Dynamic Pricing for Airport Parking | Perfect Price

Even with passenger volumes rising, ride-sharing is hitting airports where it hurts – parking revenue. Traditionally the top revenue source for airports, parking revenue cannot be replaced by $1 or $2 fees from ride-share companies like Uber and Lyft. This article explores how leveraging the same dynamic pricing technology used by ride-sharing companies can help airports reclaim lost revenue, grow parking revenues, and even improve the traveler experience.
The problem

Airports depend on parking revenues. Even Heathrow, one of the world’s largest hubs, collected over £126 million in parking revenue in 2018 – a huge portion of its operating budget. Most airports, especially regional airports – but even large facilities like Heathrow – lack the staff or know-how to accurately price their parking to match demand. As a result, parking lots alternate between underutilized (resulting in lost revenue) and over-utilized forcing upset travelers into off-airport parking. Or, anticipating a hassle, many travelers simply choose alternatives instead of driving their personal car (ride-share, shuttle services, taxis, etc), costing the airport potential revenue.

When Uber first launched, I met with then-CEO, Ryan Graves (I was at TripIt, now part of SAP/Concur, and focused on partnerships at the time). I was blown away by how you could always get an Uber in San Francisco and asked him how they did it. He said that their core strategy was that you should always be able to get a car. Always. That was part of the original value proposition and to ensure that promise, they developed Uber’s controversial “surge pricing.”

Fundamentally, surge pricing enables consumers to decide if they really needed that last available car. The AI is designed such that enough consumers will decide not to get a car at a higher rate, ensuring that there will always be a car available for those who are willing to pay a premium. What the term “Surge Pricing” fails to convey, however, is that prices also go down, and in fact, in most cases at a cost that is less than that of a taxi. This dynamic pricing allows Uber to control the supply of vehicles and maximize utilization even in low demand periods.