Why airport car hire is ripe for change
Four cars, four bad experiences. I really should have complained, but then again...
It is expensive to rent a desk at arrivals and to have parking spaces near enough to keep customers happy.
Cars I have rented in the past six months: a Fiat Panda (France); a Volvo XC40 (Italy); a Renault Megane (France); and a nondescript, too-small piece of nothingness, the brand of which I have forgotten (Ireland).
None remotely resembled the car I ordered. The Panda was a straight downgrade (“There isn’t anything else, do you want it or not?”) with no refund offered. The Volvo was an unwanted upgrade. Reader tip: the only car suitable for the tiny, twisty roads on the Amalfi coast is an already bashed-up Panda - which is why the Volvo was on offer (“There isn’t anything else”).
The Irish nondescript was too small for five people and their luggage. And the Megane, being user-unfriendly, ugly and in this case bizarrely fuel-inefficient, doesn’t resemble any car anyone would ever order anywhere for any reason whatsoever.
I haven’t complained about any of this. Why? You’ve rented cars. You’ll know the answer. I didn’t moan at the time because I couldn’t cope with either extending my wait or nudging the person behind me to violence by extending their wait. I didn’t afterwards for the reason that on each occasion I escaped post drop-off without being charged much extra for damage, dirt, late returns, missing fuel or the simple idiocy of being a customer.
You will know all these feelings. This summer, readers have told me of waiting for up to two hours for cars. You will probably also be wondering what it is that makes the car-rental sector both so hideous and so seemingly immune to disruption. After all, if you can stick your passport in a machine at an airport and get a booked boarding pass for a plane to anywhere, any time, why can’t you stick it in one at the other end, pick up a booked set of keys for a car and drive off anywhere, any time?
The answer clearly isn’t about technology. Outside airports, the sector is well on the way to being disrupted. Car clubs are great. Zipcar claims that half of London is within a five-minute walk of one of its cars. Unlock the car with an app and you find the keys in the glovebox. No humans, no desks, none of that odd paper with holes in the sides, and no queues.
Peer to peer is gaining traction too: use this and you get the exact car you ordered (as opposed to Hertz world where “similar model” could mean anything). You can pick up almost anywhere and in some cases arrange for the car to be delivered to you. Try Turo, Drivy or Hiyacar. All sound fine - which in large part explains the fall in Hertz’s share price from $120 (€104)to $15 in four years.
So why are airports a special case? Money. It is expensive to rent a desk at arrivals and to have parking spaces near enough to keep customers happy. But competition, driven in part by comparison sites, has made renting cars cheap.
Think about hiring a tuxedo, says one old hand in the sector. Each rental brings in nearly 30 per cent of the capital cost of buying the suit outright. Rent a Nissan Qashqai and the price may be as low as €20 a day for something that costs €30,000.
Sure, you can rent it out more often than a jacket that everyone takes to a sweaty wedding, and sure, the resale value is going to be more but on the downside it’s going to be driven fast and badly (remember the joke about the best off-road vehicle being a rentacar?). There will be endless no shows, late flights, late returns and carsick kids. And no one is going to tell you about the non-visible damage they have done to your £20,000 piece of kit. Clearly £20 is not enough.
Rental agencies are caught in a bind. Clients demand transparent prices and low prices. If agencies offered the former it would quickly be clear they couldn’t offer the latter. So, on the current model at least, they have to fudge it with low headline prices and overzealous post-hire charges (the fuel and the bonkers fees for minor damage) and relentless upselling.
Such threaten-and-cajole tactics only work face to face, at the counter. The problem is that upselling and dealing with disputes over upselling takes time: 43 per cent of people told an iCarhireinsurance.com survey they had no idea that if they didn’t buy insurance, the full excess would go on their credit card for the duration of the rental. While it may help with your margins, the approach doesn’t help with your queues or the popularity of your brand.
Peer to peer lending
There is some movement at some airports. New entrants can’t afford a desk at arrivals, which is why the incumbents have got away with it all for so long, but there is a model emerging of peer to peer lending of cars already parked at airports (for instance, Car & Away at Gatwick).
I’m also interested in Virtuo, which promises to leave premium cars in car parks for you to pick up. This is worth watching, though the incumbents will have been quick to point out to airport owners that if car park operators are going to get into car rental they should be charged the same price for car parking as car rental agencies. It is still small scale and limited to bigger airports.
The good(ish) news, then, is that there are ways to stick with the big names and make airport car rental less awful. Buying your excess insurance separately should save you €100 a week, but be aware that the full excess is still likely to be added to your credit card so you will need a high limit. Or check to see if your credit card offers excess insurance.
I have it on my American Express card. You can get it more cheaply elsewhere but when we drove the nondescript nothingness into a car park payment machine (they were, I’m afraid, both asking for it) Amex covered it with no fuss at all.
Bring your own car seats (try Trunki backpack seats). Then get either an Avis Preferred or a Hertz Gold membership. Both are “free” - I use quotes because you pay in data, brand commitment and premium pricing. Both let you jump the queue and go direct or almost direct to your car and both give you a marginally better chance of getting the car you wanted. None of this is fail-safe - you could still get a Megane - but it does at least represent progress.
Merryn Somerset Webb is editor-in-chief of MoneyWeek.
- The Financial Times