Technology Gives Airports Edge Against Competitors
By Michele Krakowski and Steven Grant
New technologies have gained traction in the U.S. that have the potential to greatly improve airport customer service, combat off-airport competition and subsequently increase airport revenue.
These are exciting times when airports can potentially win back customers lost to off-airport competitors or nearby airports. The tools and technologies available to airports to provide customers with products and services that meet their specific needs and requirements are here.
But a word of caution: These tools are effective only if the proper product opportunity analysis, data-mining customer market share and knowledge of how best to maximize these tools and technologies, is undertaken.
“The Age of the Connected Traveler” is truly upon us. With the advent of smartphones, iPads and all such mobile devices, customers now have at their fingertips the ability to search, select and pay in real-time for all the travel-related needs to complete a journey from their home to the airport gate, beyond, and for the return journey.
Today’s customers are looking for a more automated journey with less human interaction at each of these travel nodes. With parking, people want increased payment options at entry and exit. They include paying online or via mobile devices, which for many IT-savvy passengers are now viewed as essential to creating a positive travel experience.
And if they don’t get what they want, and experience a negative parking experience at your airport, there is now little to stop them from choosing a rival airport to fly out of next time. It is imperative that few weak links exist in this chain as possible. On the flipside, by providing customers with payment technology options that improve their parking and travel experiences, customer loyalty is established and airport revenue increased.
Clearly, airports need to truly understand who their parking customers are and what their needs are. Instead of being simply dormant landlords to the airline companies, progressive airports now have the tools and technology to provide them with a wealth of data about their customers, obtained through interfacing with parking software and reporting.
One such payment technology utilizes pre-booking reservation systems. When customers make reservations online, airports now have data on who booked, how long they stayed, what car they have and where they flew to. These are the types of data a marketing department dreams of.
European and Asian airports have been mining these data to provide their customers with specific parking products for more than a decade. Currently, only a few companies specialize in these reservation systems that utilize “yield management” capabilities.
What is yield management? In short, it is the integration of the operational management of the parking operation with a pricing management system to guarantee airport customers a parking space in advance.
By integrating with the airport’s Parking Access and Revenue Control System (PARCS), the reservation tool incorporates a pricing matrix linked to online pricing, the use of allocation pools, and creates pricing parity with any third-party agents. It also typically uses a reward scheme for airport customers using the parking facilities.
With all this customer and pricing data at its fingertips, an airport can take advantage of the reports that can be run on a daily basis to analyze – and adjust in real-time pricing – market share data, reward results, costs and revenues.
Providing an airport with the tools to sell discounted parking online in controlled pool sizes to selected channels will enable the optimization of parking revenue.
In the U.S., PARCS vendors are adopting relationships with these specialized reservation vendors in order to provide airports with this offering.
A key but often overlooked objective for any airport, due to the focus being on the short-term objectives, is “future-proofing” the solution.
The parking consultant’s task is to assist their clients regarding developments in standards, compliance mandates, etc. that affect parking system implementations.
Airports need to consider and act upon several key issues, and two are discussed below. Our experience with airports and PARCS vendors alike show that both are at various stages of the learning curve.
‘EMV’ migration to the U.S.
One key issue is that of the pending migration to the U.S. of the EuroPay, MasterCard and Visa (EMV) security framework for credit and debit card payments. EMV, in its simplest terms, is a security standard for smartcards and payment devices/terminals.
Payment industry experts generally agree that a chip-based standard will come to the U.S., and over the past two years, the major card brands (i.e., MasterCard, Visa, American Express and Discover) announced plans to introduce EMV-based payments across the country.
Moving the U.S. payments industry to the chip-based standard will not be a simple one, and implementation will be complex, because there are many stakeholders, large and small, including airports, bound together in the payments ecosystem.
Visa’s roadmap, for example, is as much about moving the market to “contactless” payments as it is about EMV adoption.
“By encouraging investments in EMV contact and contactless chip technology, we will speed up the adoption of mobile payments as well as improve international interoperability and security,” said Jim McCarthy, Visa Inc. Global Head of Product.
Visa has three initiatives in its plan to encourage the adoption of smartcard chip technology for payments:
1. Merchant incentives to upgrade to EMV chip-enabled terminals.
2. Requirements for acquirer processors to support chip acceptance.
3. Introduction of “liability shift” policies, already in place elsewhere, to the U.S. market.
So what does all this mean for U.S. airports, which are “merchants” in the payment ecosystem? Although merchants are not required to upgrade to process EMV credit and debit card payments, the EMV standard is being pushed by the major card brands as the standard for future payment interoperability.
As a result, airports and vendors should plan to accommodate EMV into PARCS, including readers and central data systems. Airports should work with their partners, such as merchant services providers and their parking consultants, to understand the impact of EMV on their PARC systems and identify an appropriate approach.
PCI Data Security Standards
Merchants that process credit and debit cards are generally required to comply with standards published by the Payment Card Industry (PCI) Data Security Standards Council. They are intended to increase the security of payment transactions, and govern systems, hardware, software and policies/procedures.
Many airports are likely already aware of PCI requirements, but emerging technologies can allow an airport merchant to reduce how much of their PARC systems and operations fall in the scope of these standards.
One such approach is “tokenization,” a process by which the PARC system does not process or store the actual credit/debit card number, but rather only a “token” that represents the actual number.
A third party, such as a merchant services provider, stores the customer’s actual credit/debit card numbers securely in their systems, returning this ‘token’ to the PARCS only when a customer transaction is processed.
This approach, while potentially introducing some new costs and not believed to be widely used yet in the airport parking environment, can reduce both the ongoing challenges of staying compliant with PCI standards and an authority’s risk in the event of a data security breach, as the sensitive payment information is not available on the PARCS.
Our discussions with several major PARCS vendors indicate that all currently support, or are working to support, advanced technologies such as tokenization, providing an opportunity for airports looking to replace or upgrade their systems.
In conclusion, airport parking is entering an exciting yet challenging new era where the tools and strategies are now available for airports to improve customer services, retain customer loyalty and fight off-airport rates.
To keep pace with the expectations of today’s “Connected Traveler,” airports need to adopt a mindset of being progressive with technology and with offering their customers the products they want while maintaining an efficient parking operation.
Contact Michele Krakowski, CPA, Founder and Owner of Lumin Advisors, at email@example.com. Steven Grant is a Senior Systems Consultant at LTK Engineering Services and Vice Chair of Parking on the Smart Card Alliance Transportation Council. He can be contacted at firstname.lastname@example.org.
Article Abstract from December, 2013