Sharing companies take over a share of the travel industry

Instead of paying $18 a day to park at San Francisco International Airport last month, Daniel Denegre tried something new. He handed the keys to his Hyundai Accent to a start-up company called FlightCar, which offered “free” parking at an off-airport lot in Burlingame, Calif., and an opportunity to earn up to $20 a day by renting his vehicle to someone else.

“If I can find a way to reduce the burden of leaving my car at the airport and make it profitable, I’m game,” says Denegre, an independent film producer from San Francisco. Even though no one rented his car, he didn’t pay a dime to park. “To me, the convenience is amazing.”

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But city officials have another word for it: illegal. In a lawsuit filed earlier this year, the San Francisco city attorney’s office said that FlightCar is running an “unlawful and unfair operation.” It says that the company, which is part rental-car company, part parking-lot catering operation, lacks the necessary permits to do business at the airport.

The office is seeking unspecified damages and penalties of up to $2,500 per violation.

FlightCar is just the latest travel-related “sharing” company to run afoul of the law. Earlier this year, a judge ruled that a New York rental offered through Airbnb, a Web site that lets homeowners offer their residences as temporary rentals, violated a 2010 law that bans apartment residents from renting their spaces for less than 30 days.

Airbnb has promised to support an appeal of the ruling.

Taken together, these court challenges raise a bigger question: When it comes to travel, is sharing always the safe — or even the right — choice? Airbnb and FlightCar are just two outliers in the $3.5-billion-a-year “sharing” economy, which includes both travel businesses such as Zipcar, which rents cars in mostly urban areas and is owned by Avis Budget, and peer-to-peer car rental companies such as RelayRides, which already operates at more than 170 airports nationwide.

A FlightCar representative says that the answer is obvious: The park-and-rent choice is not only safe, but it’s also the future. The company has received “overwhelming” support from the community since being sued by San Francisco, with its listings rising from 1,000 to 1,400 between mid-May and mid-June. It also expects to prevail in court later this summer, because the company claims that it isn’t subject to the same regulations as a traditional rental car company.

“We are operating within existing city and airport regulations,” says Rujul Zaparde, FlightCar’s chief executive. “People seem to understand that FlightCar is creating jobs and contributing income to the city and that this dispute is purely about the airport wanting more money. We are disrupting two industries that haven’t changed in decades, so we expect challenges like these.”

True, the airport wants money from FlightCar. All permitted rental car companies, whether on- or off-airport, must pay the airport 10 percent of their gross profits and a $20 transportation fee on their airport transactions, says Doug Yakel, a spokesman for the San Francisco airport. By opting out of these fees, he says, FlightCar has an unfair advantage over the 12 car rental companies that do business at the airport. The fees that FlightCar owes the airport, he says, would directly help consumers by supporting the AirTrain light rail infrastructure. And passengers benefit from increased convenience, reduced roadway congestion and a decrease in pollution.

But Walt French, a San Francisco portfolio manager who was one of FlightCar’s first customers in that city, doubts that the lawsuit will stop the company in San Francisco or any of the other cities where it operates, such as Boston. He says that incumbent businesses at the airport are just “protecting their interests” through the legal action but that it will be difficult to curb the innovation that FlightCar represents.

“The two will work it out somehow,” he says. “Besides, San Francisco is a bad place to get away with anti-competitive, anti-innovation red tape.”

French finds FlightCar too attractive for a traveler like him to pass up. Before his last flight to New Orleans, a FlightCar town car picked him up at a remote parking lot and delivered him to the terminal. He avoided paying $18 a day for parking, saving a total of $144 for eight days. Alas, no one rented his Acura RSX, but he’s sure that someone will one day. “It’s a lot of fun to drive,” he says.

