{"id":2630,"date":"2018-04-20T04:54:34","date_gmt":"2018-04-20T04:54:34","guid":{"rendered":"https:\/\/dev.airportscouncil.org\/?p=2630"},"modified":"2018-09-20T04:55:52","modified_gmt":"2018-09-20T04:55:52","slug":"ground-transportations-new-normal","status":"publish","type":"post","link":"https:\/\/airportscouncil.org\/2018\/04\/20\/ground-transportations-new-normal\/","title":{"rendered":"Ground Transportation\u2019s New Normal"},"content":{"rendered":"

Airports Navigate the (R)Evolutionary Shift oF TNCs<\/strong><\/h3>\n

By Nicole Nelson<\/em><\/p>\n

Just beyond the busy holiday season, Eva Cheong recounted San Francisco International Airport\u2019s particularly \u201crough Thanksgiving\u201d in terms of bottlenecks in roadway congestion.<\/p>\n

\u201cWhen you would walk outside, every other car you would see had an Uber or a Lyft sticker on it,\u201d SFO\u2019s Associate Deputy Airport Director of Airport Services shared of the challenging day-to-day clogged curbside experience in late November 2017. \u201cThere are different camps, and the Transportation Network Companies are going to run into those because they are the newest player. But everybody looks to them to say, \u2018It is all because of the TNCs.\u2019\u201d<\/p>\n

Cheong is not pointing fingers, but readily admits TNCs have largely sparked a broader conversation about just how to reduce the overly crowded curbsides at SFO.<\/p>\n

\u201cTNCs have challenged us in terms of us trying to promote high occupancy vehicles and transit first because they\u2019ve made it convenient and affordable for people to take a single vehicle to the airport.\u201d<\/p>\n

InterVISTAS Executive Vice President Peter Mandle said the TNC customer base at airports has expanded tremendously, not only in volume, but also with demographics in terms of age range and travel habits.<\/p>\n

\u201cAs TNCs become more and more popular, the impacts of curbside congestion have become pronounced,\u201d Mandle said. \u201cPeople who used to use HOVs such as shared-ride vans or transit are now finding TNCs very attractive, and are using those to travel to and from the airport. And because they are transitioning from high occupancy vehicles to single-occupancy vehicles, they are adding to curbside congestion. That is a challenge at SFO, and it\u2019s becoming a challenge at other airports over time.\u201d<\/p>\n

At Denver International Airport, Chief Commercial Officer Patrick Heck reports that explosive growth led to the establishment of an initial holding lot within the geofence when TNCs entered the market as a very small piece of ground transportation in 2014.<\/p>\n

\u201cThe evolution was quick into a very similar story to taxis where we actually have a location where they wait to pick up passengers,\u201d Heck said, noting that TNCs began to eclipse taxi usage in December 2015. \u201c(TNCs) are now operating here and are actually a fairly sizable portion of the ground transportation we receive at the airport.\u201d<\/p>\n

After that space was quickly outgrown, the TNCs were moved to a larger location \u2013 a very big overflow parking lot \u2013 about six minutes away from the terminal.<\/p>\n

Cross-country at Boston Logan International, CEO Tom Glynn is experiencing similar curbside concerns with daily passenger car traffic jumping from 9,000 drop offs pre-TNC, to the current tally of nearly 15,000 drop offs with the permitting of services including Uber and Lyft. But unlike Denver, Logan has few options in the way of infrastructural changes due to both the land and water constraints of the New England airport\u2019s topography.<\/p>\n

\u201cWe are on a postage stamp compared to other airports,\u201d Glynn said, noting the very small footprint of only 1,700 usable acres. \u201cWe intend to add some parking spaces over time after a 28-year parking freeze. But in terms of TNCs and taxis, it is really reusing what we have and being creative.\u201d<\/p>\n

THE NEW NORM<\/h4>\n

From coast to coast and in between, the issue of curbside congestion is among a host of new realities that airports face when challenged with revolutionized technologies.<\/p>\n

