Money Growing: Airport Parking

The capital’s parking companies are not used to fighting such opponents, but this time, in the opinion of experts, it may all end badly for them.

At the end of March the FAS moved from words to action. The FAS issued a long expected instruction that parking services at Moscow’s three airports break the law.

Casus belli

“As a result of market analysis of short term parking services at the airports, it has been established that BRK Invest Limited (operates at Sheremetyevo), Domodedovo Aerotel and Vnukovo-Invest, dominate the parking services market,” the official resolution of the FAS says.

In particular, at Domodedovo and Vnukovo, the service considers that monopolistically high prices have been set. And at Sheremetyevo, motorists paying for short-term parking are imposed with charges that round up to the nearest hour.

Car park owners at Domodedovo and Vnukovo should lower their tariffs to the level of Sheremetyevo: 100-150 rubles per hour. And the time limits should be divided into smaller sections: the first 15 minutes should be free with prices increasing for every 15 minutes, so that motorists don’t suffer from having to round up to an hour. Otherwise the car park companies will face paying a so called revenue fine at a rate of 1-1.5 per cent of the turnover of the company.

According to Finam’s estimations the turnover of such a car park is from 35 million rubles a month. In a year, the car parks at each airport bring in about $18 million. In such circumstances, each parking company would pay $300,000. And according to some experts, the income of the car parks is even higher and penalties could reach 20 million rubles.

Where is the justice?

According to experts there is common sense in the actions of the FAS. “The position of such car parks is monopolistic, the FAS can completely regulate them by setting a maximum level of tariffs. In such a case problems with control should not arise, and fines which may be applied by the FAS may also be quite significant,” says Yekaterina Sekenova, an analyst at Finam.

But there always remains a loophole for car park companies. “Infringements of legislation can easily be eliminated. For example, part of the car park will be free, but there will never be any spaces there, and you will all the same have to pay. So it is possible to find a solution, which would satisfy the FAS, the operator and the airport,” says Ilya Shershnev, director of development at Swiss Realty Group.

Action against car park owners at airports in capital cities in other countries is also being carried out, but in these countries they set tariffs in a different way. “In connection with large transport streams quite often large parking complexes are under construction separately to airports, from which special transport can be taken to the airport’s terminals. The cost of this service, as a rule, does not exceed $5-$10 per day,” says Sekenova. However according to her, there are practically no free car parks anywhere. Even if the stream of cars is small, the proprietors and operating companies of the airports try to make additional profit.

Partly based on these arguments, the parking companies at the capital’s airports have decided to challenge the decision of the FAS in court. But so far they have refused to make any comments to the press.

A Disputable Situation

To understand whether car park tariffs are overpriced, it is necessary to define the objective price of this service. And this is difficult considering the monopolistic position of such car parks. “There is no detailed information about the structure of their prices. Besides, in the city center, the price for such services is 200 rubles per hour, i.e. this is the approximate price a Moscow consumer is prepared to pay,” says Sekenova.

Moreover, it will be difficult for the FAS to prove their position in court. Possibly, this is why the FAS postponed the consideration of this matter two times already last year. Firstly, owners of the car parks can prove that their tariffs correspond to average figures. Secondly, in the law, the definition of a monopolistically high price is rather vague. Thirdly, in actual fact, car parks at airports cannot hold a monopolistic position in the market as in relation to Moscow as a whole, their share of the total number of parking places is insignificantly small.

It has been a long time since the FAS has won a case with a fine of more than 500,000 rubles and no large organization has faced a large fine. And the car park owners at Moscow’s airport have once before successfully defended themselves in court.

In 2006, Sheremetyevo airport decided to build a multi-storey car park in front of Terminal 1. The tender for the management and construction was won by French company Vinci. However the tenant of the site – Sanei-K – has refused to leave it and has continued to provide car-parking services to passengers. Moreover in July 2007, the Arbitration Court of the Moscow Region decided in favor of the car park companies.