) provides public parking revenue and access control for the airport. According to Courteau, MAVIS monitors three functions: contract (employee) parking, commercial vehicle access, and public transportation coordination.

The system is provided by Zeag Ltd., an international parking systems company charged with creating a parking system for MSP with redundant counting capabilities, interface to a license plate recognition system, extreme flexibility and ease of use, and able to deliver financial results and prompt detailed information and reporting, according to the company website.

“With MAVIS, we are able to leverage technology at every part of the operation,” says Courteau. “With MAVIS, everything is automated.”

Other trends relate to parking facility construction, says consultant Civitelli. “We have seen the construction of new facilities coupled with consolidated rental car facilities. In some cases, airports have moved forward with a kind of model that allows it to build a rental car facility along with one or two floors for customer parking. Over time, if the rental car operation needs to grow, the airport has that space available.”