Airport Transfers Industry

Part
01
of five
Part
01

Airport Transfers Innovations

Today, the airport ground transportation industry is confronted with technology innovations and the disruptions they can cause. Three key innovations that are disrupting market share of traditional ground transportation modes like taxis, hotel shuttle buses, and personal vehicles are (1) ride-hailing services (also called Transportation Network Companies, or TNCs), (2) dedicated rail transport systems, and (3) electric and autonomous vehicles.

Increased Use of Ride-Hailing Services

  • Ride-hailing services like Uber and Lyft are replacing personal cars and car rentals as passengers' preferred methods to travel to and from airports. These services are preferred by millennials (those people born between 1982 and 2000), who would rather not own their own cars and who have become a substantial segment of the air travel market.
  • The Uber and Lyft vehicles can clog curbside passenger departure and arrival roads, creating big traffic jams and annoying air travelers and their families and business associates. But some airports have already accepted this innovation and have redesigned or repurposed areas of their airports to accommodate the TNCs. Other airports are working on making Uber, Lyft, and other ride-hailing services welcome. For example, Atlanta's Hartsfield-Jackson airport and Denver's international airport "are embracing ride-sharing into their terminal-area development plans to facilitate smooth multi-modal alternative mobility."
  • In addition, the use of ride-hailing services directly contributes to the reduction of airport income. This problem alone could make TNCs a key disrupter of traditional ground transportation. In the U.S., ground transportation services and parking fees make up 41% of airport revenues.
  • TNC usage also affects how airports use their land. Airports are cutting back on parking spaces that are no longer needed because travelers aren't bringing their personal cars to the airport and leaving them there while on their trips. For example, "Pittsburgh International Airport is embarking on a $1 billion facility improvement program, which initially included the construction of about 5,000 additional parking spaces. After a more thorough review, however, the airport decided to scale back to 3,500 spaces because of the increasing use of TNCs."
  • In the past, "ground transport options [were] a driver of infrastructure investment, requiring parking facilities, access roads and curbside pickup/drop-off areas. These assets are capital intensive and have long life spans, which puts them at risk of disruption from changes in passenger behavior and mobility trends." Asset removal and replacement is costly and disruptive to customers who use the airport as well as to vendors that serve the customers on site.

Dedicated Rail Transport Systems

  • Successful rail transport systems like those in Europe have helped some U.S. airports adapt to travelers' ground transportation needs. Additional rail systems could be incorporated into airport ground transportation services at airports that currently do not have them.
  • In the year 2000, 16 large U.S. airports did not have dedicated rail systems." Today, many U.S. airports do have rail service. Miami, Philadelphia, Providence, Milwaukee, and Denver have added dedicated rail service to their ground transportation options. Atlanta, Baltimore-Washington, Cleveland, Chicago, Dallas-Fort Worth, Minneapolis, Oakland, Phoenix, Portland, San Francisco, Seattle-Tacoma, St Louis, and Dulles International now have stops at the airport on their new or existing light-rail or rapid-transit systems.
  • Dedicated rail systems and light-rail or rapid-transit stops at airports can reduce traffic congestion and reduce fossil fuel emissions of internal combustion engines from cars NOT driven to and from airports. But using rail transportation also reduces airport revenues from parking and traditional ground transportation methods.

Electric and Autonomous Vehicles

  • The near future will see further development and market penetration of electric and autonomous vehicles used as ground transportation to and from airports.
  • Major companies like Waymo and Tesla have already done extensive testing of their vehicles and will be implementing their services soon.
  • The introduction of autonomous vehicles (AVs) will further complicate the ride-hailing segment of ground transportation, since the AVs will be summoned by a phone app. Airport logistics managers will be required to address traffic congestion, curb space, concession pricing, and other factors.
  • The AVs may also reduce airport revenues, unless negotiations can produce agreements to share AV revenues in return for curbside accommodation.
Part
02
of five
Part
02

Airport Transfers Regulations

Some key regulations that impact the airport transfers services industry include zero-emission vehicles, state insurance requirements, employee classification, and airport contracts. Details for each of these regulations are provided below.

Zero-Emission Vehicles

  • As per a recently enacted regulation, vehicles serving the airport will have to be 100% zero-emission vehicles by 2035.
  • This regulation has been enacted by the California Air Resources Board.
  • ARB estimates that this change will help shuttle fleet owners reduce fuel and maintenance costs by a total of $30 million.
  • This regulation will impact any and all airport transfer operators offering services in California.

