As Flights Decrease, Airports Look for Alternative Revenue Sources
April, 2009With the economy contracting, the nation’s airports are feeling the squeeze. Many airlines reacted rapidly: cutting capacity, eliminating routes and services, reducing staff, merging and even closing down. Business downturns and consumer fears resulted in the slashing of business and leisure travel, and air freight tumbled as well.
Although 2008 was a tough year, airports continue to plan for the future. They have high fixed costs and a long-term outlook that has to make capital investments even while operating in an economic downturn. Their service commitment does not change just because there is a cyclical downturn. Even when short-term demand wanes, airports still have to ensure they can deliver service in the future.
“Airports are facing a predicament: how to reduce operating expenses but still maintain service levels,” says Forrest Swonsen, Director of Airport Systems and Services for Dallas-based TransCore Inc, a manufacturer of transportation-based RFID technology.
“Finding areas of their operations that can operate more efficently, particularly those with an attractive return-on-investment, is a priority. It’s apparent (that) non-aeronautical revenue is king,” Swonsen says.
Ground transportation management systems optimize an airport’s curbside use and control movement of commercial vehicles. Creating new or optimizing current revenue streams tied to a facility’s roadway real estate provides an almost immediate ROI in technology, while sustaining long-term profitability.
With the increased emphasis on security, a commercial vehicle system also can expedite access control for known and trusted vehicles. With accurate reporting and monitoring, the system can manage information for operator compliance and for regulatory revenue reporting.
Nine of the top 10 busiest airports use wireless communications systems or automatic vehicle identification (AVI) technology in some capacity. Whether installed at a major airport such as Los Angeles International, which handles more than 70 million passengers, or at a smaller airport such as in Aspen, CO, which handles fewer than 500,000 passengers, airport operations constitute a particularly complex set of business rules.
Although most passengers take for granted that a taxi, limo or shuttle bus will be waiting curbside as they dash from the airport to their destination, traffic management of these operations is essential for an airport’s fiscal strength, service to its patrons and commercial vendor.
AVI has been in use at airports for more than a decade, but market penetration is hovering at 50 percent. With acceptance levels for wireless communications technology growing at lightning speed, external factors are converging that will create a catalyst.
“If there are three priorities this year, they are maximizing non-aeronautical revenue, sustainability and security,” Swonsen says. “AVI use to manage commercial vehicle operations supports all three.”
Philadelphia International Airport (PHL), ranked “highest in customer satisfaction for large airports” by J.D. Power and Associates, launched a dual credentialing system for commercial vehicles in late fall 2008. The AVI system is similar in concept to what’s used today by the U.S. Customs and Border Protection agency’s Free and Secure Trade (FAST) program to speed border screening of vehicles, drivers and freight for commercial trucks.
The Philadelphia airport’s dual credentialing system has three distinct characteristics that make it appealing:
(1) It tracks taxi drivers and vehicles through a separate tag presented simultaneously with the taxi vehicle tag at entry and exit.
(2) All ground transportation operators use pre-paid accounts, and a real-time tracking system allows or denies entry based on the operator’s balance.
(3) Dynamic variable message signs, lights and gates are linked to communicate messages and allow or deny entry as appropriate.
The system tracks various categories of commercial vehicles, all taxi drivers, and charges trip and dwell-time fees. PHL averages 16,000 transactions per day or 5.8 million transactions annually.
Washington Dulles International Airport (IAD) launched a new system designed to manage its commercial vehicle curbside, as well as do complete, automated, taxi dispatch. The system also is designed to read the existing RFID-based electronic toll collection transponders for the Virginia Department of Transportation’s Smart Tag and the Northeast’s E-ZPass tags, as well as windshield sticker tags. This provides interoperability with the local toll system and airport-issued tags. (Ronald Reagan Washington National Airport also uses the same RFID-based technology, so that a commercial vehicle needs only a single tag once registered with each airport.)
The Dulles airport system uses Daktronics variable messaging signage, a text-to-speech function for automated announcements, and wireless handheld computers at curbside for vehicle tracking and compliance management.
Airports also are under pressure to reduce carbon emissions. More effective management of commercial vehicles equates to fewer excess trips, less idling at curbside and lowered emissions. This can provide significant economic, social and political benefits to the airport. “Anytime you can manage vehicles better, you can make a difference in reducing emissions,” Swonsen says.
What’s becoming more obvious is that non-aeronautical revenue will continue to play an increasingly important role as airports adapt to market and budget forces that are in constant flux. Innovations such as long-range biometric identification, video-based vehicle identification and hosted back-end applications will continue to make commercial vehicle management systems a key component in the landside revenue equation at airports.