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Name: Nicolas Ferreyra
School name: University of Louisville

Airport Parking Consumer Behavior in the Age of Uber

The rise of connected mobile devices and internet-connected mobility solutions over the course of the last few years or so have spelled nothing good for the parking industry as everything from micro-mobility services like Bird and Lime to ride-hailing services like Uber and Lyft have entered the mobility space.

Several sectors of the parking industry have seen waning growth rates due to the rising popularity of these all-inclusive platforms that integrate the point-of-sale, service provision, and control of quality into one seamless user experience.

Airport parking operations have felt the pressure of these new trends as more and more flyers opt for ride-sharing options (783 million Uber trips were completed to or from airports in 2018) rather than airport parking, leading to increased terminal curbside congestion as passenger demand has increased while the capacity of airport terminal roadways remains constrained.

Adding additional terminal roadway lanes may not be an effective long-term solution as most airport terminal motorists vie for curbside space.

Ride-hailing services like Uber and Lyft provide three unique value propositions to airport commuters that make them the best choice in the eyes of the user:

  • 1) Pricing transparency: flyers know at the point of sale (before commuting) how much the commute to or from the airport will cost. This makes them much more likely to choose a rideshare solution as opposed to driving to the airport to park themselves, as they know how much it’s going to cost and they don’t have to calculate a daily rate plus tax over the course of the length of their trip.
  • 2) Convenience: usually, flyers that hail a rideshare to an airport can choose the exact terminal and airline where they need to be dropped off. This removes the ambiguity of walking to the right airline terminal after parking on-site and greatly improves the overall convenience and logistical experience of the commuter.
  • 3) Vehicle accessibility: many individuals who do not choose to park on airport premises and either pay for a rideshare service or have a family member drop them off do so simply for the convenience of letting their family members retain the usability of their vehicle. This population likely makes up a significant portion of the total addressable market for airport parking and should be heavily considered during airport parking service re-designs.

Besides banning rideshare service curbside drop-offs—which LAX is currently piloting—there is no *singular* technological solution to decrease curbside airport terminal congestion while simultaneously increasing revenue generated by airport parking assets. However, technology should play a significant role in the re-design of airport parking services; it can certainly aid in the three areas that heavily influence rideshare consumer behavior, but primarily in the area of pricing transparency.

Airports should look to end user-facing solutions to overcome the incumbent pricing barrier, ultimately driving the point-of-sale closer to the time the customer would normally pay for another solution. This may be done in the form of an end user-facing app or simply communicating the price of airport parking via text notification or email.

The pricing of the service itself should be dynamic and demand-driven, much like the dynamic pricing algorithms used to automatically change prices of hotels and airfare; using unique dynamic pricing algorithms that pull data from a variety of sources (to get a good idea of how many people are going to the airport and, as a result, how high demand for mobility services will be) such as Google/Apple Maps APIs, flight APIs, and on-site PARCS hardware, pricing decisions can be made based on current traffic conditions to and from the airport, number of flights and passengers on any given day, and occupancy of on-site parking assets.

The rise of uber-convenient (pun intended) rideshare services is just the first wave of a series of service-based innovations that will force incumbent service providers like airport parking operations to innovate and compete.

While technology can play a significant role in this innovation, incumbents should not lose sight of their core competency: service provision. To compete with services like Uber and Lyft, it comes down to who can provide the best, cheapest, and most convenient service to the customer.