A startup out of San Fransisco is looking to revolutionize traveling to and from the airport. The service is actually pretty intuitive: instead of just leaving your car parked at the airport, rent it out to fellow travellers. It’s pretty simple. You list your car online and drop it off at the Flightcar station at the airport. Renters see your car listed on the Flightcar website and can book it for whatever days they need (that you list as available). The startup checks the renter’s driving history, cleans the car and insures it up to $1 million in damages. The company even cleans it afterwards and pays for parking. Of course, the service takes a chunk of money from each rental, but a traveller can still make $5-$20 per day from renting their car instead of paying costly parking rates. The rental prices are cheaper than most rental car agencies so the renter saves money as well.
Unfortunately, it’s running into some legal hurdles.
Other rental car companies are furious that Flightcar operates as a rental car company without following any of the regulations and San Francisco has taken it upon itself to go after the startup:
The city has filed a lawsuit against FlightCar, hoping to shut it down until it complies with the regulations, including conducting pick-ups and drop-offs at a special area, paying 10 percent of gross profits to the airport and paying a $20 per rental transaction.
This is utter crap. Flightcar is very much like a rental car company except for two major differences: it pays for parking and doesn’t use airport land.
Rental car companies must operate in specific locations to avoid confusion and prevent traffic jams at airports. These firms have dozens of cars and must keep them near the gate so that travellers can rent a vehicle quickly without waiting. This requires that all of those cars be nearby and readily available. In exchange for giving them space to have those cars close by, the airport demands 10% of the gross profits and a $20/rental transaction fee. That’s the price of doing business.
But Flightcar doesn’t need to enter into that transaction. Instead of having all of its cars readily available in one location, it pays for airport parking, communicates with its customers in advance and meets them at the gate with their car when they arrive. No traffic jams. No need for an agreement between the airport and the company.
The firm has already taken care of the possible liability issues by insuring cars for up to $1,000,000 in damages. It checks renters’ driving history before they are given the car and makes sure the vehicle is clean. The company will undoubtedly run into obstacles as it grows in size. Bringing cars from the parking lot to the curb is labor-intensive, especially compared to a rental car company which needs just a couple of people to check travellers in and give them the keys to their car. And Flightcar cannot right now rent cars to people right when they arrive. It must be done in advance online, limiting the firm’s customer base.
This is a perfect example of the “sharing economy.” Travellers save money on parking and a make a bit renting out their cars. Renters save money too. The company takes a cut from each transaction to make the business profitable. Cars are used more efficiently as they don’t sit around in parking spots for the duration of the traveller’s trip. That opens up more parking for other customers. Everyone wins – except the entrenched interests of the rental car companies. They lose and they aren’t going down without a fight.
So, while Flightcar will have to overcome a number of structural issues as it continues to grow, there’s no reason for San Francisco to step in and try to shut down the company. It’s not doing anything illegal. Like the lawsuit against Airbnb, the case against Flightcar is yet another example of a city sticking up for its business interests and not for its people.