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This chapter describes the factors frequently considered by airport operators when evaluating a potential parking strategy. The evaluation process leading to recommendation of a preferred strategy, or strategies, typically includes some or all of the following steps: â¢ Considering the specific characteristics of the airport and its customers; â¢ Evaluating the implications for affected organizations and stakeholders, as appropriate; â¢ Determining the required implementation actions; and â¢ Estimating the costs and benefits of implementation. These steps are described in the following sections. Consider the Specific Characteristics of the Airport and Its Customers After a list of potential strategies for implementation is developed, the next logical step is to con- sider which strategies best respond to the unique characteristics of the airport and its customers, recognizing that some strategies will be better suited to a particular airport than others. These unique characteristics relate to airport customers, the airport operator, and the physical airport facilities, as described in this section. Airport Customers Passenger demographics and travel behavior, which have been addressed, in part, in previous chapters, that affect the evaluation of a parking strategy include: â¢ Proportion of O&D airline passengersâThese passengers are an airportâs parking customer base. O&D airline passengers start and end their trips at the airport as opposed to connecting passengers, who start and end their trips at other airports and thus are not potential parking cus- tomers. At some large-hub airports, over 40% of all airline passengers are connecting between flights, while at most medium- and small-hub airports, fewer than 10% of all passengers are connecting with other flights. â¢ Proportion of local resident passengersâAt most airports, the majority of O&D airline pas- sengers are local residents who park at the airport. Non-resident O&D passengers are more likely to use rental cars or other airport access modes and are unlikely to park at the airport other than when being picked up or dropped off. Examples of airports with a large number of non-resident airline passengers include those serving destination resorts (e.g., the airports serving Honolulu and neighboring island airports in Hawaii, as well as Las Vegas and Orlando) and airports serv- ing large volumes of non-resident airline passengers on a seasonal basis (e.g., airports located near ski resorts in the winter or those serving national parks in the summer). 139 C H A P T E R 6 Evaluating Potential Strategies and Supporting Technologies
The need to base analyses of parking requirements and revenues on O&D passengers may appear obvious, but occasionally parking analyses are incorrectly prepared comparing trends in revenues per total passengers rather than per local resident O&D passengers. At airports with many connecting passengers or non-resident passengers, this error can result in misleading conclusions. â¢ Proportion of business versus non-business passengersâTrip purpose is an indication of the customerâs sensitivity to savings in travel time and/or travel cost. Business travelers are less sen- sitive to the cost of parking compared to non-business travelers because their travel expenses are likely to be paid by a third party. Non-business travelers (e.g., those traveling on vacation or fam- ily business) are more sensitive to parking costs because these costs may represent a significant percentage of the travelerâs total out-of-pocket travel costs, particularly for those customers parking for a week or more and using a heavily discounted airline ticket. Business travelers are typically âjust-in-timeâ travelers who value potential time savings and reliable or predictable travel times. They are more often willing to pay premium rates for park- ing products or services that minimize time spent searching for an open parking space and walk- ing long distances, provide guaranteed space availability, or avoid unanticipated delays. Business travelers typically depart early in the week and return late in the week. Thus, the peak demand for parking facilities serving business travelers occurs on Tuesdays through Thursdays. Non-business travelers are likely to depart on a Saturday and return on a Sunday. Thus, the peak demand for parking facilities serving non-business travelers occurs on weekends. The presence of a low-cost carrier at the airport tends to increase the proportion of non-business travelers. â¢ Proportion of customers using alternative access modesâIt is helpful to consider the alter- native access modes available to customers when considering potential parking rates, products, and services. The availability of attractive alternatives to private vehicles will affect customer responses to changes in airport parking costs, services, and products. For example, at some air- ports, the high cost of parking (including economy parking) has made chauffeured limousines an attractive alternative both in terms of cost and convenience. At other airports, the availabil- ity of high-quality and reasonably priced rail transit, express bus service, and shared-ride vans has reduced the demand for long-duration parking, particularly by passengers traveling for non-business purposes. â¢ Proportion of customers using alternative parking optionsâThe availability of attractive and reasonably priced, privately