Skift Take

Expect new light on the importance of airport rides to the fortunes of Uber to prompt more airport authorities and ground transportation companies to pressure the company harder for various concessions.

Fears about Uber’s dominance in airport service are overblown. That is one of a few headline conclusions to draw from the financial filing Uber Technologies released on Thursday in a prelude to its debut on the public markets.

In 2018, Uber generated 15 percent of its ridesharing gross bookings from trips that drivers either started or completed at an airport.

“The booking volume stated by Uber will relate to transactions and whilst lower than expected, the average transaction value to airports will be far higher than city ‘point-to-point’ journeys, particularly once Uber have levied the airport access fees that in the U.S. average between $2.50 to $5.00 of each trip,” said Chris Wortley, an airport consultant.

“The 15 percent of total volume is an interesting statistic,” said Michael Lee, president of the consultancy Airport Business Advisors. “While airports are abuzz with activity as passengers arrive and depart, it seems reasonable that airport trips would be on the low end of their total bookings.”

A handful of airports drove the volume. The startup derived 24 percent of its ride-sharing gross bookings from merely five metropolitan areas – Los Angeles, New York City, and the San Francisco Bay Area, plus London, and São Paulo, Brazil.

“That stat shows that even the biggest player in mobility is focused on a specific use case in a few core markets,” said David Litwak, CEO of transportation booking platform Mozio. “There is still room to carve out fairly large niches. As urban mobility matures I expect it to stay multimodal.”

Uber Segments Revealed

A look at Uber’s revenue by division confirms that airport-related sales remain a minority of its overall business.

Uber Revenue by Division (in millions) 2016 2017 2018
Ridesharing revenue $3,535 $6,888 $9,182
Uber Eats revenue $103 $587 $1,460
Vehicle Solutions revenue $188 $345 $143
Other revenue (includes Uber for Business) $18 $45 $112
Total Revenue $3,845 $7,932 $11,270

For more on Uber Eats, read “7 Things Uber’s IPO Filing Reveals About Uber Eats” from Skift Table.

Uber didn’t break out the volume it generates in Uber for Business, the company’s ride management software built for both small and large companies to review and analyze expense data. But its revenue contribution in 2018 was less than $255 million. Compared against total ride-sharing revenue of $9 billion in 2018, the service was a drop in the bucket.

Tech only accounted for about a fourth of its workforce allocation. The company had 22,263 workers as of the end of December, with 5,459 in research and development, 2,993 employees in general and administrative, 11,860 employees in operations and support, and 1,951 employees in sales and marketing.

A Focus on Airports

The airport market is growing in significance for Uber. In January 2019, the startup launched a consumer rewards program in the U.S aimed that included a perk of priority pickup at airports.

Uber and its rivals matter to airports, too. Exhibit A: At San Francisco International Airport, ride-sharing companies like Uber, Lyft, and Wingz take up three-fourths of commercial ground transportation, or roughly 880,000 trips a month.

“The three transportation network companies here have been active participants with us in the process to balance customer preferences with traffic flow considerations,” said Doug Yakel, a spokesperson for the airport.

Some airports regulate ridesharing within airport boundaries, including by mandating that ridesharing service providers obtain airport-specific licenses. The effect of this has led Uber to have to pay out fees. Under a line item “government and airport fees payable,” the ride-hailing leader has seen fees shoot up from $45 million in 2017 to $104 million in 2018, though the company didn’t break out the proportion that went to airports.

The details may help concentrate the minds of airport operators, municipal officials, and competitors in ground transportation such as black cab and shuttle providers. Some airports have seen parking revenues per passenger decline, while other ground transport offers have experienced market share losses.

Rival Lyft, in turn, has not revealed in public filings how much business it derives from airport rides. The company held its IPO in late March.

Some airports have pushed hard to add charges to ride-sharing companies on a per-ride basis and then insisted that Uber and its peers share data on passenger volumes via a semi-independent group, the American Association of Airport Executives, as a means of verification.

Some airports are getting creative with their parking fees, Wortley said. Dallas Fort-Worth, Phoenix, Vancouver, and Ottawa have made various experiments in pricing. This month Dallas Fort-Worth, for example, rolled out a prepaid discount parking program. Phoenix’s airport has seen a rebound thanks to a seventh-day free product in one lot.

“Another difficult issue are the staging lots at the airports where drivers wait for fares,” said Lee. “The transportation network companies need to find innovative ways for controlling the number of vehicles in these lots as well as the dwell time in the lots.”

Especially vulnerable among car rental companies is Hertz, which has had the greatest share of the pick-it-up-at-the-airport business in the U.S. and, analysts say not coincidentally, has been having less growth domestically in recent years than its peers. For details, read “Avis and Hertz Chart Their Futures After Yet Another Comeback.”

Several airports, particularly those outside the United States, have banned ridesharing operations altogether. Case in point: Last October, Uber brought its services back to Düsseldorf, Germany, three years after the city forced it out due to regulatory difficulties. It is but one of many cities that have dueled with the company.

While Uber has cut deals with most major U.S. airports to drop off and pick up passengers within airport boundaries, the negotiations will be ongoing and continue to spread outward worldwide.

The industry will mull over other details revealed in the financial filings. One detail was that the company’s fourth-biggest individual shareholder is the head of Saudi Arabia’s sovereign wealth fund. That matters because Uber CEO Dara Khosrowshahi bowed out of attending a Saudi investment conference after the murder of a journalist inside the Turkish Embassy in October that authorities say was likely ordered by Saudi Crown Prince Mohammed Bin Salman.

Senior Editor Andrew Sheivachman contributed to this report.


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Tags: airports, ctir, ground transportation, ipo, uber

Photo credit: A traveler pulls his luggage past a row of French taxi cabs sat on a road outside Charles de Gaulle airport during a protest against Uber Technologies Inc.'s car sharing service in Roissy, France, on June 25, 2015. Balint Porneczi / Bloomberg

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