State Insurance

  • Van (or shuttle) operations have to be in compliance with state insurance requirements.
  • Some shuttle operations, including those that serve airports, were recently suspended for not complying with state insurance regulations in California.
  • Super Shuttle was one of the companies that were suspended during the recent suspension ordered by the California Public Utilities Commission.

Employee Classification

  • Shuttle service providers, including those that serve airports, have to opt for a business model and then comply with the applicable regulations.
  • As per the business model, the people working for the company can either be classified as the company's employees or independent contractors/franchisees. Whichever the company's business model, the tax requirements for the company are based on that choice.
  • Super Shuttle has faced a number of lawsuits from their employees in this regard. The company leans towards defining drivers as independent contractors, not direct employees.
  • The Employment Development Department (EDD) "charged SuperShuttle more than $783,000 for failing to pay into state unemployment insurance and disability funds on behalf of drivers from 2006 through 2009. In 2014, SuperShuttle sued the EDD. The case is set to be heard in September."

Airport Contracts

  • Companies providing airport transfer services have to have some form of contract with airports in order to access those airports.
  • The companies may also have to pay certain fees for that arrangement.
  • Super Shuttle entered into a new contract with Baltimore/Washington International Airport. The fees were raised from the original 15% to 17.5% of outbound fares.

Research Strategy

We started our research by investigating the regulations that impact the airport transfers industry, specifically the key players identified in previous research. Although we were able to find some regulations, including the zero-emissions regulation, most of the regulations were generally applicable to transportation, e.g. load, capacity, etc. We included regulations that were specifically relevant to the industry under consideration and had a significant impact but this approach did not yield many results. Alternatively, we focused on finding general regulations that impacted the industry. During the course of our research, we found some regulations that impacted other players in the industry, e.g. Super Shuttle. We have included those results as well since the company is also a key player in this industry and the regulations are directly relevant to the key players previously identified.
Part
03
of five
Part
03

Airport Transfers Key Players

Three of the key players in the global airport transfers industry are GO Airport Shuttle, Addison Lee, and World Airport Transfer. Further details about each player have been documented below.

GO Airport Shuttle, Inc.

Addison Lee

  • Addison Lee has been providing business-class car services in London for over 40 years.
  • The company provides transportation to over 10 million people annually.
  • The company operates in 350 cities throughout the world and has over 4,800 cars in central London alone.
  • The company was founded in 1975. The company offers ground transportation services such as private car services, courier services, executive transportation, private airport transfers, 13-53 seat coaches, planning and transportation for events, and personal accounts.
  • The company generated a revenue of £390.3 million ($511 million) in 2018.

World Airport Transfer

  • World Airport Transfer provides airport transfer services on more than 700 major airports globally.
  • The company has a network of more than 13,000 travel agencies.
  • The company was founded in 1997 and offers ground transportation services from airports as well as cruise ports and train stations. The company also offers ski transfer services.
  • World Airport Transfer was acquired by VELTRA Corporation in 2016.
  • World Airport Transfer generated annual revenues of less than $1 million, whereas the parent company, VELTRA, generated annual revenue of ¥2.45 billion ($23 million) in 2017.

Research Strategy

To find out the key players in the global airport transfers industry, we started our research by trying to determine the largest players based on their revenue. However, this does not prove to be a viable strategy as most of the companies operating in this space are private companies and do not publish annual reports, thereby making it difficult to determine the largest companies based on revenues and/or market share. On the contrary, most companies make mention of their fleet sizes or the number of locations they serve. We took advantage of this information and found a number of companies with large fleet sizes or the number of locations they served. While there are many companies that have over 100 vehicles in their fleets, e.g. Aerofleet, AirFlight Services, Aeroport, etc., there are only a few companies that have larger fleet sizes. As a result, we have provided 3 key players that have either a large fleet size or provide services on a large number of locations. Once we had determined the key players, we found the requested details for each company using their websites or company information databases.
Part
04
of five
Part
04

Hotel Airport Shuttle Services

Two prominent hotel airport shuttle service providers are Heathrow Shuttle and Super Shuttle. The requested details for each company have been outlined below.

