François-Joseph Van Audenhove and Aurelia Betatti discuss ways to maximise customer experience and create added value from airport parking activities.
Over the past few decades airports have evolved from mere infrastructure providers to hubs of commercial activities. Many airports have therefore extended their service offerings, focusing increasingly on providing a holistic customer experience with the passenger central to both strategic and commercial decisions.
Proper management of airport parking activities has a defining impact on the customer experience, as the parking premises form the first physical point of contact at the airport for point-to-point passengers. Real-time information screens, cleanliness and a consistent look and feel to the pathway to the terminal will contribute to a feeling of safety for the passenger, as well as allow for a carefree start to his trip.
Typically, revenues from airport parking represent between 5% and 15% of total airport revenues and up to 30% of non-aeronautical revenues, depending on the size of the airport, the proximity to the city center and the availability of public transport alternatives. At the same time, given the relatively low capital and operational expenditures, airport parking activities typically generate significant operational margins and cash flow. Many airports have witnessed continuous growth of parking activities, despite development of public transport alternatives. These alternatives are often supported by national and local mobility policies that have been adopted to shift the access modal split of airport passengers towards public transport.
However, absolute growth in airport passenger traffic often offsets the impact of these policies. Moreover, parking management practices such as yield management, flexible capacity and restricted access to the curbside at the terminal result in increased parking activity in terms of both volume and revenue.
In this context, airports need to address two strategic imperatives in order to maximize value creation from airport parking:
- Anticipate changes in demand and customer behavior to match future demand for parking with available capacity in the short, medium and long term.
- Design attractive parking products to drive superior customer experience while maximizing value created from parking activities.
- Strategic planning to anticipate demand and change in customer behavior
Anticipating growth of parking demand is important when making strategic decisions on parking infrastructure developments, which are long term by nature. When doing so, the ability to forecast evolution of customer profiles over time is critical. Customer profiles can be segmented based on their trip details (i.e. purpose and length), price sensitivity and need for additional services (e.g. valet parking, carwash services, insurance). 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, causing highs and lows in demand throughout the year. This volatile demand pattern is mainly related to the purpose of the airport passenger’s trip (i.e. business versus leisure). Often the lows in one segment level out the peaks in the other segment, resulting in a flat demand profile.
The combination of growth for parking demand, cyclicality of demand and changes in customer behavior at segment level requires careful demand forecasting and capacity planning to match capacity with future demand in a timely fashion while optimizing capital and operational expenditures.
Due to this inability to precisely estimate the future parking demand and required capacity, many airport and parking operators heavily rely on temporary capacity solutions (e.g. capacity extensions to parking facilities, flexible capacity management and changing staff parking into pax parking). To precisely model the evolution of visitors per parking offering and the resulting impact in terms of required capacity, it is important to start from the forecasted evolution of the different pax segments (i.e. total number of airport visitors), as they form the underlying driver of demand for parking.The evolution of these pax segments can then be translated into evolution of visitors per parking offering, based on the expected behavior and parking requirements for each pax segment. Cyclicality of demand and the required coverage of peak demand throughout the year further define the required number of parking spaces per offering.
Attractive offering to drive customer experience and maximize value creation
The commercial offering of the airport parking activity is a decisive factor to the overall satisfaction of a parking visitor, and disruptive changes in customer mobility needs in past years required parking operators to adapt their product and service offerings accordingly. According to Arthur D. Little’s Airport Parking Benchmarking study, best-performing airports have improved their product and service offerings along five key dimensions.
1. Parking offering
The airport parking offering needs to cater to every parking visitor segment and those visitors’ specific needs. The diverse needs of every segment require a mix of different parking products, some of which will serve the greater part of parking visitors while others remain niche offerings. These different types of parking products will ask for different customer approaches as well as different operational models. At the same time the offering needs to remain simple and transparent in order to ensure readability upon arrival at the airport. A best practice is to have a limited number of parking products covering the needs of each individual segment, while avoiding complexity. To that effect, a good practice is to break the link between parking offers and physical parking locations, as this allows the airport to assure offer availability and adapt capacity in a more flexible way.
Finally, many airports offer parking visitors the option to reserve upfront, which gives them the certainty of having a parking space at a specified price upon arrival at the airport.
