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Guest Blog: How Car Rental Is not Like the Airlines

June 8, 2010

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Bob Barton, president of the American Car Rental Association, responds to travel writer Chris Elliott's column on car rental's "whacky" rules.

The car rental industry tends to be the "whipping post" of the travel industry (and its writers), because frankly we are our own worst enemy. We can do a much better job of communicating an understanding of what our industry is all about and maybe, just maybe the consumer will gain a better understanding of why things are they way they are.

To suggest that the car rental industry is even remotely similar to the airlines is simply grandstanding. Let's do a quick comparison of the "rules and regulations" as they currently exist.

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When you make an airline reservation, you pay in full, your money is taken, and maybe, just maybe you can get part of it back to use on another ticket at a later date if you cancel, after paying a big fat change fee.

When you make a car reservation, you pay nothing, you do not even give out your credit card information, and certain travel writers (ahem) have even suggested in the past "you should book multiple reservations since there is no penalty, and then you are guaranteed to get a car if one agency is sold out."

We should collect your credit card, and much like a hotel, charge you if you do not show up. If you do cancel, no fee. This is not a "revenue grab" as some have suggested, and I will quote one of my colleagues: "If I never collect one dollar in no-show fees, and every customer either showed up, or cancelled, I could better manage my fleet and provide much better customer service."

Are you aware up to 30 percent of our customers at any given time never show up or cancel their reservation? Thirty percent! If we take a guaranteed reservation (like a hotel) we should guarantee delivery of the car. How many of you have been told by your doctor or hair salon, "If you do not show up or cancel your appointment, we reserve the right to charge you." Is there really a difference?

We do not charge you to use the trunk and put baggage in it. You rent the car, you get free baggage allowance! Of course I am being facetious, but to suggest we are the same as an airline is simply inappropriate.

Let's look at Mr. Elliot's "six odd rules."

1. Let's play a price game. Rates are based upon reserving a car for a specific period of time. If you book the car for a week (often computed by a factor of a number of days, not 7 times the daily rate), the car rental company expects the car to be on rent for the entire week, not less than that week. You received the rate based upon renting it out for the full week, not a part of it.

Try booking a round-trip airline ticket with connections, get off on a stop over, and then try to continue using your ticket. No, it is voided. The same thing with a rental extension. These are not dishonest fees. They are fully disclosed to the customer on the face of the rental agreement and most times at the time of reservation.

Again, it is about communication, and basic business courtesy on the part of the rental customer and the rental company. I can cite just as many examples where a customer books a rental for a week at a rate of $200, compared to a daily rate of $50 per day. The customer comes back after five days and wants to be charged $143 ($200/7 x5). It just does not work that way. If you book a round-trip ticket for $450, you do not get a refund of $225 if you only fly one-way.

2. How old did you say you were? Funny, that this is looked at this way. Yes, as Mr. Elliott states it is insurance, but the last time I checked, when I called State Farm to insure my personal vehicle, I did not get the same rate as my 20-year-old son did.

The risk is different and the rates change accordingly. We have to include the state statutory insurance requirement in your daily rental whether you purchase optional insurance coverage or not. That risk (and the insurance) has a cost difference based upon the age of the driver.

3. The extra driver is ... extra. Yes, it is. Unfortunately, Mr. Prudhomme should speculate more in the casinos of his home state than about car rental insurance. He might have better luck.

There is a true cost for an extra driver and sometimes it can be pretty ugly. The biggest risk? When the second driver (who did not provide a credit card at the time of rental) is the one using the vehicle and is involved in an accident. Unfortunately, many car rental consumers in this situation look to deny liability because "they didn't rent the car," and collection for the loss of the vehicle and the liability claims can be challenging.

4. That required child safety seat will cost you. We rent cars. Providing a child seat is providing a service. The law requires the driver of the car to use child safety seats. The owner of a car is not required to provide the seat. The user of the vehicle is.

When minivans were equipped with child booster seats as standard equipment (like seat belts), no one charged for their use because it was part of the vehicle. Would you expect your neighbors to provide you with a car seat if they lend you a car, yet they have no kids?

Yes, it is a hassle to install the seat, but no rental company wants to be a part of that exposure. You, the parent, should always install the seat in the car. I do not think a single car rental company would complain if every customer in need of a car seat brought their own.

5. You say compact, I say midsize. I will not argue this point, because in fairness I agree with you. Shame on us! A Dodge Caliber is a Dodge Caliber. It should not change between rental car companies. The American Car Rental Association is currently adapting such exact standards to be distributed to the entire industry, and we are hopeful they will be embraced. Hopefully, when you then compare companies and pricing that Ford Fusion will be classified the same by all.