operated off-airport parking facilities will affect an airport opera- torâs share of the total public parking market in the region. At some airports, more than 50% of the long-duration parking spaces are provided in privately operated lots. Often private park- ing operators (including those operating on airports, such as the privately operated Canadian airports) introduce new technologies and services before such technologies and services are adopted at publicly operated airports. Because the lots are privately owned, the parking oper- ators can introduce new services, modify parking rates, offer volume discounts, and make other changes much faster than an airport operator, or an airport operator may be unable to make such changes. Thus, when considering new products, services, or rates, it is helpful to antici- pate the way competing private parking operators may respond. It is also helpful to consider whether off-airport operators are considered âpartnersâ or âcompetitors.â â¢ Seasonal and weekly variationsâMany airports experience extreme peaks in public parking demand during the Thanksgiving weekend, Christmas holidays, spring break, or local events such as major sporting events. These unusual peak demands may result in the need to operate, on a temporary basis, holiday/overflow lots thatâbecause of their interim natureâoffer lower levels of customer service and the use of less expensive parking revenue control equipment and procedures. â¢ Volume of international travelersâThe parking characteristics and durations of passengers on overseas flights differ from those on domestic and transborder flights. Typically, international passengers are accompanied to/from the airport by more family members or friends than are 140 Guidebook for Evaluating Airport Parking Strategies and Supporting Technologies
domestic passengers. These passengers park for short durations rather than for the duration of their trip. Understanding the ratio of passengers to meeters/greeters or well-wishers can be helpful at international gateway airports or those that have a separate international terminal. â¢ Infrequent travelersâMost airline passengers travel infrequently. Thus, it is helpful for air- port operators to understand the size of the customer market they are attempting to attract when evaluating the potential use of discount coupons, loyalty programs, or other programs that rely upon a customer base composed of frequent travelers. â¢ Culture and social behaviorâThe culture of the local market may influence parking demand and customer response to potential parking products and servicesâparticularly short-duration parking. For example, when passengers from some cultures or countries arrive at, or depart from, the airportâwhether they are flying on domestic or international flightsâit is likely that they will be greeted at, or accompanied to, the airport by a large group of family members or friends and, perhaps, treated to a meal or beverage rather than just being dropped off at the curb- side. When the local community includes a large volume of such passengers (e.g., southern Florida), these travel patterns may generate demand for more short-duration parking than might otherwise be expected. â¢ Customer vehiclesâThe type of vehicles used by an airportâs customers may influence the cus- tomersâ interest in certain parking products. For example, secure parking, valet parking, and vehicle washing and servicing may be attractive options in a market where many customers drive luxury vehicles. Electric charging stations require a market consisting of a significant number of all-electric vehicles or plug-in vehicles. The need for over-height or XXL parking is likely to be greater in markets where there is a high proportion of large sport utility vehicles and pickup trucks (e.g., the Midwest, Southwest, and mountain states). â¢ Response to past changes in rates, services, or productsâCustomer response to past changes in parking rates, or the introduction of new services or products, is an indicator of their likely future response. For example, it may be helpful to determine the proportion of customers who diverted to less-expensive parking products or alternative access modes in response to past rate increases. The Airport Operator In selecting and evaluating potential parking strategies, it is helpful to review how the airport is financed; the current use of net parking revenues; how the airport and its parking facilities are oper- ated, including staff resources and capabilities; and the preferences of airport management (e.g., the relative importance assigned to specific objectives). These and other characteristics relevant to airport operators are described in this section. â¢ Emphasis on customer serviceâAlthough all airport operators seek to provide a high level of customer service, some place a higher priority on this goal than others. Such airport operators allocate greater budget amounts and more staff resources to programs targeted at providing high levels of customer service. They may retain J. D. Power and Associates or similar organiza- tions to evaluate how individual components of the airport, including parking, are ranked by customers of their airport and peer airports. These airport operators are often willing to forego potential net revenues to provide new or improved customer service features. â¢ Emphasis on operating efficienciesâAll airport operators attempt to operate efficiently, but some make reducing or containing operating costs a higher priority than others. For example, in an effort to control costs, some airport operators may reduce shuttle bus frequencies, cashier hours, security patrols, or scheduled (or regular) facility maintenance, recognizing that such actions may inconvenience customers. These airport operators typically have limited operating budgets and higher priorities for the use of available funds. â¢ Emphasis on parking revenuesâNet public parking revenues provide essential cash flow to support uneconomic airport functions (e.g., general aviation, public areas of terminals, road- ways, and curbsides) and also represent the single largest source of equity funding of airport Evaluating Potential Strategies and Supporting Technologies 141
