Growing Airport Revenue and Improving the Trip Experience
Even with passenger volumes rising, ride-sharing is hitting airports where it hurts – parking revenue. Traditionally the top revenue source for airports, parking revenue cannot be replaced by $1 to $4 fees from ride-share companies like Uber and Lyft. Meanwhile in some markets, increases in passenger volume mask the overall shift away from parking–but still may require significant expansion of parking facilities.
This article explores how leveraging the same dynamic pricing technology used by ride-sharing companies can help airports increase funding for operations, avoid costly infrastructure investment, and even improve the traveler experience.
The problem: empty lots
Airports depend on parking revenues. Heathrow, one of the world’s largest hubs, collected over £126 million in parking revenue in 2018 – a huge portion of its operating budget. Most airports, especially regional airports, lack the staff or know-how to accurately price their parking to match demand. As a result, parking spots sit idle at off-peak times, severely underutilized. Passengers are scared off by high everyday prices, and choose TNCs, public transit or other ways to get to the airport–costing the airport significant revenue.
The opposite problem: full lots
At the same time, many airports suffer from the opposite problem: their lots are full at peak times, costing them revenue in travelers who are unable to park and seek alternatives. Some airports are even considering adding parking capacity. For any airport, building additional parking capacity can be an expensive–and slow–undertaking. Not only do you need to budget millions of dollars (which may have to be passed on to airlines, jeopardizing flights) but also you have to spend management time on construction planning, permitting and other tasks that take you away from your focus on flights. And if the new space is going to be convenient to your terminal, construction may result in interruptions or unavailability of current lots, traffic redirection, and other traveler hassles. The payback on projects like this is never less than 5-10 years.
Today's consumer expect dynamic pricing–TNCs and airlines alike prove this every day–and dynamic pricing can solve both over- and under-utilization of your parking facilities, while driving additional revenue and funding for airport operations. Your travelers will be happier, too, with relatively lower off-peak prices and increased availability at peak times.
At off-peak times, AI can detect and anticipate that more parking will be available than needed. Prices can reflect that, bringing customers back into a much higher and more profitable per-trip revenue source, parking, than TNCs or alternatives. And in many markets, as travelers would prefer to drive their own vehicle, your customers will like it more (and save money). These lower prices can be advertised and increase positive feelings towards your facility and your role in the community.
Meanwhile at times of peak demand, higher dynamic prices can dissuade travelers from bringing their personal vehicle to the airport. Not only will this make parking more available to those who need it (for example, people traveling to your airport from beyond the service areas of TNCs) but also it will both increase the airport's revenue from parking and politely dissuade travelers from parking when at capacity.
Towards better airport parking
An improved travel experience, faster revenue growth, and more efficient airport operations start with the right tools. Perfect Price is a Gartner® recognized vendor in the price optimization and management software field, and a leader in applying Artificial Intelligence to pricing. Our simple, software-as-a-service offering is extremely powerful, yet easy to implement.
It sounds complicated but Perfect Price's solution can calculate accurate demand-based dynamic prices and enables airports like yours to manage those prices to their specific requirements. You don't have to bring in expensive consultants, or whiz-kids from the local graduate school, to optimize your parking. And Perfect Price can deliver results faster than you can imagine.
Let us help you test those strategies and measure the results.
For more information, request an analysis with one of our pricing strategists.