Companies such as FlightCar and Airbnb are doing their best to reassure customers that although they’re a non-traditional choice, they’re as safe and reliable as doing business with an established company. For example, Airbnb offers each host a $1 million “guarantee” of protection from property damage. FlightCar pre-screens its renters and insures each vehicle for up to $1 million. But though these measures can be reassuring to many travelers, there’s no substitute for dealing with a company with an established record, say travel experts.

Change takes time. Zaparde remembers that when he conducted market research for FlightCar last year, he asked passengers on the airport shuttle whether they’d consider sharing their cars with strangers. About four out of five said no. But attitudes have shifted in just a few short months. He points to the success of such companies as Airbnb and his own company as evidence. Today, even established companies are eyeing the sharing business with interest.

“Ultimately, the innovation will lead to competition and more innovation,” says Zaparde. “As long as the bureaucrats let it.”

Would you buy travel from a "sharing" company?

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41 thoughts on “Sharing companies take over a share of the travel industry

  1. All of this sharing is just a symptom of a bigger problem, which is despite the falling economy travel businesses are out to gouge travelers even more. They rationalize that anyone with money to travel either can afford to pay more for the slump in the travel industry or they are business travelers who will pay what ever the costs are because they can’t really say no. Cities can charge rental car and hotel companies anything they want in taxes and supplementary fees, because business travelers need cars and a place to stay.

  2. Murphy’s Law will have a field day with this. An accident caused by owner neglect of maintenance (perhaps). An owner returning and finding the leather seats scratched. The owner’s insurance company cancelling for fraud by renting vehicle, a commercial use, banned in the insurance policy. And on and on. Seems like a can of worms to generate lots of future Elliott columns.

  3. “FlightCar pre-screens its renters and insures each vehicle for up to $1 million.”
    You have got to be kidding?
    Have someone rent your car so you don’t have to pay to park?
    Has anyone even considered the worst case scenario for this deal?
    Think about it, someone rents your car and has an accident or even kills a pedestrian or cyclist. You as the owner, are still liable. So if insurance doesn’t cover all the costs of someone’s medical bills or worse, you as the owner can be sued. $1 million dollars in insurance from FlightCar can be eaten up pretty quickly with the cost of medical care and payments to an individual if they cannot longer work.
    Somehow I think Mr. Denegre’s personal insurance company would not approve of this deal.

  4. There’s not even a prayer of a chance I’d hand over the keys to my 2014 Mercedes 550 to anyone, just to save a few bucks in parking fees.

  5. I’m not sure ZipCar qualifies as one of these “sharing” companies. It’s just a rental car agency with “lots” scattered all over the service area. The cars are still owned by the rental agency, just as they would be if you picked up the thing from Hertz.

    On another note, I think putting your car up for rental for free parking and maybe $20 a day firmly belongs in the category of “penny-wise, pound-foolish”. (Nor would I rent from such an agency.) We see here the contest of wills all the time between renters and agencies over damage claims… I don’t want to be on the owner’s end of those disputes any more than I want to get accused of damage by an agency.

    On another note, I’m with SFO on this one; rightly or wrongly, all rental car agencies are supposed to pay the fees (they are part of the budget for the airport). I don’t see what FlightCar is doing that is any different from any other off-airport agency. This isn’t SFO “protecting incumbent businesses”. That would only be the case if FlightCar had offered to pay and was turned down by the airport or if the “big guys” got some kind of volume discount. If I was Hertz, I’d be furious if one of my competitors simply decided to ignore the fees I had to pay, and the airport let them get away with it.

  6. This could turn every car owner into a mini-Car Rental company. I could make a fortune charging for every little scratch I find when my car is returned.

  7. But if you can afford a Mercedes or any other expensive car, then the cost of parking is probably not any concern anyway. :-)

  8. That car owner better have a 10 million dollar umbrella policy, and a car they don’t care about at all. I think back to the car I had in college, a Japanese hatchback I would let anyone drive. I would not take that risk today now that I have a net worth.

    Even then the owner would still likely be on the hook in a big problem case.

