Airport Car Rentals: The Next $10 Billion Industry Ready For Disruption
techcrunch.com
techcrunch.com
Um, actually we are. With Avis First (free to join) or Hertz Gold (last I knew there was a fee, but that may have changed), I take a shuttlebus to the rental car lot (or at the smaller airports, walk from the gate to the rental lot), look for my name on the message board, walk over to my car, get in, drive to the gate, show the attendant my license and I'm gone. In the really small airports (FSD or FWA for instance) it's literally 5 minutes from gate to road.
WRT Flightcar, that has absolultely no appeal to me as a car owner parking at an airport, or as a car renter. As a car owner, when I get back from a trip, I really want my car to be there so I can get home, I don't want to have to deal with my car not being there because the renter got stuck in traffic or had a change in plans.
As a renter (for both business and pleasure) I want to be able to have some flexibility in my rentals - if I want to extend my rental, I just visit the website and extend the rental. Would I be able to do that if the guy who's car I'm renting needs it back at a certain time? Also, how do I know that the car I'd be renting would be in decent running order?
I think that airport car rentals could use some disruption (for example more flexibility in refueling is nice, but I don't see that Silvercar really solves that problem), but I don't see these businesses doing it. Of course YMMV.
My experience at CBR last week. Walk off the plane. Walk up to the Hertz counter. Wait 20 seconds for the 1 other person in the Gold line. Flash my license. Given my keys and the direction to the lot. Walk to the lot. Drive off. Would have been under 5 minutes from when I walked off the plane.
Why would I let someone who I don't know drive the car I take good care of, possibly use it for illegal purposes or deal with the aftermath of fines and so on?
Really, that's a pretty bad idea.
The OP made up this stuff pretty badly - "There are the lines, the hassles, the constant upsells, confusion around cost of gas and insurance, and about 15 pages of paper that you have to sign before being able to pick out your car and leave the lot. " I have never experienced any of this.
Most of times I have used enterprise and few times hertz. Car choice is an issue when it is a long weekend otherwise not a problem at all. I use my own insurance because I know there is no point in using their's. If I can use an insurance for my own car then why should I get some other insurance for renting a car. I get cheap gas, free upgrades from enterprise.
I'm not quite 100% clear on what the situation would be if someone else would be driving the car and they took out insurance to absolve me (and by extension my insurance) for liability, but I'm fairly sure that just driving around with my license plate will cause me to be the party addressed for any injuries/damage caused using that vehicle.
That's why license plate duplication is such a nasty thing, you end up having to prove that it wasn't you that caused the damage/fines/whatever.
And of course, if they do get into an accident and supposedly their insurance pays for the damage I will still find no car on my return from a trip as well as having to deal with the aftermath of the damage and having a car that was repaired after an accident, which may render it drivable but will significantly impact the book value.
Bad plan.
In the US, that's not the case - I'm not perfectly sure how it works, but you can often use your own car insurance when you're driving a rental. And of course double insurance is possible, it's entirely up to the insurance company. Insurance is obviously one of the things FlightCar would need to deal with.
All in all, the issues facing FlightCar are not much different from those facing AirBnB which despite similar objections is doing fine.
AirBnB pushes a lot of the verification responsibilities onto the renter, I can't see how that would work in this case. Anybody that can't afford a regular rental is certainly not going to be able to afford the value I place on my time for the extra hassle that comes with the use of my car. And I care a lot more for my car than Hertz or Avis cares about theirs.
All this adds up to me probably not being in their target demographic on the supply side. And on the demand side I'd rather deal with Hertz, Avis or Budget (but never again with Sixt, what a bunch of scammers) when it comes to making sure damage is noted properly before pickup, having staff on site to deal with any issues with the car (not unknown to happen) and to know that there is a full operational support service behind the product in case I need assistance once underway. I've had an Avis car break down on me in the US, and the speed and professionalism with which this was dealt with left me very impressed.
And that for a price for which I as a private individual would be loathe to let another person unknown to me drive my car.
For starters, auto insurance is mandatory in the U.S.; homeowner's insurance is not. Strict laws govern auto insurance coverage, liability, and claims. These laws vary by state. This means that accidents by a renter can affect no-claim policies in many states.
Second, as others have noted--cars are easy theft targets. Homes are not, and aside from a few high-dollar items like TVs or computers, neither are the contents of most homes. Assuming that FlightCar is able to find an insurer willing to cover this theft risk, the policy would start in the millions just for California-level coverage.
Finally, asset seizures are a far bigger problem with cars than with homes. A car used to transport drugs can be seized by the authorities and impounded. The laws are very generous to the authorities for drug-related asset seizures. For purposes of drug-related asset seizure laws, if a person is driving a car with permission of the owner (i.e., even as a rental), their actions are imputed to the owner for purposes of justifying seizure. (This maxim has been tested repeatedly in the courts.) In other words: if a renter transports drugs, gets caught, and your car gets seized, you're SOL. Insurers don't cover this at the personal level; even if they provide coverage to a business like FlightCar the policy would be prohibitively expensive.
I remember coming in on a delayed flight and riding the train out to the rental center, waiting in line half an hour, then finding the car parked in the space I was sent to was entirely different from what it was supposed to be (and the keys didn't work), going back and waiting in line again, getting a call from the satellite police station on my cell because my wife was wondering what happened to me, finally getting a car and remembering I never got a child seat but driving right out because I didn't want to wait in line again.
