Posts Tagged ‘SFO’

A new business with a new model of travel parking has emerged at SFO within the last few weeks, and already it is shaking up the industry. That business? FlightCar, a brand new parking company founded by three California teenagers who came up with an innovative, if controversial, way to bridge the travel parking and car rental industries, and already industry giants and airport municipalities are scrambling to catch up and either protect their market share or get their cut.

FlightCar was started in February of this year, and operates on a new car rental/travel parking model that is closest to the Meet and Greet model that is popular in England (where travel parking locations valet you to and/or from the airport in your own car rather than a shuttle), but even that is a tenuous link. Here’s how it works: when you want to park your car at FlightCar, you bring it to the facility, fill out some quick paperwork, get handed a check, and get valeted to the airport. That’s right, they pay you, not the other way around. The reason is because while you’re on your trip, your car may be rented out as a rental car by FlightCar. Their insurance covers any potential damages, and your car will be cleaned and washed before you return to claim it. When you do return, you’re picked up at the airport in your car. Not only is this model more convenient than the traditional model of travel parking, it actually helps subsidize travel costs rather than adding to them.

There are catches of course. First and foremost of course is the fact that a stranger may be renting your car. While FlightCar is well insured, that’s a small comfort if you return to find mysterious damage to your car after a long trip; that said, there have been no reported incidents of damaged cars in the four months FlightCar has been operating. And while uncommon, if for some reason a trip was cut short and you returned early, it’s possible your car could still be rented out. Overall though, there’s very little that the consumer has to worry about. That’s a different story when we talk about the future of FlightCar.

Not surprisingly, there has been pushback from the industry and airports, and the first major effort to check FlightCar has come from the SFO management. SFO levies a host of fees on car rental and airport parking businesses. While the shuttle-less system FlightCar employs would seem to allow them to bypass the usual airport access fee assessed on shuttles, it’s the car rental fees the airports normally collect that are at issue. Normally, rental companies pay 10% of their profit and $20 per rental transaction to SFO (don’t even get me started on how that’s double-or triple- taxation). SFO alleges FlightCar has not abided by those and other regulations laid out by the airport to govern car rental companies and has filed an injunction against FlightCar. FlightCar has countered by saying that they have complied with all applicable rules and regulations from SFO, and have been contributing income to SFO, which they claim the SFO brief admits (having read through the summons issued on May 31st I found no mention of FlightCar having paid anything to the airport or complying with airport regulation).

The devil is in the details here, and the one that is going to make or break FlightCar is whether they legally qualify as a car rental company. The basis for FlightCar’s claims of compliance lies in their belief that they are not a car rental company, but a car sharing company. This, they claim, means they are not covered by standard car rental company rules. SFO contends that they are a car rental company, pointing to FlightCar’s numerous ads billing itself as such and mentioning SFO, and points out that even rental companies that don’t have counters at the airport are required to acquire permits and pay fees to the airport. While the current information available does appear to support SFO’s case, it’s easy to see why FlightCar wants to carve out a special exemption for themselves; with rental rates (or “sharing” rates if you will) as low as $21 a day, paying $20 per rental plus 10% of their income to SFO will destroy their bottomline as well as the business itself if it didn’t dramatically change their pricing. Of course both SFO and other rental companies argue that that is a price that all the car rental companies pay and incorporate into their business model, and that FlightCar dodging those costs while still competing with car rental businesses directly is a huge unfair advantage. SFO states this directly in their suit, as well as pointing out that federal law requires certain permitting and regulation of businesses based on airport access if they are to receive federal funds for infrastructure improvements to the airport.

So all in all, it’s a legal mess, one partially brought on itself by FlightCar, but which will determine the company’s future as well as the future of the car sharing model at airports. If I had a crystal ball to look into, I’d wager that FlightCar can’t win this case and will be forced to settle instead, with the ultimate outcome probably being FlightCar falling under some airport fees and regulations while carving out some new rules and exemptions for the car-sharing business model. Either that, or if there’s enough pressure on the airport from other, larger businesses, they’ll go for an admission of guilt, hit them with a giant fine ($2500 per violation is what’s listed in the SFO summons in addition to paying damages equal to any lost revenue by the airport or other injured bodies), have FlightCar shut down until they comply, and open them up to all kinds of lawsuits from competitors who were “damaged” by FlightCar’s non-compliance.

Either way, with government and big business interests aligned against them, FlightCar has an uphill battle ahead of them. Still, they are confident they will weather this storm, and that their business model will evolve and survive; in fact, they just recently opened a new facility in Boston. Of course, Boston-Logan airport claims to have had no interaction with FlightCar, and has publicly stated that they are paying close attention to how things play out in the courts in San Francisco to figure out how they’ll deal with FlightCar.

FlightCar is looking at a rocky road ahead, but regardless of the outcome they’ve introduced a new travel business model that even if it doesn’t take root now will surely be back and will become a bigger and bigger part of the travel parking and car rental industry in the future, and that for the time being still means a great deal for any travelers that can take advantage of it.