\u201cWe\u2019ve addressed everything from the initial wayfinding and signage to what do you call them and how can you help passengers find them,\u201d InterVISTAS Manager Stephanie Box said, noting a whole host of phrases that companies such as Lyft, Uber and Wingz use to describe their services, including ride sharing, ride pooling, ride sourcing and ride hailing. \u201cShould pick-up and drop-off, for example, be in the same location? Obviously, the curbside is the most convenient, but then if it causes really bad congestion, you are impacting all of your other customers who are also trying to access the airport. So there is a trade off between balancing the operations and the customer experience for all passengers. Operationally the TNCs may not like having to be in the garage, and the customer has to walk across the street, but if traffic flow is improved then the wait time for all passengers ends up being lower.\u201d<\/p>\n

Beyond customer-centric themes, perhaps the airports\u2019 most glaring issue pertains to money. While this evolution is merely in its infancy, TNCs and airports have already chartered a storied financial history.<\/p>\n

Long before Uber and Lyft became household names, TNCs were making a big first impression on North American airports as the ground transportation realm became peppered with ride-sharing vehicles. This elicited a less than favorable response from airports as lost opportunity costs derived from fee-based traditional taxi and limo services were sorely missed and the less costly TNC vehicles stealthily captured the fares.<\/p>\n

\u201cThe economics have changed as a result of TNCs disrupting the airport market because they offer, in a lot of places, cheaper fares for passengers,\u201d observed LeighFisher Managing Director Jason Snowden, \u201cand sometimes more convenient options than traditional forms of ground transportation.\u201d<\/p>\n

Popularity and politics persisted and the confluence of ever-increasing customer demand and lengthy negotiations has brought generalized acceptance and initial solutions to the more than 130 North American airports now offering TNC service.<\/p>\n

Widespread use of geo-fencing within defined perimeters has enabled the delegation of fee payment to airports based upon TNC pick-ups and drop-offs and, in many cases, zones have been established for TNCs to share holding areas with other transportation operators.<\/p>\n

COMPETITIVE TENSION<\/h4>\n

While these initial issues have been largely hashed out, tension remains as airports poise to approach the next iterations in the evolution of TNCs.<\/p>\n

\u201cAirports obviously have a lot of local demands \u2013 and sometimes even political pressure \u2013 that is placed on them from policy makers,\u201d Snowden said, noting that certain states have limited the rights of airports in terms of how they can separate charges for ground transportation including taxis, TNCs and other providers. \u201cAnd TNCs have been pretty aggressive in terms of lobbying state and local politicians to, in their words, \u2018protect the public interest\u2019 by providing access to less costly and more convenient forms of ground transportation. And the public definitely does like the service.\u201d<\/p>\n

But airports, obviously, have a requirement to be as self-sustaining as possible to fund future capital.<\/p>\n

\u201cTraditional revenue centers such as parking and rental cars have been impacted dramatically,\u201d Snowden continued. \u201cIf those areas aren\u2019t profitable then obviously an airport can\u2019t continue to invest in future infrastructure and make improvements for the general traveling public. So there is a little bit of tension in the industry right now as a result of the competing interests. Airport operators are doing what they can to try to increase fees, but in many cases they have been stepping them up rather gradually in comparison to the actual impact that TNCs have had in their market.\u201d<\/p>\n

THE \u2018MILLION DOLLAR QUESTION\u2019<\/h4>\n

SFO was among the first in North America to permit the locally based TNCs into their ground transportation marketplace where Cheong said Silicon Valley\u2019s Uber, Lyft and Wingz have been experiencing explosive growth since Fall 2014.<\/p>\n

\u201c(TNCs) have pretty much taken over the bulk of our commercial ground transportation,\u201d Cheong said, noting that the ride hailing services now constitute the largest group of commercial operators at SFO and are expected to soon take over private vehicles. \u201cThey have impacted just about everything. You can\u2019t say they just took taxi customers or share-ride van customers. They took parking customers, too.\u201d<\/p>\n

Cheong explained that in some respects, revenues have increased when fares have been generated in lieu of a private transfer. Passengers who may have previously opted to take a private car to the airport, or had a family friend or someone drop them off are now generating a trip fee with TNCs. Alternatively, Cheong said SFO is starting to see the first signs of reduced parking entries and exits, too.<\/p>\n

