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OCR for page 142
142 Guidebook for Evaluating Airport Parking Strategies and Supporting Technologies capital improvements to reduce an airport's reliance on debt. Reductions in net parking rev- enues can jeopardize existing or planned capital improvements if these revenues are expected or required to fund capital improvements or pay debt service on revenue bonds. Thus, airport operators may be reluctant to consider new parking strategies that could reduce or endanger these revenues. The nature of the airline-airport use and lease agreements (if any) may be an additional con- sideration when evaluating potential parking strategies. For example, airport enterprises that operate under residual cost or hybrid airline rate-making structures may be required to share all or a significant portion of their increased parking revenues with the airlines. Conversely, airport enterprises that operate under a compensatory rate-making structure can retain the surplus parking revenues and use them for any lawful aviation purpose. In addition, airport operators using residual and hybrid rate-making structures often must solicit airline majority-in-interest approval before investing in new parking systems or facilities and are required to justify the expense to the airlines through financial analyses or pro formas. Sometimes, parking improve- ments can result in a short-term reduction in surplus revenues even though long-term financial gains and significant customer service enhancements are expected. Given that the airlines fre- quently consider shorter time horizons than airport operators and their financial condition, these discussions can often become challenging and difficult for airport operators. · Ability to support additional capital and operating costs--Parking strategies should be assessed in terms of both capital investments and ongoing maintenance costs. The ability to support addi- tional capital and operating costs is a particular consideration for strategies that may be expen- sive to implement (e.g., revenue control systems) or that have significant ongoing costs (e.g., Internet-based reservation systems hosted by a private company). Conversely, although pay-on- foot systems or credit card in/out systems can increase costs in the near term (because of the cost of new revenue control equipment), future ongoing labor savings can be quite significant. · Tolerance of risk--Compared to private companies, public agencies, including airport enterprises, are typically averse to risk--the risk of losing or foregoing revenues, the adverse publicity associ- ated with a capital expenditure that ultimately proves to be unsuccessful, or an unfavorable "polit- ical" response to potential changes in rates or services. Airport operators may be more sensitive to the liability associated with injuries, accidents, negligence, or criminal activities occurring in park- ing facilities or elsewhere on the airport. Similarly, as public agencies, airport enterprises must strictly comply with applicable laws and regulations, including those related to work rules, protect- ing the environment, and accommodating disabled customers. Many strategies alter the revenue control procedures and reduce the opportunities for fraud or theft. Some may inadvertently increase the exposure of the airport enterprise to theft by elim- inating the linkage between a parking ticket and the entering vehicle to which it was issued. · Staff strengths and weaknesses--To implement a new strategy and oversee its ongoing opera- tion, it is helpful for the airport operator to honestly appraise the ability of airport staff (or the current contractor) in terms of competing work assignments and their relevant skills and expe- rience. Relevant skills may include parking operations, marketing and sales, accounting/audit, or familiarity with proposed equipment or software. A key component of successful implemen- tation is the continuous involvement of knowledgeable staff (see Chapter 7). Physical Airport Facilities The physical arrangement of an airport and its parking facilities will influence the evaluation of potential parking strategies, as will proposed development and improvement projects. Factors relevant to the evaluation of parking strategies and technologies in terms of the physical airport facilities are listed in this section. · Adequate area--Inherent in some strategies is the necessity for physical changes to the airport parking facilities or the entry/exit roadways, including creating new space or modifying exist-