Greenville-Spartanburg Int'l Brings Luggage Cart Rentals In-House

Author: 
Ken Wysocky
Published in: 
January-February
2013

When Smarte Carte departed Greenville-Spartanburg International Airport (GSP) in 2011, officials there took the opportunity to rethink the South Carolina facility's strategy toward luggage cart rentals. The question never centered on whether or not GSP should offer the common customer convenience, but rather on who should manage cart rentals: the airport or a third-party concessionaire.

factsfigures

Project: In-House Luggage Cart Rental

Location: Greenville-Spartanburg (SC) Int’l Airport

Total Cost: $190,000

Equipment Purchased:
80 stainless-steel carts; 3
dispensing units

Cart Charge: $2 per rental, less a 25-cent refund for
returned carts

Cart Mfg: Wanzl Metallwarenfabrik GmbH

Cart Vendor/Installer: Thompson Contract

Project Timeline:
June – Nov. 2012

Benefits: Maintain customer amenity after departure of
outside cart concessionaire

Projected Revenue: $35,000/year

"Going without carts was never an option for us," explains Rosylin Weston, vice president of communications for the Greenville-Spartanburg Airport District. "The only question was how we'd get the carts to our customers. We're a small airport, and our customers have other options - larger airports to both the north and south that offer more amenities than we do. So we're always looking for some sort of competitive edge."

That ongoing search led GSP to purchase a fleet of new luggage carts and eschew third-party concessionaires in favor of using existing staff to manage rentals. "We decided it made more sense to own the carts ourselves," Weston explains. "If you manage something in-house, you have more control ... and if there's a problem, you don't have to wait to get it resolved. We felt it was more practical to avoid waiting on a third-party to handle whatever problems may arise."

The change is expected to gross the airport about $35,000 per year if 1% of the airport's passengers (1.755 million in 2011) rent carts. In contrast, GSP earned $1,138 from cart rentals in 2010, the last full year an outside vendor ran the program. Like many concessionaires, Smarte Carte collected 80% of the rental revenue, per its commission agreement with the airport.

With a total cost of $190,000 ($160,000 for new carts and installation; $30,000 for ancillary expenses), the project is expected to break even in 51/2 years. After that, cart rental fees will produce a new and ongoing stream of non-aeronautical revenue for the airport.  

Airport officials, however, don't cite revenue as the biggest factor for bringing cart concession in-house. Even with a substantial increase in cart usage, rental revenue will still be just a drop in the bucket of the airport's overall $22.7 million projected revenues for 2013, Weston notes.

"It is much more of a customer-service issue," she explains. "This airport is very focused on delivering good customer service."

Rethinking the Program

After examining equipment from several manufacturers, the airport ordered 80 stainless-steel carts and three cart dispensing units made by Wanzl Metallwarenfabrik GmbH. Officials based their initial inventory on previous utilization rates and current passenger traffic. If more carts are needed, the system is easily expandable, Weston notes. Durability, cost per unit, caster replacement cycles, anticipated repair costs and delivery timeframes were key considerations, she adds. As airport district officials weighed their options, GSP kept a skeleton inventory of 35 to 40 luggage carts on hand.

Involving all affected departments was critical to arriving at a good decision, Weston notes. "We didn't operate in a vacuum," she explains. "When you're talking about installing something customers will use, teamwork and collaboration are essential. We had representatives from Finance, Information Technology, Customer Service and Facilities and Operations ... so in the end, we made the best, most-informed decisions because we had input from all departments impacted by those decisions."

The new carts include a front panel that can be used for advertising, but the airport is initially using it for the GSP logo. Eventually, the airport district may sell advertising space there, but officials currently feel that the branding opportunity it offers is more important, Weston explains.

"There are four panels on the rails of the dispensing units that can be used for advertising, too," she notes. "They're empty now, but it's viable space for advertisers. There's revenue potential there, but this is a very new process for us ... so we haven't priced them yet."

GSP purchased the German equipment through Thompson Contract, an airport infrastructure product provider that also quarterbacked the system's turnkey installation. Justin Thompson, sales manager for the intermediary company, says airports benefit from handling cart rentals in-house by capturing revenue that otherwise would go to concessionaires. In-house programs often allow airports to lower their rental fees, he adds, which can encourage additional business.