capital improvements to reduce an airportâs 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. â¢ Ability to support additional capital and operating costsâParking 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. â¢ Tolerance of riskâCompared to private companies, public agencies, including airport enterprises, are typically averse to riskâthe risk of losing or foregoing revenues, the adverse publicity associ- ated with a capital expenditure that ultimately proves to be unsuccessful, or an unfavorable âpolit- icalâ 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. â¢ Staff strengths and weaknessesâTo 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. â¢ Adequate areaâInherent 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- 142 Guidebook for Evaluating Airport Parking Strategies and Supporting Technologies
ing space to accommodate the strategy. For example, some strategies require (1) providing space to store customersâ vehicles (e.g., valet parking), (2) developing an appropriate area to house new computer equipment, (3) dividing an existing parking facility into nested areas or zones with gate-controlled access points, or (4) developing new parking facilities. Other strate- gies may require new or modified entry and exit routes for vehicles and pedestrians. It is impor- tant to confirm that an adequately sized site or location is available for these strategies. â¢ Number and location of parking facilitiesâSome airports have dispersed parking lots or garages, or facilities with multiple pedestrian or vehicular entry/exit points. If each parking lot or garage requires a separate entry and exit plaza, the implementation and operating costs of sev- eral strategies will increase because of the additional control equipment required. If the parking facilities have many pedestrian pathways between the terminal and parking facility, it will be more expensive to implement strategies that customers must use when they walk back to their parked cars (e.g., pay-on-foot systems) because of the increased equipment costs. Thus, these strategies have proven most successful at airports with concentrated pedestrian flows that minimize the number of locations where equipment or services must be provided. â¢ Consistency with development plansâIt is important that any physical changes, construction of new facilities, or major modifications to existing facilities are consistent with the airport mas- ter plan or long-range land use plan. Typically, interim or temporary construction is not desir- able unless there is a favorable expected return on investment (i.e., additional revenues will allow the capital investment to be recovered) or the proposed capital expenditures are required to support other projects as well. Evaluate the Implications on Affected Organizations and Stakeholders, as Appropriate As stated previously, parking is integral to an airportâs customer service and financing, and is one of the few services that passengers encounter that is controlled entirely by airport management. Since implementation of a new parking strategy may affect several airport departments or divisions, as well as other stakeholders, it is helpful to determine which entities will be affected and how they may be affected by the new strategy. Some of the factors to be considered include the following: â¢ Parking staffâSome strategies may result in a reduction in the current number of parking staff, a reassignment of staff to other (lesser paid) duties, or otherwise affect their salaries and benefits. Other strategies require increased oversight of bus drivers, valet attendants, or other employees serving parking customers (e.g., remote baggage-check facilities). â¢ Parking managementâIt should be confirmed that a strategy expected to generate new rev- enues or attract new customers will do so and not divert existing customers to lower-priced products. The likely operational effects of the new strategy should be reviewed, along with changes in policies or procedures, and it should be determined which changes must be approved by management or the airport board. â¢ Maintenance, IT, and engineering staffâMany of the strategies increase the responsibilities of airport facility maintenance staff (or the contractor responsible for facility maintenance), airport IT staff, or engineering staff. Strategies requiring construction, acquisition of new equipment, or modifications to power or an IT network may require the involvement of engi- neering and IT staff. â¢ Audit, finance, and properties staffâSome strategies result in changes to the reports available to audit staff, the way revenues are received or reported (e.g., those that result in increased use of credit cards), or require new business agreements with new concessionaires or modifications to agreements with existing concessionaires or parking management companies. A contract or procurement process may require the approval of the airportâs risk management staff, procure- ment staff, or legal counsel. Evaluating Potential Strategies and Supporting Technologies 143
