Airport Opportunities for PARCS Vendors
January, 2019
The PARCS market continues to evolve. Many new players have entered the arena offering feature-rich product lines and they are exerting significant downward pressure on the pricing.
Imbedded in the competitive landscape is the Airport PARCS vertical market, which offers earning potential for PARCS brands regardless of size, complexity, or budget. While the significant risks and challenges with this market cannot be overlooked, the rewards are present.
Airport expansion, renovation and improvement is prevalent across North America and has been in this trend for several years. “The FAA projects a 22 percent growth in the U.S. in total airport operations between 2008 through 2025.”1 Certainly as passenger enplanements have increased, the airlines and airport authorities have made significant investments in all aspects of their facilities. For example, LaGuardia International Airport is undergoing an $8 billion redevelopment project to completely transform the entire facility.2
The smartphone trend has created many other features and services that airports can offer their customer base.
PARCS vendors have capitalized on this trend, not only for the large high- profile airports, but for the smaller and more prevalent medium and smaller-sized airports. It is this varied nature of the airport market that provides a wide range of opportunity.
Airport size can be measured many ways. While we parking folks like to count spaces, this data can be hard to come by - until the RFP hits the street - which makes proactive market research and project scaling difficult. Passenger enplanements is a good quantifier, as the FAA manages and publishes this data in many portals3 and will be used for this discussion.
The FAA further categorizes airports based on enplanements as large hub, medium hub and small hub.4 The data shows 31 large hubs, 31 medium hubs and 72 small hubs in the U.S. While the total is relatively small compared to the entire PARCS market, the sales potential is attractive because of the strong growth trend of airports, combined with the wide geography covered, which can potentially engage a variety of PARCS vendors.
Specified features of an Airport PARCS project can vary widely, but also can offer opportunities, based on how a PARCS vendor is positioned technically, and may excel in certain areas of interest to an airport. As the PARCS technology offerings have increased over time, some airports are increasingly willing to adopt new concepts to stay ahead of the curve and respond to customer demand.
Tickets, POF’s, cashier terminals, AVI, LPI/LPR, ground transportation, rental cars, toll tag interfaces and valet parking have all been part of the Airport PARCS landscape for a while.
Recently, the smartphone trend has created many other features and services that airports can offer their customer base: reservations/prebooking, VIP/premium/reserved areas, camera-based guidance systems and guidance apps, Apple Pay and Google Wallet, to name a few.
As Uber, Lyft and the ridesharing surge has been great for travelers, the pressure being applied to the airport parking revenue stream has become significant.
Capturing this revenue potential, though difficult, presents a chance for PARCS vendors to differentiate themselves. Understanding the specifications and requirements is essential. We have all been presented with specifications that have unrealistic or poorly defined features or functions. Being able to manage this process to negotiate or guide an airport entity takes experience, patience and skill.
Airports classify investment in a new PARCS as a substantial capital improvement project. As such, they desire the current technology with premium features in the PARCS industry today, which affords them the ability to increase revenue and lower operational costs while providing a premium experience for their customers. If executed correctly, the opportunity can be beneficial for all parties.
The budget and timeline of an airport project also varies widely. Most successful projects engage technical consultants to prepare preliminary budgets based on their requirements.
Smaller airports may want all the advanced features, but when they understand the cost, they may start cutting out features to align the budget. It is difficult to predict how this will develop until you propose a project and are selected for subsequent discussions.
With the budget comes your margin. Larger budgets do not always equate to larger profit margins. Those smaller, regional, airports may offer unique sales opportunities without the political and contractual risks of larger hub airports.
Perhaps the largest variable in the Airport PARCS market is the political landscape and management dynamics of the respective airport authority. Being able to gain an advantage in a bid process could involve building local relationships with management and networking in the airport professional associations. In most cases, airport staff must request approval of a PARCS project through a governing board, city council, or county commission.
Therefore, airport staff recommendations to award to a particular PARCS vendor can be rejected in its entirety, the project scope and/or funding modified or the recommendation delayed due to mitigating factors.
Also grouped in this category are the bid requirements and contractual obligations typically associated with Airport PARCS bids: bonding, liquidated damages, special insurance, WMBE, licenses/certifications, staffing requirements, delivery and response times.
Certainly, the larger the airport, the larger the risk. These stringent requirements are accepted as a cost of doing business with airports. Some PARCS vendors may not have large parent companies to support their efforts either during the bid or if problems arise during the delivery phase.
Understanding the customer journey through an airport can typically begin and end with a parking experience. Combined with the increased importance of parking revenues in airport operations makes the PARCS vendor a critical component in this market.
While trying to illustrate the varied potential associated with the Airport PARCS vertical, it is clear there are significant challenges and risks to competing in this market. It is not easy to be successful in this market, but for those vendors positioned to succeed with best-in-class products, experience in the sector, competent management and strong financial backing, there is a clear market potential.
Tom Sivak is Chief Executive Officer for DESIGNA Access Corporation. He can be reached at tom.sivak@designa.com.
1 http://www.michigan.gov/documents/aero/Executive_Summary_MI_airport_sys tem_plan_MASP-2_256787_7.pdf
2 https://ny.curbed.com/2016/7/18/12211746/laguardia-airport-renovations- price-increase
3 https://www.faa.gov/airports/planning_capacity/passenger_allcargo_stats/pass enger/
4 https://www.faa.gov/airports/planning_capacity/passenger_allcargo_stats/cate gories/
