An Apparent Non-Money Pricing Anomaly

The City of Austin offers airport parking in three tiers, from garage ($20/day), to close-in surface ($10/day), to distant surface ($7/day).  Frequent parkers accumulate points entitling them to free parking days.

The incentives for redeeming the points are bizarre:

Garage                     2500 points

Close In                    2500 points

Long Term                 2500 points

The “price” of a free parking day is the same for the very desirable garage, where I’d never park if I have to pay $$, and for the close-in parking (where I park for $$ if staying fewer than 5 days) as well as for the long-term (where I park only if staying more than 4 days).  Seeing this, we will redeem our 10,000 points for four days in the garage—parking for “free” anywhere else makes no sense. Now if the airlines would only charge the same number of frequent-flyer miles for a trip to Australia as they do for a trip to New York, I would be even better off!


Phil

Perhaps the airport is trying to entice you to try the garage, hoping you like it so much you switch to it permanently.

My frequent flyer program charges only 1.6x the miles for business class than regular, even though buying a business class ticket costs at least 3x more. Perhaps it's the same idea.

Joel

I agree with Phil. That would seem to be the only logical reason for doing this. It's also possible that they underestimated demand for the less expensive options (and overestimated demand for garage parking) and are trying to maintain availability in all areas.

BL1Y

I have a coupon for Express that reads:

$50 off your $150 purchase
or $30 off your $100 purchase
or $15 off your $30 purchase

I'll let you brainiacs crunch the numbers and figure this one out.

Dave

Are points accumulated at the same rate in each of the three lots? i.e. X points/Parking Day, or are they tied to $ spent?

This would be critical information in assessing the implications of the incentive pricing scheme.

BL1Y

20 points per dollar spent.

I don't see how this is critical information for assessing the point redemption.

Dave

If points are accumulated with some correlation to price paid, then the more frugal parkers would need to amass more Parking Days before they could realize their "same-priced" reward. With your information of 20 points/dollar spent, this would see the Garage parker amassing points at nearly 3x the rate of the Remote Lot parker.

Long-term parkers are probably more likely to continue to be long-term parkers and as Allen points out below, free days may not be cover an entire parking stay but could be used to offset (or discount) a long term stay.

The scheme appears to operate on the principle that most people will utilize their rewards in a manner consistent with their accumulation. And for those that don't the airport gets the chance to offer a free trial of "upgraded" parking in the hopes of spurring a shift to a higher-priced option on future trips.

Allen

Many people will redeem a free day to partially cover their parking charge. You have four free days, but you might be travelling for a week. In that case, the value of the "free days" depends on where you're paying for the rest of the week.

Given administrative hassles with keeping track of different redemption level, the "One Free Price" plan seems like it might be a rational approach.

robyn ann goldstein

Dear Friends;

So I had this conversation with a 6 year old kid this morning. Can you imagine it. A six year old kid resolving the problem of the debt ceiling. and the kid has been diagnosed as autistic. Actually, I had been thinking about the problem myself this morning and was walking my dogs. The kid (one of fraternal twins and the sweet one) looked so sad standing (back pack and all in front of his house). So I asked him if he were going to camp? No, he said summer school and looked even sadder. I said, you don't like it. He said No, 3-4 days to go. And then proceeded to vaguely say something about having to go see a teacher. This boy has been mean to him. So my first response was, remember, "sticks and stones...." but then pursued the matter a bit further. So, what did he do. He said that he was mean to him. so I said, what did you do. And he said, "looked up voodoo on the computer." Imagine that. Yes, is not the truth that raising the debt ceiling is a form of voodoo economics. the first thing that needs to be done is "eliminate the debt ceiling." it is a false notion anyway. That is what I did when I had to pay back all of my mother's debts. I slowly paid them back and did not concern myself with ceiling, but rather with paying back and now with getting to the point of never owing so much again. So when the credit card company asks for 25, I pay 1-2000 and hold myself to a credit limit beyond which I will not go. This will be the first of a series of pieces offered to you on what needs to be done on the real basis of what I now know, that I was very close to, but that I did not really understand until yesterday. A good night's sleep and a good question (thanks to Maureen) helped alot.

Read more...

Feelin Blue

Many Kids never seem to get the credit that they are do in a protestant world like ours. I hope that they are a bit more now and will continue to be. I am somewhat a product of a kind of Victorian household where kids are to be seen not heard by parents who liked to think that they necessarily know better. Thanks to an old friend, I do know better than to treat my kid as other than a unique individual in her own right. And I am so happy to know such a wonderful person who taught me about what it means to have real friends. I just wish that I really (not abstractly) had more than two.

Rick Mueller

Could it be that the pricing scheme is incorrect? Especially in the recession where people should be less likely to pay for the fancy parking? The airport may not want to changed what it charges temporarily nor change the size of the lots (especially in the case of the garage), so they allow points to be used to fill up the primo lot (which has excess supply) and this frees up the revenue-generating lots for paying customers.

Same dynamic holds for airlines that offer deals for frequent flyers to sit up front.

Did I get it right Dan?

James

Hummm... So parking at the airport costs anywhere from $7 to $20 per day, or $35-$100 for your 5 day trip. Might it not be useful to ask the price of a bus or taxi ride to & from the airport?

Nick

The assumption that the incentive scheme is logically derived may be incorrect. Living in Austin, I've discovered that many local policy decisions are difficult to analyze using logic (e.g., offering a city backed long term, interest free loan with no payback requirement to a Tex Mex restaurant to allow them to continue to occupy a prime real estate location they could no longer afford).

Eric M. Jones.

"...Frequent parkers accumulate points entitling them to free parking days."

Daniel, you don't say how the points are accumulated for parking.

Are points paid as a fraction of the charge (like my CC)? This would be fair, since the low-rent points are much harder to accumulate.

OTOH, perhaps this is a way of saying that you can park anywhere you darned well please if you have 2500 points...or a "clergy" sticker, etc.

MM

Don't you think it is a marketing trick ?

If you get incent to go to expensive parking with points (you will not go to the usual far-away parking for the same amount of points) then, you will have a taste of the luxurious parking (you wuold never had with your money first) and the next time you will park, you will think about the benefit to save some dollars and be far away or to have again this pleasure to park near the airport (or at least not at the far-away parking).
Don't you think it is a way to invest on frequent parking users ?

Ted

This pricing scheme seems equivalent to Southwest Airlines' old Rapid Rewards system, where you got 1.0 credit per flight and earned a free flight at 16 credits, all regardless of distance, although there was some price differentiation if you got a business select ticket. I used to fly often between Baltimore and Hartford for $60 each way, and then redeem my credits for flights to California. Sadly, they just changed it this March to a more traditional points structure where both earning and redeeming points is based on the price of the ticket. Maybe both Southwest and the Austin airport use this structure to build loyalty and win market share from the competition, assuming there are a number of other off-site lots in Austin.

George

An aside -- as a resident of Los Angeles, those parking prices seem crazy cheap.