Transportation Network Companies

The Early Effect of Transportation Network Companies (TNCs) on U.S. Airports

Smartphones and changing consumer preferences have fueled the growth of the ride-hailing firms and the TNCs are changing the ground transportation dynamic and impacting non-airline revenue at airports. Most airports now have agreements with Uber, Lyft and other TNCs for pick-up and/or drop-off with trip charges generally ranging from $2 to $6. Despite the added TNC revenue, parking and rental car transactions and the associated revenue are taking a hit at some airports as passengers get increasingly used to avoiding taxis, parking, and to a lesser degree rental cars. 

Aside from the revenue impact is the uncertainty associated with ground transportation planning. Some airports are revisiting the size and scope of often capital-intensive parking lots and consolidated rental car facilities. While many airport operators are now using tracking mechanisms such as an electronic geofence tied to TNC apps, data is limited. For instance, Nashville became the first airport to enter into a TNC agreement only three years ago. Some airports are putting thought into related ground transportation elements such as roadways, curbs, and vehicle staging areas. The TNCs affect curbside congestion, and additional curbs and dedicated lanes and staging areas may need to be studied/built.

We offer the following observations with suggestions in italics.

Rental Car. Not only have TNC agreements with airports been in place for a short period, but data has also only been collected during the traffic upturn experienced over the past several years, so more time and data are needed to assess trends. One large hub ground access study found rental car transactions have declined 8% to 10% annually since TNCs were permitted to operate, but many airports have reported no material hit to rental car activity. Short-haul (2 days or less) rental car transactions have been impacted more from TNCs. We suggest:

• While competitiveness may prohibit the rental car companies from sharing data, airports should collect both transaction and duration data from the rental car companies, which should shed light on revenue trends and customer preferences. AAAE offers a service called ABT Clearinghouse that has been in place for two years whereby airports can track the TNCs and manage several aspects such as revenue and security.
• Passenger surveys (identifying both would-be and actual rental car renters) could augment transaction day data.

Parking. A customer preference survey conducted at a medium hub airport in 2016 found approximately 17% of TNC customers previously traveled in private vehicles to the airport, some that would have utilized the airport’s parking lot. Parking data is more readily available to airport operators and some airports, particularly larger airports with relatively high per day parking rates, have experienced transactions reductions over 10%, presumably as a result of the TNCs. Potential parkers also have increasing options beyond ride-hailing with more rail and other transportation options being built at airports. The potential threat to parking activity resulting from TNCs at airports could also be enhanced given car ownership is declining in the U.S. and several large companies are investing heavily in autonomous vehicles. Given that TNCs require space and the fact that many customers will not shake their parking habits, it is hard to imagine that there will not be a need for vehicle staging, drop-offs, pick-ups and parking lots for years to come at U.S. airports. We suggest:

• Airports should consider flexible facilities or parking lots that can be re-purposed to accommodate, for instance, TNC staging needs.
• Some airports are modernizing parking revenue control systems, offering parking reservations and introducing incentives or online promotions to encourage on-airport parking.
• Ground transportation studies may be worth commencing to assess demand elasticity to pricing and this may also help set the right fee that will attract parkers.

Data collection by airport operators and studies from ground transportation specialists should shed more light on the evolving effect that TNCs are having on airports. Several articles on TNCs at airports have been written, including an Airport Cooperative Research Program report on the subject. For more research and analysis on autonomous technologies, the autonomous vehicle impact on commercial aviation and other transportation developments, please reach out to D.J. Mehigan at 804.225.1147 for a copy of a Raymond James research report, The Future of Transportation: An Autonomous, Electrified, and Internet-Connected World.