Airport Business

DEC 2017 - JAN 2018

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TNC TECHNOLOGY December 2017/January 2018 airportbusiness 11 Uber overtook rental cars in 2015. As of late 2016, Uber accounted for 52 percent of the ground trans- portation segment, while the share for rental cars dropped to 33 percent. There are widespread reports of Uber and Lyft disrupting city parking revenues, such as in Chicago and San Francisco. And at Bob Hope Airport in Burbank, California, Uber and Lyft were cited as possible causes of a parking revenue decline more than a year and half ago. These examples may only be the beginning. The impacts from today's ride-hailing services may pale in comparison to what's coming next. After initial research and development at high- tech giants like Google, big investments are now being made on the assumption that self-driving vehicles will be commercialized in the coming decade. General Motors, Ford, Volvo, Uber, Lyft, Tesla and Intel are just a few big names in a rapidly growing and extremely competitive, ecosystem of technology developers that are investing billions of dollars in self-driving technology. The technology is gaining a real-world foot- hold. In May of 2016, GM announced it would test self-driving taxis with Lyft. Ford hopes to deploy a fleet of self-driving ride-hailing service in 2021 and Uber has already piloted self-driving transportation services in several states. Autonomous vehicles will bring enormous changes to current transportation systems around the country, even around the very notion of car ownership. Many auto experts are anticipating that self-driving vehicle fleets will likely be owned and maintained by large corporations that offer transportation as a service, instead of individual owners. Rather than focusing on the profitability of each car manufactured, automakers may find more revenue by offering a variety of services throughout the lifetime of a vehicle. A service offering self-driving cars on demand would eliminate the need for car owners to main- tain vehicles, or sacrifice productivity while they pay attention to the road. Self-driving cars could be in use, earning revenue almost 24 hours a day. They would erode the need for parking everywhere and a major threat to airport revenues will emerge. The disruptions from this change will be enor- mous. On one hand, as new transportation technol- ogies take hold, air passengers will be demanding the utility that comes with the new approaches. On the other, airport revenues and existing vendor arrangements or infrastructure plans will have to be re-evaluated and in some cases future planning may have to be scrapped or scaled back unless new revenue sources can be found. For example, if more passengers arrive via a car service (automated or not), then the curb will most likely become an increasingly important focal point for pick-up and drop-off — making the curb a potential new revenue generator. An increased number of personal autos at the curb might sig- nificantly increase congestion at airports — trig- gering lane access limitations, or a reconfiguration of airport traffic patterns. Dozens or hundreds of new rules will be need- ed to adapt to self-driving cars. Labor relations, right-of-way, vendor and concession agreements, real estate management, parking pricing and availability: These will almost certainly experi- ence controversial disruption. WIDESPREAD IMPACTS WILL REQUIRE COORDINATION Airport authorities, city councils, vendor and labor associations, and other stakeholders will all recog- nize the gravity of changes required as the nature of driving fundamentally changes. If parking and car rental revenues decline there will be an inevitable scrutiny from bond rating agencies on airports' ability to support facility expansions, potentially diminishing capital expen- diture capacities for the full range of projects air- ports may currently have planned. Replacements for these lost revenues will have to be established before financing conditions begin to erode. Infrastructure will also be impacted. If just 10 percent of air passengers that would normal- ly park in an offsite airport garage begin using curbside drop-offs, the resulting traffic conges- tion at most major airports would significantly impede normal operations. At first, existing infrastructure might be effectively re-purposed. For example, dedicated lanes that offer access to airport garages and ter- minals could be created for low-occupancy vehi- cles, redirecting some of the access and egress crush. But as self-driving technology continues to be adopted there will be little choice for air- ports but to embark on large-scale upgrades to their road and curb infrastructure. These upgrades will have to be coordinated with other changes in the transportation system caused by self-driving car. City councils, state departments of transportation and the federal gov- ernment will wrestle with the impacts of self-driv- ing cars elsewhere in the transportation system. The rate of adoption of new technologies is notori- ously hard to predict and with so many unknowns about how self-driving cars will evolve, the best course of action for airport planners is to form ded- icated task forces and committees now. Airport entities that must begin developing plans to adjust to new transport technologies include: • Airport directors and governing bodies • Airport planners • Private parking operators • Municipal and state governing bodies with authority over airport and air traffic operations • Regulatory agencies at regional, state and fed- eral levels • Financial institutions • Service and vendor coordinators • Labor organizations • Car rental operators It will be vital for airports to take special care in how they gather and analyze parking and rental car statistics, air passenger demographics, broad economic trends, and the evolving price-compet- itiveness of all options available for airport ground transportation EXPLORE NEW FUNDING SOURCES Perhaps most important for airports that already depend on parking revenues will be an aggressive analysis of new funding sources: • Examine new pricing structures for parking and traffic infrastructure • Make existing parking options more competitive • Charge for curbside pickup, or dedicated lanes and pickup zones • Repurpose existing parking structures • Examine non-transport revenue sources such as property leases, retail, etc. • Increase expertise in public-private partner- ships that can holistically drive revenue • Raise fees and taxes that are currently established by Federal and local regulations (Passenger Facility Charge, etc.) Tom is an internaƟonal aviaƟon consultant with extensive experience including a 35-year career with the MassachuseƩs Port Authority where he served in various posiƟons including CEO. He is considered a leader and expert throughout the aviaƟon industry, and serves as a senior advisor to leading, global com- panies in all aspects of the aviaƟon industry. Tom Kinton ABOUT THE AUTHOR

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