Airport Car Rental Dispute Intensifies : Off-Site Firms Oppose Fee; Airports See Bill Limiting Revenue
In the latest round of one of this year’s biggest corporate battles, airport operators complained Tuesday that a bill pushed by Alamo Rent-A-Car to gain an advantage over Hertz and Avis could create a revenue crisis for California airports.
Siding with the rental car giants that lease space in airports, the operators said legislation by Assemblyman Jim Costa (D-Fresno) would limit their ability to collect fees from companies like Alamo that operate shuttle buses between the airport grounds and offices outside the terminal.
“This legislation is an attack on the very lifeblood of an airport’s ability to finance, operate and maintain the facilities that serve the air transportation system of this country and this state,” Tom Greer, director of airport services for Burbank Airport, told a news conference.
Charging Companies
But Alamo officials and other supporters of the measure said it would prevent airports from charging companies that operate off the airport grounds nearly the same fees as those that lease space in terminals.
“Unlike Hertz and Avis, they don’t get a counter in the terminal. They don’t get the benefit of the walk-up traffic. Why should they be charged almost the same fee?” said Terry Reardon, a consultant to Costa.
The bill, which has passed the Assembly, is pending in the Senate Local Government Committee. At issue are the fees airports levy against the gross revenues of rental car companies that serve them. Most airports charge the big rental companies--Hertz, Avis and National--10% of their gross revenues in return for allowing them to operate counters in the terminals.
Only five public airports, located in Long Beach, Orange County, Bakersfield, Palm Springs and South Lake Tahoe, currently charge off-site rental companies a gross revenue fee. But both sides acknowledged that the legislation is aimed primarily at a proposal by Los Angeles International Airport to begin charging Alamo and other off-site companies fees of up to 8%.
“We would assume that once Los Angeles starts charging it, then other airports will start charging it,” Reardon said.
Ron Cagle, a lobbyist for Los Angeles, said the city is opposing Costa’s bill because officials believe that the airport generates business for off-site companies, just as it does for those on the premises, and both should be charged gross revenue fees.
Each side in the struggle contended that they were representing the interests of the consumers against those of the corporate profit makers. If Alamo is forced to pay the gross revenue fees, Reardon said the company would be forced to raise its prices. On the other hand, if airports are not allowed to charge the fees, operators said they would have to raise charges to make up for the revenue losses.
“If the airports were prohibited from imposing those fees, they would have to make up the lost income in part by raising landing fees and rentals,” said Alan Wayne of the Air Transport Assn., which represents scheduled airlines. “Airlines and their passengers . . . and other airport businesses would unfairly bear the entire burden of the airport costs.”
Joe Crotti, a member of the California Commission on Aviation, said the greatest fear of airport operators is that price competition from off-premise companies could prompt the giants to move out of the airports. He said California airports collect an estimated $60 million each year from on-site rental companies.
“Passage of this bill would create for California airports a financial crisis whose impact would ripple through all segments of the state’s travel industry,” he said. “In the end, ironically, it would even harm Alamo and the other off-airport companies.”
However, Reardon said the big rental companies were only threatening to move out of the airports to draw airport operators into the battle with Alamo.
