Los Angeles International Airport Non-Aeronautical Revenue Development: Public Parking

1. Los Angeles International AirportNon-Aeronautical Revenue Development: Public Parking Board of Airport CommissionersNovember 16, 2009

2. LAX Non-Aeronautical Revenue Initiatives • In-terminal concessions • Car rental concessions • FlyAway fare adjustments and cost management • LAWA employee vanpool program cost recovery and bidding of new service provider • Airport-employee parking revenues and bus costs • Improved cost recovery from updated roadway circuit charges • Other business-opportunity privilege fees (e.g., shared ride vans) • Public parking in the CTA and long-term lots

3. Public Parking Performance – Initiatives Recent • Acquisition of Park One • Consolidation of public and employee lots - Annual savings of $540K • Increase in daily rate for remote lots – Annual revenue of $2.5mm Potential • Adjustments to CTA parking rates, both short-term and long-term • Improved customer service • Management of exit plaza and other operating costs within the CTA garages • Management of bus costs for remote lots

4. Asset Utilization is Below Benchmark Targets • LAX assets are underutilized in comparison to other airports • Despite higher prices than peer airports, • LAWA parking revenue per passenger is $2.86 • Sample of 30 comparable airports averages $5.73 per passenger

5. Long-term Performance Erosion • Parking revenue has lagged growth in other revenue sources at LAX • Low utilization • No change in product or service • Parking revenue has fallen from 16% to 10% of operating revenue since 2001

6. Competition at LAX is a Performance Factor for LAWA • Private supply at LAX is higher than most airports • Industry average is estimated at about 25% • Before Park One acquisition, LAX was 41% • With Park One LAX is 31% • LAWA’s remote lots are under greater competition • Pre-Park One LAWA had 42% of the remote space supply • LAWA is now at 55% of the remote spaces • Operations struggle to break even • Private remote lots provide much higher service levels than LAWA • LAWA remote lots are 40% occupied • Private lots are 65% occupied

7. Performance Evaluation • LAWA has received five studies in the past five years that evaluate public parking performance • Evaluations included both quantitative work and customer opinions • Conclusions and observations about LAWA parking performance • Some share common characteristics • Distinct differences exist between CTA parking business and the remote lot parking business 7

8. Performance Evaluation • Common Observations • Customers report greater concerns about automobile security than desire for proximity • Amenities such as car washing are perceived advantages • Promotions such as advertising and coupons are factors in market share shifts, particularly to private operators • Perceptions about personal security are a factor • CTA Parking • Pricing strategies alone will not be sufficient to address the performance shortfalls, given the service level gaps • Increasing parking rates as patronization drops in order to preserve gross revenue has been proven to be unsuccessful • Longer stay discounting (or coupons) are needed to attract a missing segment of users • LAWA Remote Parking • Service differences are a fundamental factor • LAWA’s remote lots have few advantages given the choices available to customers

9. LAX Issues are Not Limited to Pricing • Services offered at other airports/off airport operators: • Valet Parking • Quality bus services • Car Wash/Detailing • Promotions/Coupons • Frequent Parker Programs • Air conditioned waiting areas and bottled water for remote lots • Luggage Assistance • “Car to Curb” Service (minimal customer walking) Services offered in LAX parking lots: • Parking space for hourly/daily rate • Location and proximity for CTA parking

10. Defining the Opportunities • Required Investment • Parking Revenue Control System • Pay-on-foot systems • Credit card in-and-out • Changes to exit lanes to increase efficiency and reduce wait times • Pricing Strategies and Revenues • Seasonal pricing • Weekly rates, not just daily rates • Non-parking revenue generating services • Product Selection and Choice • Differentiation in parking products and services across LAWA’s various parking locations

11. Alternatives for Implementing Change • Hire industry consultants to assist LAWA staff in developing improved business/operations plan and implementation of strategy • Slowest to market • Highest level of control/risk • Likely a “trial and error” based strategy requiring institutional responsiveness and agility • Turn parking into a concession (all or remote-only) • Fastest to market • Reduced level of risk, but with some loss of control • Shared upside from improved performance • Privatization/Long-term Lease • Slow to market • High initial payout/low long term reward • Least control/risk • Likely leaves money on-the-table given underperforming baseline operations

12. Next Steps for Concession Approach • Define criteria for contemporary airport parking operation • Identify risks to be managed • Develop and release parking concession RFP • Review proposals: • Improvement in customer service • Plan for investments • Proposed services • Financial offer • Select new concessionaire • Implement new parking operation before 2011