    Oh, the poll: Hell no. I wouldn’t touch this with a ten foot pole, as a parker or renter.

  9. While the concepts are interesting and I believe this type of business will expand in the near future, the services are not for everyone.

    Others have already brought up the restrictions in most personal car insurance policies that prevent the vehicle from being used for commercial purposes and the possible financial disaster the owners could face. And exactly what is FlightCard insuring? The replacement value of the vehicle? Or is it liability coverage? Most people I know are very protective of their vehicles and don’t want others driving them. Some even get upset when they have to let a valet drive it to a parking spot. I don’t see any of them using this type of service. My major concern is a smoker renting my vehicle. While they may not actually smoke in the car, some heavy smokers leave the smell behind because it is so imbedded in their clothes it rubs off on the seats.

    The airport claims that FlightCar is “unfair”. Well, boo-hoo. They are just upset they don’t get a piece of the action. This is no different than me renting a car from an off airport location of any major existing rental car company today where I avoid the inflated airport taxes and fees. At IAH where I fly into a lot, the Hertz location at the airport has fees and taxes that can exceed the daily rental charge. But if I take a taxi 5 minutes away and rent from another Hertz location I end up saving at least $25 a day on an economy car rental. While the taxi cost eats up some of the savings, I still save money. Many times I will have a family member pick me up at the airport when I fly in for a visit and then rent a car to go back to the airport. Since I am renting from an off airport location even though I am returning the car at the airport I don’t get stuck with the extra fees and taxes. Will the airport now claim I owe them the fees or can’t use an off airport location to rent from since I flew into that airport? This kind of thinking by the airports is also why so many refuse to allow the local light rail or subways to connect in, they are afraid that the cash cow of rental fees and permits will disappear.

  10. Neither airport authorities nor municipal governments nor travel companies are exactly wallowing in piles of excess cash.

    Is it “gouging” if nobody is making high profits?

  11. Yeah, I wouldn’t play this game. I bet some loser would smoke in my car and I’d be stuck smelling that crap for years.

  12. FlightCar is being “unfair” if it’s avoiding fees that all the other agencies have to pay.

  13. I think the term “gouging” here is more a reference to saddling travelers with excess fees and taxes simply because they can.

  14. My travel is done 98% by car, and I drive a lot. This frightens me, as it puts even more unskilled drivers on the road. I have multiple vehicles that I use for various reasons, none of them are especially new or fancy, they are generic vehicles chosen for the fact that they blend in with other cars on the road. STILL: I’d never hand over the keys to any of them to this sort of operation, because their emphasis will never be on scrutinizing the drivers they inflict on the community.
    Seeing a ZipCar on the road is a sure sign that the driver is gonna do idiotic stuff. Rental cars are often easier than you’d think to identify, and they are even more a menace in the vicinity of International Airports. See, the truth about “THOSE PEOPLE” from Whozwhatistan, that folks say are the worlds worst drivers, and simply people who are accustomed to the driving style of that country, and are probably average to good drivers at home. Still, they are driving in ways I have difficulty anticipating. People in ZipCars are the ones who drive once or twice a month and as a result, their skills are not all that well polished.

  15. GOUGING, Maybe, but businesses in this country today are ALL struggling to stay afloat and fund a government with unlimited ability to spend on lavish idiocy and tax all of us to pay for it.
    Did YOU get to go on a $100Million dollar vacation in Africa?

  16. “Will the airport now claim I owe them the fees or can’t use an off airport location to rent from since I flew into that airport?”

    Actually, some “in-town” rental locations already won’t let you rent unless you can produce a driver’s license with a local address. This seems to be especially true with some Enterprise locations. My understanding this is more of a loss prevention issue than a specific edict from an airport authority, but in theory, I don’t think there’s anything stopping a city council/county commission/airport authority from passing an ordinance that either (1) mandates that people attempting to rent at an off-airport location show proof of local residency or (2) require off-airport locations to charge airport taxes and fees to non-local renters. I suspect it’s only a matter of time before this starts happening, personally.

