History of D/FW Airport Valet Privilege Fees
- 2001 -2007 no fees, no permit required to operate
- Late 2006, Board votes to require permit, charge fees for valet operation, with no notice to or discussion with valet operators
- January 2007, 8% fee assessed to valet revenues for off-airport operators
- October 2008, valet operators informed that if the 8% fee is passed on to the customer, then the 8% received from the customers is subject to an additional 8% (8-on-8), informs FreedomPark that it will be assessed in arrears for the deficit
- December 2008 DFW CEO Fegan offers to waive the amount in arrears in exchange for off-airport valet companies agreeing to operating restrictions; FreedomPark declines to ‘sell’ its cooperation unless all off-airport parking companies are given the same break
- June 4, 2009 D/FW Board votes to reduce fees required of its on-airport valet operator by 33%
- June 5, 2009 D/FW Board sends notice to FreedomPark assessing $89,000 in fees in arrears (8-on-8)
- August 6, 2009 D/FW Board votes to increase fees for off-airport valet customers by 25% without notice or discussion with valet operators
Unfair Competition
DFW Airport CEO Jeff Fegan, when defending the decision to launch a DFW branded valet operation after being questioned by Mayor Moncrief regarding that decision:
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“This is a private company (PCI) who has to succeed. They competed for the concession of operating out at DFW Airport. So, much like our concessions program there’s always competition. There’s always a winner and there’s always sometimes a loser. So we believe this is a private enterprise trying to operate under a concession agreement as opposed to a permit agreement as the other operators will be operating under.” |
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This is Mr. Fegan’s idea of "competition”
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Advantage
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PCI/DFW Valet
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FreedomPark
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Can take non-reservation customer
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X
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Customers exempt from entry/exit tolls
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X
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Airport pays for and develops all marketing
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X
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Has podiums with signs at greeting locations
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X
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Has dedicated parking slots in One Hour Garage
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X
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Has primary customer meet location in all terminals
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X
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Permitted to hand out promotional literature at airport
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X
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Coupons distributed by airport to other airport parkers
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X
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Receives fee reduction for economic hardship
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X
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Airport provides 1300 garage parking spaces on-airport
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X
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Doesn’t have the airport telling them how to run business
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X
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Quotes
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Ben Muro, DFW Airport Board Member:
“we run this airport as an enterprise… as a business” (What business has the right to regulate its competitors and assess them fees)
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Jeff Fegan, D/FW Airport CEO, when justifying to the Board in January 2008 the decision to continue with the D/FW-branded valet project:
“Nothing that we are doing here (with PCI as their branded valet contractor) will preclude, or impact, or change the process in which the current operators currently perform here at DFW.”
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Jeff Fegan, D/FW Airport CEO when asked by a Board member what will happen to PCI if they are not granted financial relief
“They will pull out of the contract”
When asked if other company’s could take up the slack if PCI pulled out, Fegan replied:
“Yes, FreedomPark and the others have the capacity to do so, but the airport would not make as much money.”
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Ken Buchanan, D/FW Airport VP – Revenue Management, to Gil Barnett, President of PCI, in response to Mr. Barnett’s gloomy assessment of the prospects for the valet venture:
“Failure is not an option.”
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Mr. Gill Barnett, President of PCI, urging D/FW to impose restrictions on off-airport valet companies in order to improve PCI’s prospects for financial success, and in order to alleviate pressure on PCI from their bank:
Financial results of D/FW’s on-airport valet project
- Contractor’s (PCI) first year’s operating results
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Parking Concepts, Inc.
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DFW Airport
Valet Parking
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Income Statement
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For the Period Ending February 28, 2009
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Reporting Period
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Quarter
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Year-To-Date
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Actual
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Actual
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Total Sales
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$
684,100
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$
2,364,200
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% Change vs. Prior Year
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NA
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NA
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Total Cost of Sales
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$
928,300
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$
3,699,600
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Percent of Sales
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135.7%
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156.5%
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Gross Income
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$
(244,200)
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$
(1,335,400)
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Percent of Sales
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-35.7%
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-56.5%
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Total Controllable Expenses
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$
146,200
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$
612,500
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Percent of Sales
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21.4%
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25.9%
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Income Before Fixed Costs
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$
(390,400)
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$
(1,947,900)
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Percent of Sales
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-57.1%
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-82.4%
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Total Occupancy Costs
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$
46,300
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$
184,000
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Percent of Sales
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6.8%
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7.8%
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Earnings Before Interest, & Taxes
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$
(436,700)
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$
(2,131,900)
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Percent of Sales
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-63.8%
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-90.2%
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- Contractor’s (PCI) 1st Qtr Year 2 results
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Parking Concepts, Inc.
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DFW Airport
Valet Parking
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Income Statement
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For the Period Ending May 31, 2009
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Reporting Period
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Quarter
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Year-To-Date
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Actual
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Actual
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Total Sales
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$
747,000
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$
747,000
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% Change vs. Prior Year
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164.9%
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164.9%
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Total Cost of Sales
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$
946,800
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$
946,800
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Percent of Sales
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126.7%
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126.7%
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Gross Income
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$
(199,800)
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$
(199,800)
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Percent of Sales
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-26.7%
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-26.7%
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Total Controllable Expenses
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$
145,400
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$
145,400
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Percent of Sales
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19.5%
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19.5%
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Income Before Fixed Costs
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$
(345,200)
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$
(345,200)
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Percent of Sales
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-46.2%
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-46.2%
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Total Occupancy Costs
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$
41,500
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$
41,500
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Percent of Sales
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5.6%
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5.6%
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Earnings Before Interest, & Taxes
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$
(386,700)
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$
(386,700)
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Percent of Sales
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-51.8%
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-51.8%
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- DFW Airport’s Results
Cannibalization refers to the extent to which the airport’s valet business has stripped business from the airport’s other parking products. Since the airport’s valet contractor, PCI, pays only 22% of gross revenues back to the airport, every dollar taken from other airport parking products is diluted to as little as 22 cents before it comes back to the airport.
- Sources of business for D/FW’s valet project (based on June 2009 Survey conducted by the D/FW Airport Board
- 15% from off-airport valet companies
- 74 % cannibalized from D/FW Airport’s own parking products (terminal, express, remote)
- 11% other
- Financial results of cannibalization: net loss to D/FW Airport for first year of the project = ( $1,053,000.00 )
- Potential loss to D/FW Airport for second year of the project = ( $1,162,000.00 )