This is a presentation given by Cristina Lynn of Parking Consultants International on the pricing of car parking at airports. It explores the economics of parking at airports, both in Australia and internationally. Parking Consultants International (PCI) have worked on many projects for parking solutions at airports. Please feel free to contact us for more information.

1. Are airport parking charges too high?

3. Introduction AIRPORT PARKING CHARGES – A HEADLINE ISSUE People around the world complain about Airport parking fees…

4. September 20th, 2005 “ Rocketing Cost of Heathrow Parking” The cost of parking in the short-term car park has already risen 50% in the last decade and could rise even more.

5. “ Motorists are upset by a rise in car park fees at Cairns Airport” August 12th, 2009

6. “ Airport parking fees take off” Parking fees at Sydney Airport have doubled for international travellers leaving their vehicle for more than a day. July 20th, 2008

7. “ Abu Dhabi Airport's hourly parking fees doubled” April 30th, 2009

8. “ Travel surge makes airport parking tricky” Many frequent flyers complain that airport parking rates are too high. The cost… can exceed the price of an airline ticket. May 23 rd , 2006

10. The traveller’s perception

12. Skytrax 2009 World Airport Awards Source: www.worldairportawards.com (2009 results) Ranking Airport Country Traffic Volume (millions of passengers) 1 Incheon Seoul South Korea 15.0 2 Hong Kong China 47.7 3 Changi Singapore 36.7 4 Zurich Switzerland 32.2 5 Munich Germany 34.6 6 Kansai Osaka Japan 16.7 7 Kuala Lumpur Malaysia 26.9 8 Amsterdam Holland 47.4 9 Centrair Nagoya Japan 10.8 10 Auckland New Zealand 13.0

13. How does Parking affect overall excellence Note: cost of parking is not an evaluation factor! SELECTION CRITERIA 1 Website Parking / Transportation information 2 Ground Transport Access by car / car parking facilities Short term car park facilities Long term car park facilities 3 Arrival - Transit - Departure 4 Security and Immigration 5 Terminal Comfort - Facilities 6 Food and Beverage 7 Shopping Facilities

15. Parking – a major revenue generator ** Calculated as aeronautical charges + other income – operating expenses Source: BAA (British Airports Authority) Annual report Y/ended 31.12.07 BAA (UK) Millions % Income % Profit FX rate 1.935 Sterling AUS$ Airside shops 74 143 15% 10% Landside shops 48 93 10% 6% Catering 60 116 12% 8% Bureaux de Change 57 110 12% 8% Car Parks 164 317 33% 22% Car Rental 22 43 5% 3% Advertising 36 70 7% 5% Other retail 29 56 6% 4% Net Retail Income 490 948 100% 66% Aeronautical income ** 257 497 34% Operating Profit 747 1,445 100%

16. The role of the ACCC

20. Locational vs. Monopoly Rents Airports, when they raise their parking charges, take pains to describe the resulting profits as being locational rents, even though their ability to raise charges could be symptomatic of market power. P. Forsyth “ Locational and monopoly rents at airports: creating them and shifting them”, Journal of Air Transport Management, 10, 2004, p. 52

22. Parking – a major revenue generator in Australia Melbourne’s parking revenue as a share of total revenue was the highest at 21% and Sydney’s the lowest at 7%. Source: ACCC Airport Monitoring Report 2007-08, March 2009 Combined Adelaide, Brisbane, Melbourne, Perth & Sydney Aero Non-Aero Total Revenues $ 911,458 41% $ 1,287,237 59% $ 2,198,695 Operating Profit $ 411,481 29% $ 1,014,154 71% $ 1,425,635 % 45% 79% 65% Highest Proportion Non-Aero revenue to total Bris/Perth 64% Lowest Proportion of Non-Aero revenue to total Adelaide 42% Highest profit margin of Non-Aero Sydney 82% Lowest profit margin on Non-Aero Adelaide 42%

23. The upward trend Inflation over the period: 19.2% Data: average of 5 Australian Airports (from ACCC report) Short term parking prices

24. The upward trend Long term parking prices Inflation over the period: 19.2% Data: average of 5 Australian Airports (from ACCC report)