\u201cI think there\u2019s going to be a lot of talk,\u201d Cheong said, calling this quandary the \u2018million dollar question going forward\u2019. \u201cThe new hubbub is how TNCs are impacting airport revenue streams, especially in the parking and rental car sections. Everybody is going to try to figure out ways to recover from that.\u201d<\/p>\n

Denver\u2019s Heck said that despite passenger growth, parking revenues have stagnated around $170 million over the course of the past three years.<\/p>\n

\u201cEven after traffic has grown in high single digits, parking has remained flat,\u201d Heck said, \u201cSo what that tells you is that the yield with the dollars per passenger are starting to come down from parking\u2026 You can\u2019t 100 percent blame that on TNCs, but I think that is a big part of it.\u201d<\/p>\n

Cheong and Heck are among airport personnel working projections and starting to have conversations about how to offset such notable reductions. \u201cSeveral airports are now looking at alternative fees, alternative business arrangements, and other methods or other revenue models in order to make sure they maintain their non-airline revenues,\u201d InterVISTAS\u2019 Mandle said, noting the importance of maintaining the airport infrastructure, supporting capital investments and providing an optimal customer experience. \u201cI would say everything is on the table as we are at that infancy right at the initial stages in terms of what airports are doing.<\/p>\n

They are exploring all sorts of options.\u201d<\/p>\n

According to LeighFisher\u2019s Snowden, underlying business models and fee structures need to be revisited.<\/p>\n

As he explains, a number of airports applied similar rates that taxis and limos had been assigned to the TNCs without considering the potential impact of TNCs.<\/p>\n

\u201cA couple of years ago, airports would have just used their normal ground transportation rates and fees and applied them to TNCs when TNCs entered the market,\u201d Snowden explained of the reactionary measure to the initial disruption of the market.<\/p>\n

\u201cAt the time, a lot of airports hadn\u2019t really done a full cost recovery or ground transportation rate settings study to evaluate what the rates should be in light of TNC impacts.\u201d<\/p>\n

FUTURE IMPACTS<\/h4>\n

As airport rideshare usage continues its upward trajectory, the initial impacts of the TNC evolution are noticeable \u2013 by airports, by businesses and by individuals. \u201cTNCs give passengers a lot of choices they didn\u2019t have in the past,\u201d explained Snowden.<\/p>\n

For airports, more research is being done on the financial side, especially the rates for parking, rental cars and other forms of ground transportation that have been impacted by TNCs. \u201cA few years ago, the median pick-up\/drop-off fee for airport access would have been in the $2 to $3 range at large hub airports,\u201d Snowden said. \u201cToday, the median is in the $4 to $5 range and we expect it to continue increasing as airports reevaluate their business model and fee structures in light of TNC impacts.\u201d<\/p>\n

SFO\u2019s Cheong said San Francisco has had a good track record in terms of rising concessions and ground transportation revenues while keeping the rate basis for the carriers down. But the airport is seeking innovative and fair ways to charge new entrants for access to the airport.<\/p>\n

\u201cI think we all just have to understand that this is more of a revolution,\u201d SFO\u2019s Cheong said, citing the constant need for airports to adapt and change. \u201cWith the TNCs themselves, it helped us to understand what their business model was and how they could fit in to how we do business here. But I think in the future, airports are going to have to look toward restructuring how we are doing our finances and our revenue generation if we expect to continue the way we have been.\u201d \u201cACI-NA is helping to facilitate those conversations\u201d, said Aneil Patel, ACI-NA\u2019s Senior Director of Air Policy.<\/p>\n

\u201cOur Operations and Related Airport Revenues Working Group helps member airports exchange new information and ideas to address the evolving TNC challenge.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"

Airports Navigate the (R)Evolutionary Shift oF TNCs By Nicole Nelson Just beyond the busy holiday season, Eva Cheong recounted San Francisco International Airport\u2019s particularly \u201crough Thanksgiving\u201d in terms of bottlenecks […]<\/p>\n","protected":false},"author":9,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[25,46,51,52,32,50],"tags":[],"class_list":["post-2630","post","type-post","status-publish","format-standard","hentry","category-business-information-technology","category-commercial-management","category-large-airports","category-medium-hub","category-operations","category-small-airports"],"acf":[],"yoast_head":"\nGround Transportation\u2019s New Normal - 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