"You get more usage when the fee is below $3," he advises. "Above that, rentals take a big hit. Most concessionaires charge $5, because they have to generate more revenue from fewer rentals."

After bringing its cart program in-house, GSP opted to keep its rental fees steady at $2 per cart, less a 25-cent refund designed to encourage users to return carts to dispensers and minimize restaging.

According to Thompson, even if an airport has to pay janitorial or parking lot staff $18 to $22 an hour to collect carts, it's still better than paying 80% to 85% of rental fees to a concessionaire. By "kicking in some more dollars to their own bottom lines," airports can hold down increases in landing or operating fees for their carriers, he elaborates.

Although the payback cycle varies with the equipment selected (cart material, options such as brakes, number of dispensers), Thompson says airports can break even on cart investments in as little as 30 months. "And the equipment will last 15 to 18 years," he adds.

At GSP, employees use a software system to help manage cart rentals. The system allows them to monitor how each dispensing station is working, track how much money each takes in and change rental rates if needed. It also allows customers to pay for cart rentals with cash or a credit card.

Location, Location, Location

After consulting with Thompson Contract, GSP divvied up its 80 new carts between three spots: a double-row dispenser in Baggage Claim and two single-row units in the long-term, 1,600-space economy parking lot that is farthest from the terminal.

"At $4 a day, the economy lot is the least expensive parking option at the airport, and it fills up first," Weston notes. "So it made sense to have two luggage-cart dispensers strategically located there - one close to the front of the lot and the other midway through it."

The airport's customer service employees collect unreturned carts from its various parking lots.

"It's really all about customer service and being customer driven," Weston emphasizes. "At the end of the day, that's not to say there won't be some revenue associated with the project. But the driving factor for us is delivery of good customer service."

No Reservations About Changing Parking Policies

In an effort to eliminate some of the stress associated with air travel, Greenville-Spartanburg International Airport (GSP) in South Carolina now offers advance reservations for nearly 100 parking spaces in three of its parking facilities. By charging $5 per reservation, the airport  expects to net about $10,000 per year.

“It was totally driven by customer convenience,” explains Rosylin Weston, vice president of communications for the Greenville-Spartanburg Airport District. “Between talking to our customers at check-out and asking some parking-related questions on our monthly survey forms, we found customers were very receptive to the concept of parking reservations.”

With overall passenger traffic up 38% from 1.268 million in 2010 to 1.755 million in 2011, airport personnel began fielding concerns from customers about not being able to find parking spots. In total, GSP offers more than 4,500 parking spots: 1,165 spaces in Garage A; 1,510 in Garage B; 1,506 in the economy lot; and 338 spots in the daily lot. Since last March, 90 spots are earmarked for customers with reservations: 50 in the economy lot and 20 on the top level of each parking garage.

Implementing the new customer convenience, Weston reports, was relatively easy, because ABM Parking Services, the company that manages the airport’s parking facilities, already had a reservation system in place at other airports.

A parking reservations link added to the home page of GSP’s website (www.gspairport.com) takes customers to an ABM landing page, where they can place “electronic dibs” on a parking spot for an extra $5. GSP debuted the reservation option last March, and by the end of November, more than 1,590 customers had elected to pay for extra parking peace of mind. Typically, about half of the spaces earmarked for reserved parking are occupied at any given time, Weston reports.

“We have a lot of repeat customers, especially business travelers who travel on a weekly basis and generally use the economy lot,” she explains. Customers may make a reservation for a maximum of 30 days, although it expires once a car leaves a spot — even if time still remains on the initial reservation period.

The airport typically nets $4.80 or $4.90 for each transaction — the full fee less a credit card processing charge. During its first partial year (March through November 2012), GSP collected $7,955 in reservations revenue, reports Weston. Airport district officials expect this year’s total to be around $10,000.

“While any new revenue stream is attractive, our decision to offer reserve parking was not driven by revenue,” Weston clarifies. “We just want to rank up there at the top in terms of customer service, because that’s a factor people consider when they decide what airport that they want to use. We’re going to do everything we can to make our airport more customer-friendly.”

 

Subcategory: 
Concessions/Retail

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