  17. Who is liable of someone has an accident, runs a red light, robs a bank, or something similar while in your car? Are people insane? The NYC law that Airbnb is fighting is quite a nuisance to people who legitimately live in the buildings with apartments being rented out. If you were a legal tenant, would you want strangers in and out of your building at all hours of the day and night or have to deal with renters partying until all hours?

    Just how much is it worth in liability to YOU to save $18 a day for parking? This car thing just doesn’t make any sense.

  18. I voted no, but that’s a personal thing; I wouldn’t like anyone else driving my car. It is however, a great idea and I hope it’s successful…. for no other reason than, as competition, it will lower the price that airports charge for their parking. Miami airport parking is so expensive that I “save money,” by spending $50 on a taxi to and from the airport. Vendors at airports are often chosen by the amount of their contributions to political campaigns.

  19. I wouldn’t leave my Lexus or GTO with FlightCar, but how about this… if I did a lot of flying, there might be something to be said for keeping an old POS (like my ’72 Chevy) around for just this kind of thing. Unlikely anyone would rent it and I’d still save the 18 bucks a day. Whataya think?

  20. Why should a “non-local” person arriving by railroad, bus line, or even carpool, pay airport taxes and fees? Will such taxes and fees be shared with the owners of the railroad stations, bus stations, and carpool staging park-and-ride lots?

  21. The only thing I can see that might be considered unfair is that they drop you off at the airport and pick you up using their own vehicles which are probably not registered as commercial vehicles (taxis in other words). If they used regular taxis that are licensed for airport pickup and drop off, I believe they would then be a true off-site company and would not be bound by the fees and permits required.

  22. What’s an “excess” fee? Airports, convention centers, etc. that these fees go to pay for, are by no means cheap to build or maintain.

    In any case, if the fees at one airport are too high, use another one (there are three airports that serve the Bay Area); this is supply and demand in action. Airlines do… (notice the growth in FLL vs MIA.)

  23. In Houston, the extra taxes and fees even vary depending on which of the two airports you fly into so how then would they charge the fees if they tried? Distance from the specific airport? Residence of the renter which would determine which airport they may have arrived at (domestic vs. international)? It just gets too complicated.

    While I can see the city requiring rental car companies to charge the sport stadium fee and stuff like that at every rental location (they don’t currently), I don’t believe they would be able to get away with charging the extra fees just to travelers. If a local rents a car at the airport, they pay the same extras as a non-local. And, most travelers will rent at the airport anyway unless they are very familiar with the area since it is just more convenient.

  24. Exces fees are all those fees and taxes that the local government levies on travelers arriving at airports that are not also levied on residents.

    The airport already collects landing fees and in many cases charge a higher sales tax rate or a special additional tax on items purchased by anyone in the airport. And the airports charge high rent for the merchants who they allow to set up shop there. So the $5 Subway sandwich I can purchase 6 blocks from the Las Vegas airport cost me $12.50 inside the airport. Many of the airport expansion projects are paid by the airlines directly to the airport. IAH recently received over $1 billion from United to rebuild a terminal there and have received more than that over the years from Continental for expansions that directly benefited the airlines but also meant more travelers so more income in general to the airport authority.

    Convention centers are not free to the users, every exhibit there pays fees rental or whatever you want to call it to set up and use the space. And the city receives incremental income in sales taxes paid by those attending the conventions for their hotel rooms, meal and other entertainment and yes even from the rental cars.

    Yes, building and maintaining of the various facilities are not cheap, but the majority of the taxes and fees added especially to rental car bills are just ways for the local government to increase income without raising taxes on the local residents.

    I’m not against the extras, I have accepted this as part of the cost of travel, I just think that many of the charges are negatively impacting the travel choices that many people make.