Heathrow Shuttle

  • Heathrow Shuttle has transported more than 3.9 million passengers since 2005 just to London city from Heathrow Airport.
  • The company operates 6-49 seater luxury vehicles, including minibusses, executive coaches, and cars.
  • The company provides transportation to and from Heathrow Airport, as well as many other airports and cities in the UK, to any destination throughout the UK round the year.
  • The company's positioning statement says, "HeathrowShuttle® is the Leading Transportation Service in London City. Specializing in low cost door to door Airport Transportation Services to any destination in the UK to and from London Heathrow Airport 24 hours a day 7 days a week."
  • The company's core focus is on serving travelers at Heathrow Airport, which gives them an edge over other service providers in that region.
  • Additionally, all vehicles that the company owns and uses for its services are nearly new, which can be a competitive advantage. The company also serves seaports, which allows them to claim a piece of the pie in that market as well.
  • While the company's explicit focus on Heathrow Airport provides them with an opportunity, it can also be considered as an opportunity. The company can improve its focus on other destinations to address other regions in the market.
  • Road-based airport transportation options are relatively slow as compared to train options. This poses a potential threat to the company in terms of the market they serve.
  • The company's offerings include door-to-door airport transportation, seaport transfers, group transfers (6-100 passengers), business travel, event planning and management, and holiday packages.

Super Shuttle

  • Super Shuttle is a division of Transdev OnDemand, Inc. The company serves more than 40 airports worldwide.
  • The company serves over 9 million passengers each year and has cumulatively served 150 million passengers.
  • The company's positioning statement says, "Airport transportation made simple". They also state, "SuperShuttle is the leader in airport transportation with over 30 years of experience and 150 million passengers served."
  • The company has a rich experience of over 30 years that sets them up for success.
  • The company offers discounts with its partners, which has the potential to target new customers.
  • Although the company has many strengths, it does not offer services in some of the busiest airport locations in the world, e.g. Istanbul, Dubai, etc.
  • To add to the trouble, the company is closing operations in some existing locations.
  • The company does not offer services other than transportation, e.g. holiday packages.
  • The company's offerings are limited to transportation only, which includes shuttle services, black car, business travel, and transportation for events.
  • The company recently partnered with Deem, which provides mobile and cloud technology services to the business travel industry.
  • The company also partnered with HotelPlanner, which provides online group hotel sales services.
  • The company posted revenues of $340 million in 2015.

Research Strategy

We started our research by looking for prominent players in the airport transportation industry that offer shuttle services to and from the hotel. We found a number of smaller players, e.g. Airport Shuttles and Sunstar Shuttle, however, Heathrow Shuttle and Super Shuttle were by far the biggest provider of such services based on the number of passengers served. After identifying the players, we searched their websites and other sources, e.g. company information databases and news and media articles, to find the rest of the details for each. No partnership/acquisition or revenue information is available for Heathrow Shuttle. We went through the company website, as well as the company's blog and news and media articles to look for such information, however, no such information could be located about the company. The rest of the information has been provided above.
Part
05
of five
Part
05

Airport Transfers Competitive Landscape

The key players in the global airport transfers industry are GO Airport Shuttle, Addison Lee, and World Airport Transfer. Further details about each player, including positioning statements, strengths, weaknesses, partnership, and acquisition information have been documented below.

GO Airport Shuttle, Inc.

  • GO Airport Shuttle has a fleet of 3,765 vehicles.
  • The company serves as many as 29 million passengers each year across 110 airports worldwide.
  • The company was formed as a result of 40 independent transportation companies joining hands. These companies are located throughout the United States, Mexico, England, Canada, Scotland, France, Italy, and Spain.
  • The company was founded in 2007. The company has an estimated revenue of $16.2 million.
  • The company offers ground transportation services for airports, private car services, and sightseeing tours.
  • The company's positioning statement states, "GO Airport Shuttle makes getting to or from the airport easy with shared ride airport shuttle service, transfer, or private car service."
  • GO has local management on locations throughout the world that allows them to handle matters where they arise. The company also offers tours and attractions along with transportation, which allows them an additional avenue for revenue generation.
  • The company does not offer discounts (or discontinued them) in certain locations, which can potentially be a missed opportunity.
  • The company is made up of small and large businesses with local owners. This can sometimes mean different experiences for people traveling in different areas.
  • The company partnered with a shuttle operator in Seattle in 2015 to "launch a fleet of 11-passenger Mercedes Benz shuttles featuring TEC technology, the cleanest-burning diesel engines in the world" under the umbrella of GO SpeediShuttle.

