Why has such a deceptively simple product taken such a central role in these large-scale infrastructures?


Over the last decades, airports have evolved from infrastructure providers to hubs of commercial activities. The continuous growth in passenger traffic from the hub strategy of legacy airlines and the rise of low-cost carriers has transformed the airport landscape. Airports now compete for passengers with multiple other airports and transport modes in the same catchment area by offering a holistic customer experience across a broad portfolio of destinations, airlines and supporting services.

Proper management of airport parking activities has a defining impact on this customer experience as the first physical touch point at the airport for point-to-point passengers. Relevant offerings, real-time information screens, cleanliness and a consistent signage will contribute to a safe and carefree start to the trip.

Moreover, airport parking activities represent one of the most important revenue streams for airports. Depending on the size of the airport, the proximity to the city center and the availability of public transport alternatives, airport parking typically represents 5-15% of total airport revenue and up to 30% of nonaeronautical revenues, but given the relatively low capital and operational expenditures, airport parking activities typically generate outsized operational margins and cash flow.

Finally, many airports have witnessed continuous growth of parking activities, despite development of public transport alternatives supported by national and local mobility policies. The absolute growth in airport passenger traffic combined with parking management practices such as yield management, flexible capacity and restricted access to the curbside at the terminal result in increased parking activity and revenues.

To maximize value creation from parking, airports need to address two strategic imperatives:

  1. Anticipate changes in customer behavior to match future demand for parking capacity
  2. Design parking products to drive superior customer experience yet maximizing value capture

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How do you anticipate changes in customer behavior to match future demand for parking capacity?

Anticipating parking demand is critical when making long term strategic decisions on parking infrastructure developments and requires the ability to forecast customer profiles over time, demand cyclicality and overall demand. Customer profiles can be segmented based on their trip details (e.g. purpose and length), price sensitivity and need for additional services (e.g. valet parking, carwash services, insurance), but customer behavior within a specific segment may evolve over time and lead to diverging demand for different parking offerings.

Airport parking activities are by nature cyclical with a volatile demand pattern through the year mainly related to the purpose of the passenger’s trip (e.g. business, leisure, medical etc.). Often the lows in one segment even out the peaks in another segment, resulting in a rather flat demand profile. Occasionally, however, peaks in both segments might overlap, coinciding with national holidays and special events in the home country or the most popular destinations.

The combination of growth for parking demand, cyclicality of demand and changes in customer behavior at segment level requires careful demand forecasting to match cost effective capacity development in a timely fashion. This has proven a challenging exercise for airports and parking operators, because to tackle the last mile of this transport ecosystem may involve up to 7 key actors with 3 different roles:

  1. Forecasts of future parking visitors are based on the historical evolution without making a distinction between different segments, due to lack of insight into the behavior and needs per segment
  2. The impact of external trends on car usage is sometimes difficult to estimate (e.g. impact of economic cycle, development of public transport policies, development of access road infrastructure etc.)
  3. Narrow understanding of the cyclicality of parking demand throughout the year and peak demand calculations (e.g. evolution of average length of stay per parking product throughout the year)

To precisely model the evolution of visitors per parking offering and the resulting impact in terms of required capacity, it is critical to start from the forecast for the different passenger segments, as they form the underlying driver of demand for parking. The evolution of these passenger segments can then be translated into visitors per parking offering, based on the expected behavior and parking requirements for each passenger segment. Cyclicality of demand and the required coverage of peak demand throughout the year further define the required number of parking spaces per offering. Even with a strong model of parking demand, there is a need for capacity solutions matching different time horizons:

Short-term (0-1 year):

  • Flexible capacity management technologies (including routing inside parking facilities)
  • Commercial actions (e.g. encourage customers to reserve upfront or use of remote parking facilities)
  • Changes to airport procedures (e.g. check-in, boarding, landing, border control, baggage handling)

Mid-term (1-3 years):

  • Allocation of parking capacity to different visitor segments (e.g. switching staff parking to passengers)
  • Infrastructure improvements (e.g. better planning, facility usage or parking technologies)
  • Extensions to create buffer capacity (e.g. flat parking facilities)

Long-term (3-10 years):

  • Airport infrastructure development plan (e.g. parking infrastructure, access roads, terminal layout)
  • Mobility plan and detailed impact
  • Public transport infrastructure plan and detailed impact

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How do you design parking products to drive superior customer experience yet maximizing value capture

The commercial offering in airport parking is a decisive factor for the overall satisfaction of visitors and recent major changes in customer mobility needs required parking operators to adapt their product and service offerings substantially. In our experience with our parking studies in airports around the world the best-performing airports have improved their offerings along 5 key dimensions:

  1. Parking Offering

The airport parking offering needs to cater to every parking visitor segment and their specific needs. This requires a mix of different parking products, where some will serve most parking visitors while others remain niche offerings. This in turn requires different customer approaches and operational models. At the same time the offering needs to remain simple enough to immediately support the right choice upon arrival at the airport. A good practice is to break the link between parking offers and physical parking locations to ensure offer availability and adapt capacity in a more flexible way. Another example is to offer parking visitors the option to reserve upfront to provide the certainty of a parking space at a specified price upon arrival at the airport.

  1. Pricing

The pricing scheme should be based on a comparison between the prices of city center parking facilities, taxis and competitor parking facilities around the airport, as passengers choose between these alternatives to travel to the airport. When choosing a preferred parking product, each parking visitor makes an implicit trade-off between price and proximity to the airport terminal, so the pricing scheme is a critical factor in the commercial success of airport parking. Moreover, it is important to have a consistent pricing scheme with a substantiated price difference between premium, standard and remote parking facilities. Finally, pricing mechanisms can be used to maximize capacity utilization, and offering discounts for early reservation can boost overall parking revenues. In combination with a yield management system, this allows increases in revenues by 6-8% yearly.

  1. Capacity Management

Periods of capacity shortage and unavailability of specific parking offerings will have a tremendous impact on the customer experience. To address this, it is important to introduce flexible capacity through capacity management technologies to allocate of the same parking facilities to different parking offers. A few of the best-performing airports use capacity management technologies to deal with capacity constraints in peak seasons, such as automated parking by robots, bumper-to-bumper parking, valet parking and parking space indicator systems.

  1. Customer Experience

The end-to-end customer experience for airport parking is a key success factor being assessed at every step of the journey from preparation at home, over travel to and arrival at the airport, to usage of the parking facilities and the pathway to the airport terminal. When preparing for their trips, it is important that parking visitors can easily find reliable information and reserve parking spaces online. Later, when visitors are driving to the airport, providing real-time availability of the parking facilities and precise route to their specific parking facility via a mobile app will contribute to a carefree experience. Upon arrival at the airport good visibility, clarity of signage and a pleasant atmosphere consistent with the rest of the airport will drive superior experience.

  1. Stakeholder mangement

Airport parking activities must not be treated as a standalone activity collaboration with other airport stakeholders at system level (e.g. airlines, retail, food & beverage) should be tapped. Best-performing airports are heavily investing in cross-marketing initiatives such as loyalty cards, bundled parking/food & beverage promotions and advertisements in the parking facilities. Carefully selected such actions can increase parking revenue while contributing to customer satisfaction.

Parking is in reality a highly complex product – managing the full complexity is key to a successful parking business.


Contact Epinion’s aviation experts today (BRKR@epinionglobal.com) to discuss your needs further and learn more about our service portfolio or read more about our aviation solutions at www.epinionglobal.com

- By Epinion Aviation

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