  25. The solution for me re. parking fees at airports has been to park at a motel close by for free for a maximum of two weeks. in most motels I’ve dealt with, such as Super * and Best Western, there have been no additional charges. You just get a card to place on the dash and use the free shuttle to and from the airport.j

  26. You may be thinking about an “excise” fee rather than an “excess” fee. I’d try to explain it, but I’d just end up confusing myself. Google always explains things better than I can.

  27. In this case, you may need to pay a drop-off tax, because you are returning the car in a different location than the one you had rented it.

  28. Airports are usually owned by a semi-independent regional airport authority, and I’m not aware of any that routinely remit funds back to the controlling governments. It’s hard to make an argument that the governments are levying these fees to “increase income” when the facilities don’t actually make any money.

  29. But when the traveler who’s paying the fee will never see the inside of said convention center, or stadium, or whatever. That I DO call gouging.

  30. “But when the traveler who’s paying the fee will never see the inside of
    said converntion center, or stadium, or whatever. That I DO call
    The traveler paying the fee is often more likely to see the inside of said convention center, stadium, or whatever than a local resident. Under your logic, paying for the facilities with local general use funds (i.e. residential property taxes) would make even less sense.

    In any case, it’s very rare for taxes to be directly coupled to the things they fund. I pay property tax for schools (I have no kids), parks (many of which I’ll never visit), arts functions I don’t personally attend, roads I don’t personally drive on, etc. This is kind of how taxes work in general.

  31. I suppose to each their own, but I’d certainly never turn my car over to a company to rent it out – and I’d never rent on in that way either.
    Hasn’t anyone ever seen how people drive rental cars? It is hard on them.
    As for the airport, they should quit screwing everyone and everything out of money. Run the airport out of landing fees and renting out space.
    Maybe Chris will have to send the airport a fee because he was talking about it.

  32. But unfortunately, the people who are paying these travel based taxes and fees, also don’t get to have any say in whether those taxes are levied. Because, after all, those people don’t get to vote in local elections. This is why these types of taxes and fees are so popular with politicians. They don’t have to answer to the people who have pay them. Every place does this of course. But just because everyone does something doesn’t make it right.

    The only real power travelers have is to boycott an area if their taxes and fee are too high. And I’ve actually done this. I was vacationing in Pensacola, FL and I flew into Mobile, AL instead of Pensacola because the fees and taxes on rental cars in Florida are so outrageous. Fees and taxes in FL can literally add 50%, or more, to the cost of a rental car. And am I getting anything for that? No.

  33. It’s an interesting idea, but as a car owner I just can’t imagine ever letting complete strangers have access to my vehicle. Liability concerns are very real, but mostly I’d be afraid they’d damage it. “Up to $20 a day” won’t go very far if there was even the slightest bit of damage.

  34. Honestly, I’d think twice before handing the keys to many people I know. So no way am I letting total strangers take it. I guess if you had a total beater, maybe. But then you’d need to worry about getting sued if the person had an accident because they’d claim it was your fault for not keeping the car in perfect repair.

  35. What happens if some fool does rent it and proceeds to get himself hurt in an accident? What protects you from his lawsuit claiming the poor repair of the vehicle was the cause of his injury? Also, even if it is a POS, it’s still your POS and operable, which it likely wouldn’t be after any sort of accident.

  36. FlightCar provides $1,000,000 in liability insurance and $300,000 on your car. The only fly in the soup (as I just discovered through my old buddy, Google) is that they only accept 1999 and newer cars. Damn. Here’s an article from if you’re interested in reading more:

  37. The airbnb thing should be left up to the condo associations, not city law. I go on vacation for two weeks a year and would love to rent out my place, and my condo bylaws allow it. Why should the city step in and say no?

  38. I don’t write the NYC laws. Would your condo neighbors agree with having people they don’t know coming in and out? Just putting myself in the shoes of other residents in an apartment building.

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