6. Drove less than 75 miles? There is a refueling fee. Unfortunately, we do not manufacture the vehicles, so checking the gauges as Mr. Elliott suggests is not something we can do. But we all know, when you fill up your car it takes miles for the gauge to move off of full.

This may seem petty and Mr. Elliott may want to take issue with it, but hopefully some basic math will put this in perspective for everyone. If you have 100,000 cars in your fleet nationwide and you did not have a similar policy, the numbers are quite large. Assume for a minute each of these cars is rented eight times a month, and for each rental you lose 3 gallons of gas. That's 2.4 million gallons of lost fuel. At an average of $2.75 per gallon, or $6.6 million dollars, a month!

This policy should not be a surprise to anyone and should be, and is easily explained and understood by the customer. If you use the gas, you should pay for it. Bring in the receipt, no one will charge anyone for fuel.

Now we are far from perfect and there is always room for improvement. But to suggest we are remotely coming close to what the airlines are doing is shameful. We do not charge you to put your bags in the trunk. We are not going to charge you to put a bag next to you on the seat. We do not charge you to use the entertainment system or require you to buy headphones if you do not have your own.

The bigger issue for me is that lack of a confirmed reservation with a no-show fee, and the constant barrage of state and local taxes assessed on our customer that can increase the cost of the rental by up to 50 percent, which the travelling consumer, unfortunately, blames the rental company for and not the state and local governments. If you make a reservation and you will not come, cancel.

And while we could raise our rental fees and not have any of these extra fees, we could say the same of the airline industry. Unfortunately, competition does not dictate such a practice. Overall, we still have to recognize that a rental car is still a significant bargain for the money, with daily rates often being substantially less than the hotel charges you to park the car.

What it all comes down to is communication. The rental company needs to clearly communicate its terms, conditions and policies, and the renter needs to clearly understand what he or she is agreeing to and what the contract says.

If the company does its job, and the customer listens and understands his or her obligations, no one will be steering anything except the driver of the vehicle.

Comments

  1. 1. Don [ June 09, 2010 @ 01:15PM ]

    You make valid points. However, the rent-a-car companies have engaged in some borderline legal practices in order to pad their receipts over the years. I think the worst is this add-on of airport concession recovery fees. That's just the concession fee which a RAC pays to the airport for the privilege of doing business on it's property. In other words, rent. RACs don't add "rent" to my invoice when I rent from one of their non-airport locations, so why do it at the airport? Because they can. It's really just a cost of doing business. When I buy a meal at an airport restaurant, I pay the bill plus tax. I don't have to pay an extra "airport concession recovery fee" as well. So cut out this nonsense and stop trying to trick your customers.

  2. 2. edwin [ June 18, 2010 @ 09:00AM ]

    very good Bob!

  3. 3. kevinpit7 [ June 24, 2010 @ 05:41AM ]

    Hhmm good thinking. There are many other ways which is not shown here. But most of them are covered which is very useful. thanks man. I love this post. Thanks man

  4. 4. John [ June 26, 2010 @ 04:16AM ]

    Don,

    I dont like paying airport concession recovery fee, etc. However, bsinesses at aiports have higher rent and therfore, higher operating expenses which are always passed on to consumers-- whether or not they itemize the additional cost. For example, before I get to the airport I can buy a starbucks coffee for $1.50. However, at the aiport the same coffee costs $2.75

  5. 5. sewa mobil [ June 29, 2010 @ 09:28PM ]

    Nice article. Thanks

  6. 6. Chris [ July 05, 2010 @ 07:34AM ]

    No serious traveler pays attention to Chris Elliott. Just go do a search on "Elliott" on a site like FlyerTalk.com. Every frequent traveler I've met has nothing good to say about him and his incessant whining.

    Unfortunately, he has a huge following of mostly clueless people who travel once a decade. These people listen to what he has to say and think he's an authentic travel guru. And unfortunately, these people will never actually hear our side of the story--they'll just read Mr. Elliott's blather on MSNBC.com or other mass media outlets who are themselves too clueless to recognize Mr. Elliott's lunacy.

    Trust me, Chris [Brown]--you know more about the entire travel industry than Mr. Elliott ever would. Great job putting him in his place.

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Author Bio

Chris Brown

Executive Editor

Chris Brown is the executive editor of Business Fleet Magazine and Auto Rental News. Through these publications, online newsletters, trade events and associations, Chris covers all aspects of the fleet world, including fleet management, manufacturer fleet activities, the fleet leasing industry, vehicle remarketing, rental industry news, car rental taxation and legislation.

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