Addison Lee

  • Addison Lee has been providing business-class car services in London for over 40 years.
  • The company provides transportation to over 10 million people annually.
  • The company operates in 350 cities throughout the world and has over 4,800 cars in central London alone.
  • The company was founded in 1975. The company offers ground transportation services such as private car services, courier services, executive transportation, private airport transfers, 13-53 seat coaches, planning and transportation for events, and personal accounts.
  • The company generated a revenue of £390.3 million ($511 million) in 2018.
  • The company's positioning statement is "Business class cars. At your service".
  • The company's strengths include having a rich experience of operating in the industry for over 40 years and the appetite for continuous growth.
  • Although the company operates globally, its core focus currently appears to be the United Kingdom. The company has plans to expand globally. The company is also focusing on advancing in terms of technology, which suggests that the company may have room to improve in this area.
  • Addison Lee recently partnered with Immense, a company that provides intelligent mobility solutions, under their mVentures innovation programme. The partnership will utilize simulation "to explore more efficient and environmentally friendly ways of getting drivers and customers to where they need to be." The partnership was announced on October 15 this year.

World Airport Transfer

  • World Airport Transfer provides airport transfer services on more than 700 major airports globally.
  • The company was founded in 1997 and offers ground transportation services from airports as well as cruise ports and train stations. The company also offers ski transfer services.
  • World Airport Transfer generated annual revenues of less than $1 million, whereas the parent company, VELTRA, generated annual revenue of ¥2.45 billion ($23 million) in 2017.
  • The company's positioning statement says, "Since 1997, World Airport Transfer has offered economical and hassle-free transport options to and from airports worldwide."
  • The company offers all types of transport options, including shared-ride shuttle vans, private vans, sedans, limousines, mini-coaches, and deluxe motor coaches.
  • The company operates globally with offices in France, Greece, the USA, the Philippines, and Italy. It has a network of more than 13,000 travel agencies.
  • Although the company offers a full range of vehicle types and has offices throughout the globe, it can improve in terms of the services offered. With such a wide transportation network, it has the potential to expand its services, e.g. luxury options, tours, etc.
  • Most of the vehicles that the company operates are vans. They have a potential expansion opportunity into the cars space.
  • The company was acquired by VELTRA Corporation in 2016.

Hotel Shuttle Services

Research Strategy

We started our research by identifying the key players in the global airport transfers industry from previous research. We then performed further analysis on each key player, using their websites, annual reports (where available), and press releases, to outline the requested details for each key player.
Sources
Sources