26. The upward trend Note: the Sydney Airport price for 4 hours is valid up to 24 hours Airport Millions of passengers Private or Govt Return taxi fare Short Term Long Term 1 hour 4 hours 24 hours 24 hours 3 days 7 days AUSTRALASIA Cairns 3.8 P $ 35 $ 5 $ 10 $ 16 $ 16 $ 44 $ 100 Christchurch 5.9 P $ 65 $ 3 $ 9 $ 18 $ 20 $ 61 $ 143 Adelaide 6.7 P $ 32 $ 4 $ 14 $ 30 $ 25 $ 50 $ 70 Perth 9.2 P $ 70 $ 5 $ 9 $ 26 $ 17 $ 51 $ 79 Auckland 13 P $ 114 $ 8 $ 18 $ 31 $ 31 $ 57 $ 103 Brisbane 19.0 P $ 69 $ 12 $ 20 $ 50 $ 30 $ 70 $ 140 Melbourne 22.9 P $ 85 $ 12 $ 36 $ 49 $ 49 $ 99 $ 99 Sydney 32.5 P $ 50 $ 15 $ 52 $ 52 $ 25 $ 60 $ 114 EUROPE Edinburgh 9 P $ 58 $ 8 $ 14 $ 31 $ 14 $ 42 $ 97 Heathrow 66.9 P $ 212 $ 8 $ 27 $ 87 $ 30 $ 91 $ 204 Madrid 40 G $ 93 $ 17 $ 37 $ 65 $ 65 $ 119 $ 214 Southampton 1.9 P $ 7 $ 15 $ 43 $ 19 $ 57 $ 133 Zurich 22.1 P $ 135 $ 7 $ 17 $ 47 $ 47 $ 117 $ 234 ASIA Bangkok 41.2 G $ 21 $ 1 $ 3 $ 8 $ 8 $ 25 $ 59 Hong Kong 47.8 G $ 90 $ 3 $ 12 $ 36 $ 21 $ 63 $ 147 Kansai 16.7 P $ 426 $ 5 $ 20 $ 50 $ 50 $ 150 $ 351 USA Dallas/FW 57.9 G $ 100 $ 2 $ 6 $ 13 $ 16 $ 49 $ 114 JFK 47.8 G $ 105 $ 7 $ 28 $ 38 $ 21 $ 63 $ 147

27. Forbes survey – most expensive US Airports Source: forbes.com – 15/12/2006 – Australian prices current as of Oct 09 US $ Daily rate US $ Weekly rate Chicago O'Hare $ 50 $ 350 Washington National $ 36 $ 252 LA International $ 30 $ 210 New York La Guardia $ 30 $ 210 Boston Logan $ 24 $ 168 Newark $ 24 $ 168 Phoenix Sky Harbor $ 20 $ 140 Denver $ 18 $ 126 Minneapolis St Paul $ 18 $ 126 Orlando $ 17 $ 119 Dallas Forth Worth $ 17 $ 119 Melbourne (multi level L/T) $A 49 $A 99 Sydney Domestic (multi level) $A 52 $A 364 Sydney International $A 50 $A 139

28. Airport vs CBD prices - Sydney ** Refer previous note for Sydney Airport Sources: current rates from car park websites Sept 09; 2004 rates from PCI file data and ACCC report Sydney CBD Car Parks 2004 Rates Current Rates 1 hour 4 hours All day 1 hour 4 hours All day 131 Macquarie Street $ 18 $ 46 $ 53 $ 28 $ 63 $ 70 Governor Phillip Tower $ 12 $ 36 $ 45 $ 27 $ 63 $ 69 Chifley Tower $ 17 $ 44 $ 53 $ 25 $ 65 $ 65 Australia Square $ 16 $ 52 $ 52 $ 25 $ 68 $ 68 155 George Street $ 15 $ 44 $ 49 $ 17 $ 55 $ 55 Average $ 16 $ 44 $ 50 $ 24 $ 63 $ 65 Sydney Airport (Short Term) $ 12 $ 25 $ 37 $ 15 $ 52 $ 52 1 hour 4 hours All day CBD % Increase 2004 - 2009 56% 41% 30% Airport % Increase 2004 -2009 25% 108%** 41%

30. How prices are (should be?) set “ Propensity to Park” % of car park transactions/passenger movements (inbound/outbound)

31. Competitor and alternative transport prices Example 1: Melbourne Airport Return taxi fare to CBD $86 7 days’ parking in remote long term car park (outdoor) $69 7 days’ parking in multi level long term car park (undercover) $99 7 days’ parking in short term car park (undercover) $280 Skybus link to CBD (return) $26 Andrews’ Car Park: 7 days’ parking (undercover) $89 or (open air) $69 1 day parking in CBD $35 - $48 1 day parking in short term car park $49

32. Competitor and alternative transport prices Example 2: Adelaide Airport Return taxi fare to CBD $40 7 days’ parking in long term car park $70 7 days’ parking in short term car park $210 Off airport (AS Parking) $95 Skybus link to CBD (return) $16 1 day parking in CBD $15 - $20 1 day parking in short term car park $30 Note: all parking at the airport is outdoors

33. Competitor and alternative transport prices Example 3: Christchurch Airport (NZ$) Return taxi fare fare to CBD $100 7 days’ parking in remote long term car park (outdoor) $57 7 days’ parking in short term car park (outdoor) $110 7 days’ parking in premium car park (undercover) $175 Shuttle bus link to CBD (return) $40 Off airport (Craddocks) : 7 days’ parking (undercover) $105 or (open air) $70 1 day parking in CBD $8 1 day parking in short term car park $22

36. Market Pricing Parking is about three things: SPACE, TIME and MONEY ** Prof. Don Shoup “The High Cost of Free Parking” p. 471

38. Marketing

41. Interviewed for the Forbes article, Pat Gleason, vice president of the Center for Airport Management (Portland, Oregon) said: “ Some airport parking rates are determined by contract; at other airports, the average parking rate as to equal or exceed that of competitive airports around a specific formula. And some airport parking pricing is driven by the market. The greater the demand for on-airport parking, the higher the rate.”

42. According to Prof. Donald Shoup: “ When many parking spaces are empty at any location, the price is too high. When all the parking spaces are full, the price is too low. When a few vacant spaces are available everywhere, prices are just right.” The right price for parking is thus like the US Supreme Court's definition of pornography: "I know it when I see it”.

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