Reimagining airport parking to support the travel industry
Thursday, October 29, 2020
When most people think about airports, they generally think about airplanes. This makes sense, considering the majority of people head to airports to fly. But when looking at the revenue sources in airports, air travel is one small part of a very complex system.
Along with airlines, airports rely on the businesses that support them internally — rental car companies, retail stores, restaurants and parking lots — to provide the majority of their revenue. As the travel industry suffers due to pandemic restrictions, all of these sources of revenue are also suffering.
Although 53% of destinations worldwide have eased travel restrictions, international tourism plunged by 93% in June when compared to 2019 numbers. Airport executives need to begin thinking creatively about their existing assets to recover lost revenue.
With a decrease in air travel activity, all aspects of the airport experience, from eating at restaurants in terminals to shopping and parking, are currently underused. This has resulted in massive revenue losses for airports and associated businesses.
The largest loss for airports has been in airport parking. From 2015 to 2018, airport parking revenue rose by an average of 13.6%. And even as airport parking declined, revenue increased: at San Francisco International Airport, parking was down by 7.5% from 2014 to 2017, yet parking revenue increased over the same period.
For many international airports, parking accounted for 17.2% of total airport revenue in 2018. Typically, this asset is well-used, but with airline travel down and restrictions on who can enter airports, parking lots are largely vacant.
At the same time, the rental car industry is suffering. Rental car companies across the U.S. have had to file for bankruptcy protection, while rental prices have dropped to entice customers. For example, Florida experienced a 18% drop in rental car prices.
Like many other businesses in the travel industry, COVID-19 will have a severe impact on the rental car industry for years to follow. And since the majority of rental cars are usually on the road, most companies are looking for places to store excess inventory. This is causing financial hardship, forcing companies to resort to paid parking to store unused vehicles. As businesses begin to reopen, public parking spaces are declining, forcing rental companies to seek out alternatives.
To benefit both airports and the businesses that rely on them, airport parking can be reimagined to become an important source of revenue. The solution is to use these unused parking spaces to store fleet cars. Rental car companies, which are experiencing a steep decline in ridership, could rent out parking spaces in bulk, saving money from daily parking fees. Since many rental car companies already operate the majority of their business out of airports, these spots are conveniently located. When their business begins to pick up again, they’ll have quick access to the cars that are stored away in fleet parking.
Another industry that would greatly benefit from fleet parking at airports is the transportation and shipping of vehicles. Even though passenger air traffic is declining, the increased reliance on e-commerce is causing the air cargo industry to expand.
By storing their fleet of shipping vehicles at the airport, companies can support the industry, benefit from steep bulk discounts, and have a convenient location for their vehicles. The global e-commerce industry is expected to grow at a compound annual growth rate of 14.7% from 2020 to 2027, which will drive up demand for adequate space to store growing fleets of vehicles.
The impact of the losses that the travel industry has experienced throughout the pandemic is staggering. This can be seen in a GDP drop of approximately 3% globally due to air travel restrictions.
Supporting airports, airlines and all businesses associated with air travel is of paramount importance right now. By reimagining airport parking, airports can do just that, while simultaneously driving revenue for airports. As the industry struggles to recover, this type of creative thinking will help businesses succeed over the next few years.
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