The pricing scheme should be based on a comparison with the prices of city-center parking facilities, taxi prices and prices of competitors’ parking facilities around the airport, as passengers choose between these alternatives to travel to the airport. When choosing his preferred parking product, each parking visitor makes an implicit trade-off between price and proximity to the airport terminal, which makes the pricing scheme 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% to 8% yearly.
3. Capacity management
Periods of capacity shortage and unavailability of specific parking offerings will have a tremendous impact on the customer experience. In order to address this, it is important to introduce flexible capacity through the use of innovative capacity management technologies to allow for allocation 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 in their parking facilities.
4. Customer experience
The end-to-end customer experience regarding the airport parking activity is a key success factor being built at every step of the journey, from preparation at home, through travel to and arrival at the airport, to usage of the parking facilities and the pathway from the parking facilities to the airport terminal. When preparing for their trips, it is important that parking visitors can find reliable information and reserve parking spaces online. A customer-friendly web site plays an important role here. Later, when visitors are driving to the airport, providing real-time availability of the parking facilities and providing the best route to the airport (via a mobile app) will contribute to a carefree experience. Upon arrival at the airport, good visibility and clarity of signage and a pleasant atmosphere within the parking facilities will drive superior experience.
5. Stakeholder management
Airport parking activities should not be treated as a stand-alone activity, and potential for collaboration with other airport stakeholders at system level (e.g. airlines, retail, food & beverage) should not remain untapped. Best-performing airports are strongly investing in cross-marketing initiatives such as loyalty cards, parking promotions bundled with food & beverage promotions, and advertisements in the parking facilities and near payment terminals.
Those 5 dimensions should form the basis on which a comprehensive improvement program can be developed. By doing so airports can improve the overall attractiveness of their parking offerings and reach a superior customer experience, while maximizing value creation from airport activities.
Can an airport continue to increase its customer parking revenue, in the face of growing competition?
The competitive landscape may vary depending on an airports location, but there is no doubt that with the increase of ‘alternatives’ such as off-site parking operators, focus on public transport in many cities and alternative transport providers such as Uber, that competition for a passenger to park at the airport is growing.
Depending on an airports proximity to the city centre, its size and availability of public transport, parking revenue can be as much as 40% of an airports non-aeronautical revenue. A revenue stream that is worth protecting.
So, how does an airport not only protect its asset, but also increase the revenue that a parking customer can deliver.
Creating a strategy to suit your customers
Each airport needs to create a strategy that is specific to its market, environment and specifically to its customers, however, the four fundamental points should be the same.
Understand your customers
The first step in building any customer revenue growth strategy is to understand who your customers are. This is not just a one off research or customer profiling exercise, but airports need to use a range of tools such as reservation platforms, membership programs and access/exit information to understand who their customers are, how they use airport parking and other services across the airport.
By creating a picture of each customer and their habits, airports can not only measure the impact of competition, but can build a profile and understand how best to communicate with their customers and improve the customer experience.
Make it easy for your customers to park and engage with you
Whether your customers are going on a short holiday, the trip of a life time, or rushing to the next business meeting, airport travel can be frustrating. The experience is a lot more than just the flight, it can often start before the day of travel and how easy it is to make arrangements for parking.
Many airports (and if the airport isn’t, the off-site competitor is), offer the ability to pre-book their parking space.
A reservation platform, is however more than just giving the customer the option to pre-book their parking (and potentially achieve an online deal). It should be a platform for the airport to understand more about their customers, create an opportunity to increase the value of the customer and to provide a way to engage.
Combine this with a parking account that maximises ticketless technology for regular customers and an integrated loyalty program, an airport can gain real time customer knowledge and statistics on how the parking (and other services) are being used.
It is important that this customer knowledge is utilised and the airport not only creates relevant product offerings but engages with their customers in a way that is relevant to them.
The airport and the parking proposition need to be at the centre of the customer booking experience, maximising the opportunity to add value to the customer. This can be by enabling additional services such as security fast track, valet parking or lounge access to be pre-booked alongside parking (in a single booking experience) and by using regular engagement to increase the customers value while at the airport.
The current digital consumer wants access to information now, and in a way that is convenient to them. Customers use a multiple of channels to search for and make purchase decisions on their travel. The airport needs to make sure that they are reaching the customer when, and on the platform/location that they are making the purchase decisions from.
