By Mark Washburn
You call it a movie theater, but you’re wrong. It’s a popcorn stand attached to an auditorium, selling you 37 cents of ingredients for $8 a bag.
Likewise, you call it an airport, but you’re wrong. It’s a parking lot with runways.
For North Carolina’s biggest airports, no operating revenue stream surges stronger than parking — bigger than rent from the airlines, bigger than concessions, bigger than landing fees. If you’re in the airport business, parking is where it’s at.
At Raleigh-Durham International Airport, parking is a $56 million business, providing 42% of the airport’s revenue. At Charlotte Douglas International Airport, parking brings in $59 million, or 27% of revenue, and it’s growing rapidly.
Yes, that’s a lot. If the airports’ parking enterprise was one privately run business, it would show up on Grant Thornton’s North Carolina 100 ranking of the state’s largest companies.
You might think that the airports would be happy with the parking windfall. And you’d be wrong again.
Both RDU and CLT are watching their parking money surge because they’ve increased rates. Year-over-year, RDU grew its parking business 19% and CLT, 16%.
Who pays? You do, of course. Airport authorities love to crow about the benefits they bring to their regions, and they are powerful economic engines on many levels. But they don’t talk about how much of that is extracted from their homegrown patrons.
When CLT raised long-term rates 40% two years ago, it did so with a haughty scowl. There hadn’t been a major parking-rate increase in about a decade, the airport told its users, and still CLT was a cheaper place to leave your car than some other airports.
At the same time, it was telling bond-rating agencies about its rosy financial outlook, bragging about booming revenues in parking. And it resonated: CLT’s bond ratings rank among the strongest of the nation’s airports.
About 80% of the 45 million annual passengers at CLT come to change planes at the American Airlines hub. But selling $11 hamburgers and $9 beers hasn’t kept pace with what the airport makes gouging the locals on stabling their cars. Parking revenues passed terminal concessions in 2015 and just keep rising, up, up and away.
The Charlotte airport’s success stems from its cozy relationship with the airlines it serves. Reflecting a long-term commitment to keep costs down, CLT’s landing fees are much lower than those in American’s other hubs, about $1.25 per passenger vs. $11 in Dallas or $20 in Miami. Meanwhile, its domestic round-trip fares are about 20% higher than the national average.
Another little-known fact is that the airlines serving the Charlotte airport get a chunk of the sales action. CLT cuts American and its other carriers 40% of the profit from parking and concessions.
Commercial aviation is a remarkable industry. Its hosts seem to have thought of everything, including their version of a profit-center popcorn stand.