From Part 01
Quotes
  • "The use of ride-hailing service companies, also referred to as transportation network companies (TNCs), continues to grow—comprising up to 18% of all passenger ground transportation to and from airports."
  • "“Continuing this trend would mean that airport parking demand could be cut in half in about 14 years,” said Alejandro Henao, a postdoctoral researcher at NREL. “While this can be viewed as a declining revenue base, it could also enable airport growth without additional parking infrastructure investments, freeing up airport property for other uses. It also allows for new revenue streams—airports implementing a TNC fee for ride-hailing pick-ups and drop-offs are seeing an uptick, with Denver and San Francisco earning upwards of $600,000 to $2 million a month in new service-fee revenue.”"
  • "Total parking revenue has peaked, and growth in parking demand is not tracking with growth in air travel, with ride-hailing being a major contributor to the shift. As a result, curb demand, rather than parking demand, is a factor in accommodating increased air travel."
Quotes
  • ""...(S)ocial media innovations and preferences of the rising millennial age segment (born between 1982 and 2000) demonstrating less dependency on car ownership, are inducing demands for alternative mobility platforms.""
  • ""Uber has expanded to more than 300 international airports....[Uber and Lyft] are moving toward utilising Autonomous Vehicle (AV) technology for ride sharing." "
Quotes
  • "Data from expense reporting service provider Certify on business and travel spending shows that TNCs grew from 8% of U.S. business traveler spending in 2014 to a staggering 62% in 2017. In one case, two TNCs at San Francisco International Airport (SFO), Uber and Lyft, grew from 4% of drop-off mode share in 2014 to 29% in 2017. In the process of winning nearly one-third of SFO’s arriving passengers, these TNCs reduced the share of every other mode — notably, not only taxis and rental cars, but also door-to-door vans and public transport."
  • "Ground transport is a major source of revenue for airports, with parking and ground access charges typically contributing one-quarter or more of total airport revenues. Yet TNCs generate substantially less revenue per passenger than parking, taxis and rental cars, thus increased use of TNCs may cut into airports’ income."
  • "At present, the implication is that the growth of TNCs means passengers are effectively trading down from a higher-revenue parking product or taxi service to a lower-revenue but higher-volume TNC product. This has far-reaching implications: if airports fail to act now, they may face declining financial performance as TNC usage continues to increase."
  • " North American airports in particular are greatly exposed to disruptions, with parking revenues accounting for about 23% of total airport revenues in 2016, compared with 13% for ANZ airports, 7% for Europe and 3% for Asia."
Quotes
  • "Four elements of a successful airport rail system: 1. Service to downtown and the metropolitan area; 2. Service to national destinations beyond the metropolitan area; 3. Quality of the rail connection at the airport, or the airport–railway interface; and 4. Baggage-handling strategies and off-site facilities."
  • "The link from the airport to the downtown is just a part of a larger transportation system to move the user to his or her actual trip destination. This chapter examines the characteristics of service for (1) airport users with local destinations in the metropolitan area and (2) airport users with destinations beyond the metropolitan area. In the European experience, the longer-distance ground access trips tend to be accommodated by national rail systems and are referred to in this report as“national” services. In the U.S. experience, destinations beyond the metropolitan area might be referred to as “statewide” or“exurban” destinations.""
  • "Rail services to airports can be categorized as either a dedicated service or a shared service. With dedicated service, services and vehicles designed specifically for the needs of the airline passenger are provided. With shared service, airline passengers use the same vehicles as other public transportation passengers in the corridor of service. In London, both the Gatwick Express and the Heathrow Express rail services are examples of dedicated service, with vehicles designed for the airline passenger. Service to Heathrow Airport on London Transport’s Piccadilly Line and other commuter rail services stopping at Gatwick Airport are examples of shared service. Many dedicated services market their high-quality line-haul times with fast service to only one terminal. Most shared services, such as the Piccadilly Line to Heathrow, provide relatively slow speeds into the city, but with distribution to many points in downtown. In many cases, the dedicated service (e.g., Gatwick Express, Heathrow Express) utilizes a vehicle designed to accommodate checked baggage. In most shared services, such as Munich’s S-Bahn service, no specialized vehicle is used, resulting in vehicles that may not serve travelers’ need for extra baggage space.... A characteristic of the dedicated-service strategy is the ability to provide minimized travel times between the airport and the downtown. However, the most successful overall mode share is gained by airports that offer a variety of strategies."
Quotes
  • "Ensuring multimodal access to an airport increases and enhances its competitive advantage. Ground transportation fees generally apply to taxis, buses, and car rentals that transport airline passengers. Other public transport services (such as train) might generate additional revenues for airport operators. Car parking and access fees paid by ground transport operators reduce congestion in the limited forecourt areas and ration scarce resources to those ground transport providers and private users willing to pay for premium access or parking. "
  • "In addition to generating extra revenues, additional and more affordable public-transport services to the airport can reduce congestion and promote growth. On the other hand, they cannibalize the airport car parking business. In the U.S., parking and ground transportation represents 41% of commercial revenues with U.S. O&D airports seeing higher parking revenue per passenger ($6.50) than large hub airports ($3.60)"
  • "Electric and autonomous vehicles will pose the next wave of change to airport infrastructure. New investment and management skills will be necessary to take advantage of the opportunities that the new technology brings. New technology such as assisted parking has the potential to increase car parks’ asset utilization; on the other hand, additional investment in electrification will be required to recharge electric vehicles at car parks and ground access infrastructure."
Quotes
  • " The transportation revolution could mean:• Electric Vehicles replace gasoline powered vehicles.• Self-driving cars become a reality.• Autonomous flying taxis begin serving customers.• Autonomous transportation as a service could mean many, if not most, will not own their vehicles. "
  • "Waymo [Google's transportation company] is already offering autonomous app-based transportation to consumers in Phoenix, and in late October 2019, they began testing the service without a safety driver.11 They are expected to begin offering this service without the safety driver in the near future. "
  • " Autonomous electric vehicles have the potential to completely transform public transportation by allowing it to serve more consumers and provide a higher level of service."
  • ""...(I)t is probable that AVs and transportation as a service will reduce traffic congestion and reduce transit times."
Quotes
  • "Dallas-Fort Worth International Airport – DART's Silver Line. Initially planned to open in 2013, still in process. The service will run West to East, connecting Grapevine, Texas to Plano, Texas. Houston. An extension of the METRORail Red Line is proposed to connect to George Bush Intercontinental Airport. An extension of the METRORail Purple Line and METRORail Green Line is proposed to connect to William P. Hobby Airport. Las Vegas has an ongoing discussion about extending the monorail into McCarran International Airport. Also in the Vegas area, the planned Ivanpah Airport is sited on the right of way for the proposed maglev demonstration project."
  • "For airports built within or close to the city limits, extending mass transit urban rail systems like rapid transit or light rail to airport terminals allows full integration with other public transport in the city, and seamless transport to all parts of town. Service frequency will be high, although travel time is a drawback as the services make many intermediate stops before reaching the city center and thus there may not be enough space for the baggage commonly carried by airport-bound passengers. "