Luton's drop-off parking goldmine

A couple of weeks back I posted a LinkedIn article in which income from Luton Airport's short-term car park was estimated at a cool ￡37 million p.a.

On Tuesday I had the opportunity to view at first hand another of the airport's ingenious schemes to lighten the wallets of weary travellers. I refer to Priority drop-off parking or "kiss and drop" as it has come to be known. This service allows passengers to be deposited or collected a couple of minutes walk from the terminal for the bargain price of ￡3. This buys you ten minutes which works out at 0.5p per second. Each additional minute over this allocation is charged at ￡1.

The airport does not publish a breakdown of its parking income so there is no readily available financial information relating to "kiss and drop". However based on a statistically questionable period of observation (a few minutes) I'm going to have a go at estimating the revenue that flows from this mother of all golden geese. To avoid undue attention from my learned friends I will add the caveat that this analysis is highly unscientific and open to challenge.

In a two minute period (while waiting for a long term parking bus to arrive), I counted 29 vehicles pass through the drop-off area. So we have an average of 14.5 vehicles per minute each paying a minimum of ￡3. A few of course will be paying more. I'm going to say that 90% of all cars pay the minimum of ￡3 and the remainder spend on average an extra five minutes in the drop-off zone (more likely to be picking up arriving passengers). So that gives revenue per minute of ￡50.75 or ￡3,045 per hour. My observation took place at a relatively quiet time of day for drop-offs. Intuitively I would expect the peak to be early morning. I'll assume however this is a reasonable average to apply across the period 530am to 930pm and, lest I be accused of unfairness, that no-one uses the facility outside these hours. So we have 16 hours of operation at ￡3,045 per hour or ￡48,720 per day. To be fair, airports are generally busier in summer than winter so I will further assume that the daily revenue take is reduced by 40% to ￡29,232 for the period Oct-Mar. On this basis the total annual revenue take from the "kiss-and-drop" comes in at ￡14,226,240.

So what might that level of income make Luton's drop-off zone worth? I've been told that 6% is a decent commercial property yield. Stripping out VAT from the ￡14,226,240 reduces the take to a mere ￡11,380,992 which imparts a back of the envelope valuation to the drop-off facility of ￡190 million. Not too shabby for a piece of tarmac!

Had I been travelling on my own and not with a recalcitrant teenage daughter, I might have stuck around a bit longer. My observation started to yield some quick-fire cameos that illustrated how this potentially pressurised situation might impact on driver behaviour.

To be fair, in most cases, the operation seems to work fairly well. When things are running smoothly ten minutes is a decent period of time to park, unload luggage and bid your loved ones adieu. However its a fair distance from the point of drop-off to the exit barriers and unaware first time users lingering for too long could easily be caught out.

There were two instances where it seemed the drivers appeared single-mindedly determined not to avoid paying an extra charge. In the first I witnessed a car disgorge a family of four in a matter of a few seconds. It was a manoeuvre a Formula One pit team might have been hard pressed to emulate. The fact that three car doors flew open simultaneously while the driver gunned the engine led me to believe they had been practising on their driveway for weeks. Even more remarkably I witnessed a passenger exit a vehicle without it actually stopping. I was half expecting a baby to be rugby passed through an open window.

It would be unfair of me not to point out that Luton also allows parking in the mid-term facility for up to 15 minutes without charge, though passengers will of course then have to take the transfer bus to the terminal. The existence of a further unofficial free option is evidenced at peak times by the line of people snaking up the hill pulling their cases behind them.

So what does the future hold for short-term parking at Luton? Well for one thing there is a newly built multi-storey facility where the original easyJet offices once stood. This charges ￡50 a day (when not pre-booked) compared with the "standard" short-term tariff of ￡45 but has a covered walkway thus allowing the 1% who can afford to pay to keep their hair dry. It will be interesting to see the extent to which this additional parking capacity swells Luton's annual accounts when they are published. As for "kiss and drop" could the ￡3 minimum rise still further? With airport capacity on a seemingly unstoppable upward trend I very much expect so. Can such pricing ever be justified, particularly during Luton's building redevelopment phase where the customer experience has left a lot to be desired?

All this got me thinking.....If you travel with any degree of frequency you will have noticed that many airports carry more than just a place name. It has become fashionable for them to associate themselves with a famous person, usually dead. Examples include Paris Charles de Gaulle, John F Kennedy (New York), Liverpool John Lennon, Warsaw Frederic Chopin.

Any creative ideas out there on a potential renaming of the Bedfordshire airport? Luton Dick Turpin has a certain ring to it!

Tony Anderson is the author of "easyLand"