Los Angeles International Airport Non-Aeronautical Revenue Development: Public Parking Board of Airport Commissioners November 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

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

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

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 8

9 LAX Issues are Not Limited to Pricing Services offered in LAX parking lots: –Parking space for hourly/daily rate –Location and proximity for CTA parking 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)

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 1.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 2.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 3.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