This is the third article in a series about what makes an airport “smart.”
Smart cities, smart airports: these are buzzwords that we're hearing more and more. It’s clear that technology is changing how we design and operate airports, and it’s clear that tech is transforming the passenger experience.
Last time, we looked at how smart airports are redesigning the passenger journey. Today's topic: parking.
Smart airports are embracing disruptions in the automobile industry—and creating a future-proof parking model.
Every few months, I have the pleasure of teaching a training course on non-aeronautical revenue. I begin by introducing the three main sources of non-aviation income: parking, terminal concessions, and property development. For some airports, parking is the most lucrative of the three. Unfortunately, it’s also the most vulnerable to disruption.
For decades, ground access—how passengers travel to and from the airport—wasn’t exactly a dynamic field of research. Year after year, most travelers came to the airport by car. They drove there themselves, asked a family member to drop them off, or took a taxi. When they landed, many of them rented a car.
Airports monetized these activities by charging their customers to park at the airport, by leasing land to car rental companies, and by levying access fees on taxi companies and meeters-and-greeters. As passenger volumes grew, airports became surrounded by acres of parking lots and garages.
How people travel to and from the airport—what planners call the “modal split”—varies considerably around the world. Asian and European cities tend to have a much higher share of public transport users. In Hong Kong, less than 10% of passengers take a private vehicle to the airport. That’s because there are plenty of convenient, comfortable, and affordable alternatives: express buses, subways, ferries, high-speed rail. The same is true in Shanghai, Seoul, and Tokyo. It’s also the case at European hubs like Amsterdam, Frankfurt, and Zurich, where the modal split is evenly divided between public and private transport users.
But at most of the world’s airports—from Peoria to Perth—travelers overwhelmingly come by car. That’s especially true in small cities, rural areas, and emerging economies, and that’s unlikely to change in the near future.
What will change, however, is how airports make money off that traffic. Here’s why:
Airports face fierce competition from low-cost parking lots located just outside the perimeter fence. Improvements in technology are making this more attractive for passengers, who can pay for parking and send their flight details in advance, which minimizes waiting times. On a recent research trip to the US, I interviewed countless passengers who sang the praises of offsite parking. It’s putting a major dent in the leisure travel market, and it’s driving down the price of on-airport parking.
Technology is also driving down the price of hiring someone to take you to the airport. Twenty years ago, I routinely shelled out $60 for a 20-minute cab ride from Boston’s Logan Airport out to the suburbs. Today I pay half that amount—or even less, if I carpool with others. Although their long-term business model is highly questionable, ride-hailing and carsharing firms like Lyft, Uber, and car2go have disrupted the airport ground access model: first by challenging the taxi monopoly, and second by offering a product that is more convenient, and often cheaper, than parking at the airport or renting a car.
This is a moving target, and I’m skeptical of overly optimistic projections that promise a 100% driverless, 100% electric future any time soon. What’s clear, however, is that AVs and EVs will fundamentally change how airports design for automobiles. In the near term, the biggest challenge will be to build parking facilities, access roads, curbsides, and charging stations that can accommodate both human-operated and driverless cars. Smart airports are already investigating how landside facilities can be optimized for that evolving fleet mix..
The environmental ethics of driving has become a polarizing political topic. Urban voters are pressuring their elected officials to discourage car use—for example by raising tolls and gas prices—and to invest in mass transit and alternative fuel sources. People living in rural areas see these measures as threats to their livelihood, and as an attack on their way of life. Suburban folks are caught somewhere in between—as are airports. Moving forward, airports will need to serve customers who want convenient car access, while at the same time demonstrating a commitment to sustainable alternatives.
I recently interviewed the CEO of a clothing company about the impact of e-commerce. Is traditional retail dead?, I asked. “No,” she answered. “bad retail is dead. Customers are either buying based on price, or based on the high-quality experience that you offer them. All the mediocre, mid-range products in between won’t survive.”
The same can be said of parking. Premium parking—with perks like curbside valet drop-off—will undoubtedly continue to be favored by well-heeled customers. Similarly, cheap off-airport parking will likewise continue to thrive. But everything in-between—like a dingy garage that’s poorly connected to the terminal, and where you have to wait in line to pay—is likely to become a thing of the past.
How can airports engage with this paradigm shift? Smart airports start by focusing on their customers. That’s because they understand that disruptions in the automobile industry will not affect all airports in the same way. Airports whose customers live in dense cities, are tech-savvy, and use a mix of public and private transport in their daily lives will be at the forefront of change. On the other hand, airports in suburban and rural areas—where customers skew older and car ownership is the norm—will likely see continuing demand for traditional parking and car rental services.
Second, smart airports establish partnerships to improve their parking product. They partner with airlines so that passengers can pay for their flights and parking in a single transaction, and throw in added perks like lounge access and fast-track security. Others work with local businesses to provide car repair and maintenance services for long-term parking customers.
Smart airports are also partnering with the disruptors to innovate the passenger journey. As Cincinnati airport’s Chief Innovation Officer Brian Cobb recently explained to me, CVG is exploring how to install bag-tagging technology inside vehicles operated by ride-hailing services. That’s good for passengers, who can save time at the airport, and it’s good for the airport, which can move passengers more quickly to the airside.
Thinking ahead, smart airports are studying how autonomous vehicles can help to cut parking costs. One model anticipates that AVs will drop passengers off at the curbside before proceeding to a parking garage. If customers no longer need to enter the garage, then the ceiling height could be reduced from that of a human being to the height of a car, allowing for more efficient storage. You could also eliminate lighting, as has been done in automated factories.
Moreover, if AVs drop passengers at the terminal, they could then be stored at a remote location on the edge of the airport. That would free up valuable land where garages currently sit, which can then be put to better uses: like terminal expansion projects, or landside commercial development (see here and here for recent examples). That could be a big win for space-constrained airports, and for airports looking to grow their real estate portfolio.
To some ears, this might all sound like science fiction. But if we’ve learned anything over the last 100 years of civil aviation, it’s how quickly and profoundly a new technology—from the jet engine to the smartphone—can transform the industry. Smart airports are aware of that history when planning the future.
Many thanks to Elina Björklund, Brian Cobb, William Jenkinson, Theresa Hughes, Andrew Pickford, Maurits Schaafsma, and Bert Wee for their helpful insights and feedback.