There are geographic market variations, but many airports now work with aggregators to extend their sales channel. Through its reservation platform the airport is able to manage mutually exclusive pricing and availability with the aggregator. The aggregator will be able to have a direct connection, allowing bookings to be made in real time.
In this model the airport still has the ability to retain the relationship with the customer and it provides a new platform to engage with them. The approach is becoming more popular and should not be ignored. For some airports it can attribute to up to 55% of the sales channel.
Turning a one-off customer into an advocate
Any organisations’ dream is that their customers are not only loyal and keep returning, but are advocates for their business. An advocate customer is hard to obtain, but once it has been achieved they are very unlikely to leave and are likely to buy more from a brand they advocate. In addition, advocate customers are just that and will endorse your brand to their peers (in whichever way is most relevant to them).
By using the tools mentioned, an airport can utilise its customer knowledge, relevant product offers, method of engagement and loyalty programs to turn a customer from a one-off customer, to a loyal customer and eventually to an advocate customer. The methods cannot be used in isolation and each touchpoint with the customer must seem natural and be relevant.
The fundamentals must start from understanding your customer, providing pertinent products and engaging with them in a way that is relevant. The customer interaction might start at parking, but the modern airport needs to encompass all customer touchpoints and provide combined services that the customer can reach in a single platform. Only then is the airport offering a greater ‘value’ to the customer and in a way that a competitor won’t be able to achieve.
Adelaide Airport uses ADVAM GroundTransport to handle a 10% increase in traffic and reduce operating costs
Adelaide Airport (AAL) is the principal airport for South Australia and the sixth largest International Airport in Australia. It handles millions of passengers each year and with numbers increasing by around 5% per-annum, the challenge of enabling passengers and visitors to easily travel to and from the airport is ongoing.
With 19% of passengers travelling by taxi, this is one area that can have a large impact on the traffic ﬂow around the airport and the ease at which passengers can travel to and from the airport.
Dennis Killeen, ground transport manager, ALL comments, “A large proportion of our customers travel via taxi, therefore it is important that we make sure we can handle these services in an efficient manner. We manage the taxi traffic by creating a holding area before they pass through for passenger pick-up. This helps to maintain a continual ﬂow of taxi availability and reduces congestion on our roads. However, we were using a manual process and we needed to drive efficiency to make this less of a resource burden on AAL staff”.
Removing a manual process
For a long time, taxis have been managed by providing a holding area where taxis would wait to go in to the passenger pickup zone. This enabled taxis to be ﬁltered through the pick-up zone, managing an effective queue and making sure that passengers could easily be picked up from the airport via taxi.
Taxis pay a nominal fee in order to pass through the holding zone and on to passenger pick-up. The collection of the fee was a manual process and at times was open to errors. A machine was in place in order to collect payment and issue tickets, however, due to a range of issues including impact from adverse weather conditions or user error, there were sometimes problems with the process. This would result in taxis not being able to pass through the zone, creating a back log of taxis, causing congestion along roads and passengers waiting longer for taxis.
Selecting a solution to support future growth
In 2012 AAL started to look to improve the ﬂow of taxi traffic. The required solution needed to be able to integrate with the existing access control equipment, remove the manual burden from AAL and make it easy for taxi drivers to pay the nominal fee in order to pass through the holding zone to passenger pick-up.
ADVAM was selected as the service provider, working with the access control system to deliver the GroundTransport solution.
The Adelaide Airport taxi system consists of two areas – the initial holding area and the passenger pickup area. The entry to and exit from both areas is controlled by the parking access equipment. Access to these areas is controlled by a proximity tag which is also linked to the ADVAM GroundTransport system.
On approach to the holding area the tag is read and ADVAM GroundTransport determines whether the driver’s account has sufficient funds. If yes, a green light signals that the taxi may join the waiting taxi queue. If there are insufficient funds then a red light advises the driver that his account needs attention. After picking up their passengers the taxi approaches the pickup exit where the tag is read again and the nominal fee is deducted from their account balance.
Taxi drivers can top up using the web-based online portal using either their smart phone or a computer, have their balance top-up automatically or top up directly via the Taxi Council of SA. There is also a Top up Kiosk located in the taxi facility building adjacent to the taxi holding area.
In addition, the solution provides a comprehensive administration tool, allowing the South Australian Taxi Council to register new taxi drivers on to the system and manage any expired accounts. AAL are able to use the management reporting tool to monitor transactions processed and taxi traffic flow through the airport.