About a month ago I offered the first in a series, Questions That Are Rarely Asked. (Why do flight attendants have to collect pre-departure beverage cups, but you’re allowed to keep the beverage you brought onboard yourself?)
Today’s entry concerns airport parking: why are there always so many empty spaces, and more specifically why don’t parking lots adjust pricing because of this?
Casino hotels are the extreme, where historically they’ve adjusted their rates downward — even close to zero — to ensure they are as close as possible to full every night. If it takes a $9 rate to get there, so be it. But they earn incremental revenue from gambling.
But other hotels discount unsold rooms, such as though opaque channels like Hotwire and Priceline. Every room that stays empty is revenue they cannot ever get back. And the marginal cost of an additional hotel guest in an otherwise empty room is very low.
Airlines discount seats, virtually any revenue from a seat that would have taken off empty is cash positive for an airline.
But airport parking? Parking lots have the same characteristics as airplane seats and hotel rooms. They already exist, which means the costs have been incurred, and each day a space is empty that’s revenue that can never be earned back.
So why don’t airport parking lots discount their spaces? Here I’m talking about the official daily lots, not private off-airport parking. Interestingly, those lots do discount. They offer coupons. They offer frequent renter credits. They market aggressively to fill up. But generally speaking airport lots do not.
- The want to remain empty on purpose. Part of what they’re charging for is the reliability of finding a space whenever you need it, their mission isn’t to make money for the airport authority it’s to provide convenience to support the airport operation. So when you ‘overpay’ for a space you’re paying not just for your own space but for empty spaces as well, the convenience of knowing you’ll be able to park when you show up.
- Then why don’t airport lots raise price over Thanksgiving and Christmas? Peak holidays are the only times they do seem to truly fill up. If their mission is to ensure parking is always available, overcharging to accomplish that, shouldn’t they increase price in order to make sure that happens when demand outstrips supply at their usual price?
- Are the just insufficient incentives for airports to care? Or perhaps there are barriers that make it not worth prioritizing, since airport authorities are political environments and a controversial pricing model like discounting and surge pricing would have to be explained and perhaps voted on — why should an bureaucratic entrepreneur stick their neck out?
Every day plenty of spaces go empty, which means lost revenue for airports. That means either airports aren’t getting the funding they need, or they’re raising fees on flights — pushing away discount airlines, increasing ticket prices.
So isn’t this a real lost opportunity?