DALLAS – Airports that have lost revenues to ride-hailing services like Uber and Lyft are fighting back with online technology that allows them to compete more effectively on pricing and convenience.
Since 2014, Lyft has established service agreements with nearly 240 airports and Uber has agreements with more than a hundred. Through their apps, the services allow travelers to set up rides and pay through their smart phones, with quick pick-up and drop-off at airport terminals.
“We probably lost anywhere from $10 million to $20 million to Uber and Lyft,” Dallas-Fort Worth International Airport Chief Financial Officer Chris Poinsatte told The Bond Buyer’s Texas Public Finance Conference in Austin in February. “On an average day, we use about 60% to 65% of our parking spaces.”
Through 2016, Federal Aviation Administration data showed no real impact on revenues from the shift to the ride-hailing services from parking or traditional taxis, said Earl Heffintrayer, transportation analyst for Moody’s Investors Service. The data, which lumps parking and ground transportation together, actually showed an increase in parking and ground transportation revenue per enplanement to $4.81 in fiscal 2016 from $4.69 in fiscal 2015.
“In fiscal 2017, however, despite strong growth in enplanements, we have begun to see year-over-year declines in only parking revenue,” Heffintrayer said.
To improve yields on the available spots, DFW is developing an online tool that discounts fees through advance booking. Airport officials have not said how deeply they’ll discount the parking, but Poinsatte said the rate is expected to improve the airport’s competitive posture against the ride-hailing services.
“Maybe when we’re more sophisticated you’ll be able to get parking for $5 per day,” he said.
Parking all day in one of DFW’s close-in parking spots now costs $24. The lowest fare quoted on Lyft’s Web site from the airport to downtown Dallas is $40 or a round-trip fare of $80. For someone planning to park more than three days, the Lyft rate would be competitive and would include drop-off and pick-up at the gate.
Airport officials note that the design of DFW’s parking facilities puts travelers within minutes of their departure gate, not counting the time searching for an open slot. Even faced with the new competition, DFW parking revenue was up 1.9% year-over-year in 2017, said airport spokeswoman Cynthia Vega.
DFW is working toward an April 5 rollout of its new service, which has already been adopted by Phoenix Sky Harbor, Vancouver International, and Ottawa International airports.
Sky Harbor launched its prepaid discount parking program in February 2014, said airport spokeswoman Heather Lissner. Since then, there have been about 62,000 average annual prepaid transactions, and annual revenue has grown from approximately $3.5 million to $4.3 million, she said.
In November 2017, the Phoenix airport launched a new seventh-day free product in its East Economy facility.
While Phoenix is monitoring the impact of the ride-hailing or “transportation networking companies,” Lissner said “the city cannot predict what impact, adverse or otherwise, those operations will have on other ground transportation services, parking at the airport, or the impact on associated revenue.”
Parking revenue at Phoenix declined 0.3% in fiscal 2017 despite an increase in origination and destination enplanements of 7%, Heffintrayer said.
“Like others that are anecdotally experiencing losses in 2017, the airport actively manages the access fees it charges TNCs -- which are considered ground transportation revenue -- to mitigate the loss of parking revenue,” he said. “We expect 2018 to be a year of transformation in airport revenue sources, though parking and ground transportation revenue will suffer only small losses.”
Los Angeles International Airport, according to the official statement for a $379 million revenue bond deal that priced Feb. 28, charges the TNCs $4 per drop-off and pickup.
In fiscal 2017, TNCs recorded nearly 7.5 million pick-ups and drop-offs at LAX resulting in approximately $33.7 million in annual revenue for the Department, according to the offering document, which noted that airport department "cannot predict the impact of TNCs on revenues from parking, other ground transportation services or rental cars."
During the same period LAX recorded $96.7 million of parking revenue.
Landside revenues – including parking, ground transportation and rental cars – represent about 60% of all non-aeronautical revenues for airports, according to the Airports Council International. For large hub airports, median gross revenues from parking came to $63.4 million. For medium hubs, the median was $21.4 million.
To compensate for lost revenue and keep the playing field even, airports are charging the ride-hailing services a fee to pick up passengers. DFW charges a $2 trip fee, compared to $5 in Chicago and $4 in Los Angeles.
The cities of Houston and Austin battled Uber and Lyft over regulatory issues until Texas Gov. Greg Abbott signed the so-called ride-sharing bill in 2017 that shifted regulation from local governments to the state.
House Bill 100 sides with the two companies that called local regulations too burdensome for their business models. The new law requires ride-hailing companies to have a permit from the Texas Department of Licensing and Regulation and pay an annual fee of $5,000 to operate throughout the state. The companies are required to make local, state and national criminal background checks on drivers annually.
David Arthur, chief financial officer at Austin Bergstrom International Airport, said his airport has not yet developed a parking app to compete with Uber and Lyft.
Austin Bergstrom added one bond-funded parking garage in 2015 and is working on a 6,000-space, $250 million garage. Last year, the Austin City Council approved another level to the garage. Austin has also developed new rental car facilities that could also be affected by the TNC competition.
Dallas Love Field expects to complete a $208 million parking garage to meet demand anticipated after the airport was allowed to expand service beyond the restricted area under the so-called Wright Amendment in 2014. The parking facility was financed with revenue bonds.
Despite the parking challenge, Moody’s has a positive outlook on the US airports sector, reflecting the expectation that continued economic expansion will lift enplanement growth to 3.7% in 2018.
"Historically, enplanement growth is highly correlated with the average of GDP and airline seat growth," Heffintrayer said. "We expect GDP to expand by 2.3% and seat capacity to grow between 4.5% and 5.7%."
The enplanement growth rate for large airports will slow in 2018, Heffintrayer said. However, Moody's expects enplanements to far surpass budgeted levels for airports in 2017 and moderately surpass them in 2018.
Moody's foresees the strongest growth at small and non-hub airports. That capacity investment in those markets by low- and ultra-low cost airlines. For example, the Long Beach, Calif. airport, rated A3, and the Baa1-rated Colorado Springs Airport Enterprise both saw 29% enplanement growth from September 2016 to September 2017 with new service from Southwest Airlines and Frontier Airlines, respectively.
"All told, the increased net revenue will provide stronger debt coverage and, in most cases, result in greater liquidity," Heffintrayer said.