Sensible (unamerican) people just take the BART if they are going to SF. I didn't have that choice because we were going to San Luis Obispo.
I'll admit fueling can be a pain, but car rentals at other airports, even big ones, are nowhere near as bad.
At LAX, for instance, I reserved a Hertz car on Priceline, caught a shuttle bus to the car rental center, got the paperwork filled out quickly and drove off. On the way back they were handling a huge volume of returning automobiles but it was efficient, really a pleasure.
(I did make the mistake of thinking I could go north on the 405 at 5pm on a Friday... Had I known LA a little better, I'd have gone north on the surface streets which are easily accessible from the rental center.)
AirBNB is competing with high priced hotels that often are booked and an existing inefficient P2P subleasing business.
Uber is competing with taxi services notorious for poor responsiveness and frequent gaps in availability.
I don't see the same room for disruption in the airport car rental market, but there is likely some room for innovation. Don't count on Hertz and Payless quaking in their boots any time son.
As mentioned by others, Hertz Gold etc really ups the service, but it's usually not worth the 2-4x you pay on the rental.
I've found Payless and Fox both to be the cheapest and provide adequate service. I've had run-ins about fees and such, but generally I fell I get excellent value.
I move often, and when I'm going to be in one place for more than a month I buy a cheap $1000 car. Then I sell it, usually for around $1000. Sometimes I take a loss, sometimes I make some money, it's a wash.
But when in I am in town for less than a few weeks, I rent. Always with Enterprise. Never on airport. In fact, I've taken hours of busses from the airport to save $100 on a rental.
I think it's easy. I go in, I sign a few times, we walk around the car and I leave. Done.
Getaround is cute but its too expensive, Flightcar sounds nice, but it amplifies all the problems that Getaround has.
Meh.
- new license plates
- state registration
- sales tax
- insurance
- city stickers
- title application and fees
I'm asking from a place of envy, not challenge. Please teach me your ways. I must be doing this wrong. Would you mind shooting me an email: ezl@rocketlease.com
Rental car companies are the largest buyers of new vehicles in the world, and more importantly the largest sellers of used cars. What's your strategy in those areas? What's your cost of working capital going to be? Ditto with insurance, these companies generally self insure the collision, can your startup afford to do that?
Then there's counter space at the airport. These generally come on the market rarely and at a different time and process for each airport. How are you going to compete when your lot is a twenty minute shuttle ride, and your competition has a lot in walking distance from the terminal?
I'm not saying it's impossible but the barriers to entry are high.
Silvercar sounds more like how renting a car should be (except for the limited car options)(I'd go with a Toyota/VW lineup).
The things that are completely stupid with current car rental companies: 1) lengthy checkout process, 2) inability to choose car and 3) anti-customer gas policies.
I suggest you patronize different car rental companies. Discount car rental companies skimp on the service and choices. Better ones (Enterprise, Hertz) focus on the service and only cost a dollar or two more a day than the discounters.
My biggest gripe with car rentals is not the experience at the counter but the schlep from the terminal to the rental car district. First there is the wait for the shuttle bus, then the tour of the other terminals, then the drive to the rental lost. By the time you get to the counter you've lost 30 minutes of your life to waiting and ferrying.
So for me the core problem is that the car is not somewhere extremely convenient at the terminal when I need it. I do recall some uber-statused folks at my work having the rental car company meet them at the curb with the car but this seemed to be an arcane and rarified perk.
It's kinda like the last mile problem. Once you actually get to the rental hub then it's pretty painless and quick but getting from the plane to the rental lot is a slow mess.
Also, lets say I know something is about to go on my car. Something expensive. Why not bring it there and let someone drive it 10 miles until it breaks and blame them for it?! Free repairs? Or how would they handle that?
Airport car rental is mostly grunt work. Moving cars, storing them, valeting them, maintaining them, filling them with gas, sorting out insurance, customer service, screening customers, chasing late returns, pursuing people for damages, so on and so forth. 5% booking interface, 95% on the ground work.
There is already healthy competition in the market, and the incumbents do a pretty good job. There are lots of moving parts, so things often go wrong, but it's hard to do better.
Who cares about a shiny iPhone app? The existing companies already have passable online interfaces, and if they don't already have iPhone apps they have the capital to roll one out in a matter of weeks and crush any looming competition.
I give both of these startups 12-24 months, and the end won't be pretty.
You also missed the picture of car sharing.
You can bet the leading companies have already invested huge amounts seeking out efficiency savings and ways to improve customer satisfaction.
Slow moving and bogged down in bureaucracy they may be, but if there were a simple way to avoid common customer complaints (e.g. long queues) without hurting the bottom line, they would already be doing it.
> You also missed the picture of car sharing.
I can't think of anyone I know who would even consider sharing their car. It's just an absolute minefield. It might just about work on a small scale, where you know and trust the people you are sharing with, but that kind of thing doesn't scale.
It's a warming thought that companies are always looking to improve customer experience, but more often than not, they will not do something because it doesn't improve the bottom line, not the opposite. And "hurting the bottom line" depends on the business model, that's where the market can be disrupted.