"Indianapolis Airport is awash in parking spaces"

Thursday, September 26, 2002

Airport is awash in parking spaces
Operator BAA and private lots hurt by income loss
By Jack Naudi
The Indianapolis (IN) Star


Robert Long spent more than a year crisscrossing the country,
researching new initiatives for his Atlanta company's parking business.
Last year, Long, vice president of The Roberts Group, landed on a
strategy: high-service airport parking.

The Roberts Group, based in Atlanta, also picked a spot for its first
lot -- Indianapolis.
 
But after Sept. 11, 2001, the airline industry unraveled. As passenger
counts fell, parking lot business took a nosedive throughout the
country.

Five months later, The Roberts Group opened 1st Class Express Airport
Parking at 1601 S. High School Road. The service was there -- shuttle
pickup at customers' cars, free bottled water and free newspapers -- but
the customers were not.

With 1,258 spaces, 1st Class Express had plenty of room to spare.

And it was not alone.

In Indianapolis, the nearly 13,000 long-term parking spaces run either
by Indianapolis International Airport or private companies saw occupancy
rates fall from lofty levels of 80 to 100 percent to 50 to 75 percent.

Airport parking revenues for 2002 are expected to be $20.7 million, 11
percent lower than 2001.

Parking is far and away the single largest source of operating income
for the airport, a fact that revenue-conscious BAA focuses on closely.
By contrast, the second-highest revenue generator for 2002, terminal
rental fees, is anticipated to generate $12 million in 2002.

For the private companies that hold some 5,500 parking spaces, things
are even worse. Using a tax on the parking companies as a gauge,
revenues in 2002 are expected to fall by more than 16 percent from 2001.

And considering that 2001's revenues dropped dramatically after Sept.
11, the parking business has fallen more than 16 percent from its peak.

"If (a competitor says) they're down 20 percent, they're doing better
than most," said Ronald Jones, general manager of Metro Airport Parking,
which operates small lots at 1501 S. High School Road and 5051 W.
Bradbury Ave.

Things are so bad that even venerable Denison Parking, the largest
Downtown parking operator, recently abandoned its airport operation. The
company, hired six years ago to manage the 1,450-space Premier Parking
lot for the airport, opted not to renew its contract.

Last month, Central Parking Systems, the largest parking operator in the
world, took over the Premier lot with a partner, Darring Consultants.
Their joint venture, called Circle City Parking Co., signed a contract
through Dec. 31. A longer-term contract is being negotiated.

The five-month contract calls for Central Parking Systems and Darring to
pay the airport $450,000, plus 60 percent of the gross proceeds in
excess of $862,499.

Leaving the airport parking business was a matter of basic economics,
said Denison President Mark Pratt.

While the company made a profit, "the margin was too slim," Pratt said.
"A major happening, a major snowstorm that left snow on the ground for
two or three weeks, or, God forbid, another 9/11 happening, we
definitely would have lost money.

"It was never a great deal, a huge return. But definitely 9/11 had an
impact on our thought process."

Indeed, that day has been on the minds of most parking operators. But
most agree business is suffering today because of a poor economy and not
a nervous flying public.

"The people will be back," said Long. "The economy always goes in
cycles, and there is a light at the end of the tunnel. . . . We're
there, and we're prepared."

In the meantime, the parking operators are working hard to woo a smaller
group of travelers. All pitch services designed to lure particular niche
groups.

While 1st Class offers pick-up at the car, Metro highlights free winter
jump-starts. Ace Rent-A-Car, which has about 300 spots, will have
customers' cars waiting for them with the trunks open when they return
from trips.

Central Parking has invested in five new shuttle buses and spent tens of
thousands in upgrading the Premier lot.

Alfa Airport Parking offers the simplest inducement of all. At $4.81 per
day, its rates are the cheapest among the private parking companies.

But the private companies face a daunting competitor in the airport
itself. BAA Indianapolis, which manages the airport, controls 7,236
long-term and 2,250 short-term parking spaces. In addition, the airport
owns the Premier lot, contracting with Central Parking to run it.

BAA and the airport offer a menu of parking options, from the no-frills
$4.50-per-day 3,000-space Economy lot with a shuttle bus every eight to
10 minutes, to the $8-per-day Premier lot run by Circle City Parking
that boasts free newspapers, rain ponchos and shuttle buses twice as
frequently as the Economy lot. 

BAA also has more flexibility than its private competitors. After Sept.
11, for example, BAA closed the Economy lot, helping to reduce expenses.


"It became a cost-containment exercise for us," said airport spokesman
Dennis Rosebrough. "We were in a position that when we needed to control
cost, we had the ability to do it."

To handle the Thanksgiving rush, the Economy lot was reopened and has
remained open.

If a private parking company closes a lot, it would go out of business.
The private operators also face another disadvantage: They must hand
over 7 percent of their gross parking revenues to the airport. "Their
business is entirely dependent on the airport," said Dave Fleet,
passenger facilities director for BAA. "That's why they live and
breathe. So they pay a fee."

The private companies accept the airport fee as a part of doing
business.

"All airports have them," Long said. "Some are lower. But some are a lot
higher. I would say they are fair (in Indianapolis)."

Those fees, which generated about $358,000 in 2001 to the airport, are
expected to fall to about $300,000 in 2002. But as passenger counts
recover, BAA expects fees from the private companies and its own parking
revenues to increase as well. In 2003, parking revenues are forecast at
$23.3 million, nearly the amount collected in 2001.

The private companies also remain cautiously optimistic.

"Right after Sept. 11 (2002), it started getting busy," said Jones of
Metro Parking. "I think things have really turned around."

And although plenty of empty spaces still can be found at 1st Class
Express, Long said business has improved every week.

"Of course, there was some consternation," Long said about opening just
five months after the terrorist attacks. "But we have faith in our
government. We have faith in the airport. The people will be back."

Pete Ianni, general manager of Central Parking, the newest airport
parking manager, said he is not concerned about current parking
troubles.

"If you would dump your business every time something bad happens, you
wouldn't be in business. We're here for the long haul," he said.


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