â¢ Public relations or marketing staffâMany of the identified strategiesâparticularly those that represent the introduction of a new serviceâwill require a marketing or advertising program to alert potential customers. Often this requires the participation and support of the airportâs public relations or marketing staff. â¢ Operators of off-airport parking facilitiesâThese off-airport operators will be affected by any strategy that reduces their business volume, revenues, or ability to conduct business. It is likely that they will object to changes affecting their profits by complaining directly to members of the airportâs governing board, commission, or city council. â¢ Airport boards and commissionsâMany strategies, particularly those affecting parking rates or involving a major capital expenditure, require the approval of an airport board or commis- sion. These boards are often interested in how a strategy will affect airline passengers and the air- portâs finances in terms of changes in costs and services. It may be helpful to cite the experience of other airport operatorsâespecially the operators of identified peer airportsâwho have implemented the same or similar strategies. â¢ Other approving agenciesâDepending on the type of strategy, it may be necessary to obtain the approval of other agencies, including those responsible for building inspections/code com- pliance, and local environmental permitting agencies. Determine the Required Implementation Actions Chapter 7 provides an overview of implementation actions. For purposes of evaluating a poten- tial strategy, the key considerations are to determine the level of effort, responsible parties, and lead time required to implement a strategy. Among the key considerations are the following: â¢ Required approval processâIt is necessary to determine the procedures required to gain approval for and implement a strategy. For example, which agencies must approve the strat- egy? Are a competitive proposal process and preparation of designs or specifications required? Will operating procedures change? Can airport staff simply issue an acquisition order for the equipment? Are environmental or building permits required? Are there any building or fire code compliance issues? â¢ Level of effort requiredâDetermine if the implementation tasks can be conducted using just airport staff or if outside support or expertise is required. â¢ Lead time requiredâEstimate the total time required for obtaining management approval, design (if required), acquisition, implementation, and testing (if required). Determine if the strategy requires new business agreements, changes to existing business agreements (e.g., valet parking), or approval to revise policies (e.g., coupons) or operating procedures (e.g., reserved parking). The total time will also be dependent upon whether the supporting infrastructure is in place or must first be designed and built. â¢ Availability of responsible personsâEstablish which entity and staff will serve as the lead and agree to oversee implementation of the strategy. Confirm that they have adequate expertise and adequate time to devote to implementation of the strategy and assess other competing priorities and whether or not the other priorities are likely to interfere with the success of this project. â¢ Airport management approvalâDetermine the steps typically required to obtain the approval of airport management or the airport board. Establish what information or analyses they typ- ically expect. â¢ Airline approvalâCapital expenditures exceeding certain amounts may require approval from the airlines. Estimate the Costs and Benefits of Implementation A key step in the evaluation of a strategy is estimating its costs and benefits. The costs may include the initial costs of construction, acquisition, and installation, as well as the expected 144 Guidebook for Evaluating Airport Parking Strategies and Supporting Technologies
ongoing costs of operations and maintenance (O&M). An initial estimate of construction costs and O&M costs can be prepared using the information contained in Appendix A. Changes in the estimated O&M costs for existing or new facilities may vary depending on many factors. These include the prevailing wage rates, the age of existing facilities, and the quality of the maintenance program. The expected benefits may include the following: â¢ Increases in gross or net parking revenues; â¢ Improvements to operational efficiencies or reductions in O&M or labor costs; â¢ Improvements to customer service, perhaps quantified by the value of the time saved by cus- tomers while searching for empty spaces or from other savings; â¢ Environmental benefits that may include reduced emissions resulting from reduced vehicle idling while in queues at entry/exit plazas, from reductions in vehicle miles traveled while recirculating on the airport or within a lot or garage to locate an empty space, or from reduced vehicle miles traveled by parking shuttle buses; and â¢ Reduced opportunities for fraud or theft. Evaluating Potential Strategies and Supporting Technologies 145