Who is the Villain in this Disruption Story?
priceonomics.com
priceonomics.com
FlightCar, and to a lesser extent the other off-airport rental companies (who still run shuttles from the rental car center), don't burden the airport with space in the multistory garage on the airport property. As such, they shouldn't be subject to taxation by the airport.
SFO's an interesting case because it exists completely beyond the boundaries of the city and county of San Francisco, with FlightCar's property even further afield in Burlingame. I fail to see how they could even have standing.
Clearly FlightCar doesn't burden an airport in the same way, however they do to some extent. Maybe if the airport worked with them and provided some portion of short term parking for their customers for a cut of the price it could be beneficial to both parties?
To address your last point, let's use another example. Football stadiums are public facilities often owned by local municipalities. But that doesn't mean I can go in and start selling hot dogs.
Disclaimer: I have had pizza delivered right up to Solider Field in Chicago before a game. Using a public road.
If so, they can prohibit your friend from dropping you off just like any house owner can prohibit your friend from entering their driveway.
The point is that FlightCar is offering the same or competing services as an Airport rental car agency without paying the same use fees as a rental car agency. This has less to do with efficiency and more to do with them exploiting loopholes to avoid paying the same costs as more established rental companies. They benefit from the increased rental demand, cab stands, and private roads produced by the airport, but don't pay for it.
If their entire business model is dependent on not paying the airport fees, it's probably not as disruptive as they claim.
The problem is that part of their value prop to customers is that they offer airport pickup (they send a black car to bring you from the airport to the rental agency). This puts them in a position where the airport has a right to demand use fees, since they are using the same roads and infrastructure as any other rental car service.
Reducing costs by not using the infrastructure, and therefore completely circumventing the need to pay the use fees, would be disruptive. Using the infrastructure but refusing to pay is not disruption. They are not doing anything more efficiently, they are just refusing to pay.
This issue should be understood as completely distinct from their core car-sharing business model, which is disruptive to the rental car industry.
[Entertainment companies] are less fearing change than trying to maintain their funding system.
[Cell phone companies] are less fearing change than trying to maintain their funding system.
[Game companies] are less fearing change than trying to maintain their funding system.
Isn't that what holds back a lot of companies--why change if they're making enough money as it is. In some ways, I feel like that's the big thing that held Sony back and let Apple dominate the MP3 player market.
EDIT: This is just a comment on the headline, not anything in the article -- just to be clear!
Alright, pass those costs on. What's the alternative? We live with a less efficient system because we're used to car renters subsidizing everyone else?
It seems rather silly and inefficient that people have to pay more for their airport coffee or airplane tickets just because rental car companies decide stop paying their fees.
>> What's the alternative? We live with a less efficient system because we're used to car renters subsidizing everyone else?
Car renters aren't "subsidizing" everyone else. The article makes clear that rentals are just one of a variety of revenue sources for airports. Looked at another way: why should public transit riders pay for the infrastructure to support rental car agencies and shuttles?
Also, assuming FlightCar is truly disruptive, they should be able to provide a more efficient and cost-effective service despite paying the airports an appropriate use fee.
I'm getting lost in the premise here. Does every story of disruption have to have a hero and a villain? This seems to be a rule of how these things work in the author's eyes? Why the heck is that?
I own a car. I park the car. If I allow other people to use the car, the location the car is parked has nothing to do with anything. If it did, would we start allowing different fees depending on where my car was when I loaned it to somebody? That's crazy.
There's not a villain. There's a broken revenue model for airports that doesn't work anymore. That's good -- things keep changing and we wouldn't expect everything to remain stable forever. Airports need to change like everything else. Creative change that gives us all more of what we want more efficiently is a good thing. We need lots more of it. It doesn't have to fit into a good-guy/bad-guy narrative.
Like I said, I have no idea what the point the author is trying to make here.
Though it could make sense to recommend wiping your gps before loaning your car if it does keep a memory of recent trips.
This is not a story of potentially overbearing or obsolete regulation such as that faced by companies like Uber and Airbnb. This is simply a property owner controlling activity on their own property. The fact that airports are usually owned my governments is completely incidental here. You'd no doubt find the same sort of fees at a privately-owned airport. If you want to do business on somebody else's property, you play by the owner's rules, end of story.
It's the same kind of un-scoped reason that leads to conclusions like trickle down theory. They think because they're proving a service that someone can presumably benefit from, that gives them a blank check to consume as much as they can to provide that service, thus completely negating the positive impact of their business through crock-pot philosophy. Obviously, there is no sound logic in this line of reasoning. Obviously, they're not going to argue that they should pay more since they don't have a fleet to maintain. "Invisible" hand?
The solution is quite simple really: there is no simple solution. If you're going to displace a business you can't replace them with something less then what they were and expect to make more money than they did, at least not in a sustainable way. It's simple thermal dynamics.
This is all a subset of issues born of cargo-cult thinking, techy buzz words and such that give businesses respect they simply co-opted by using the word/technology in marketing materials. More bubbles, more start up trends, more 'combinators separating uninformed people and their money without providing real value and expecting to get their @#$% &*!! for doing us the favor.
Also, it's likely a majority of their drop-offs and pick-ups aren't even people renting cars! Instead, they're locals, who've dropped off their car at a remote lot for maybe-renting. Why should such a person be routed out through the remote rental-counter-center, when they're not a car-renter? They're most like any other local arriving via cab or limo, so that's the airport-usage-fee that should apply.
The obvious move for FlightCar is to partner with nearby garages, and offer a valet service to drive passengers to their terminals. To sweeten the deal, FlightCar might offer to wash or do basic maintenance (oil change) on the car for an added fee.
The passenger gets
- convenience of getting dropped off at terminals (vs. walking from airport parking)
- convenience of taking advantage of car "dead time" to get cleaned / serviced
- some money (from the rental), to bootThe valet drop-off/pick-up service (and air-travel-related marketing) is what SFO thinks entitles them to the rental agency fees... even though the drop-off/pick-up is indistingushable, in terms of impact, from having a friend drive you.
SFO has been granted a monopoly on land, waterfront, and airspace by several levels of government, and is owned by the public, so this reductionist "the owner can do as they damn well please, social welfare be damned" analysis doesn't apply.
What would probably work better is a toll ticket just to enter the airport complex via the main gate. Airports (almost always) have front gates to lock the entire compound if necessary, add a toll booth.
The visit toll could be collected electronically, via transponder or a bill mailed to the car's registered owner, to require no slowing or stopping of traffic.
They could also allow free or cheaper visits at the far end of the SFO 'airtram' (where the existing rental car center is located).... the differential could even vary with congestion.
If they want to throw a bone to occasional, casual flyers and friends on pickup/dropoff duty, let each license plate have 1 free visit each N days. (Though, the logic and fairness of charging every visit equally based on its congestion impact is strong.)
There are better ways to meet any legitimate concerns of SFO than to force new services into the old rental-agency cookie-mold.
So if you're suggesting the airport be privatized, and then offering services like any other "business entity… deciding what to do with its own property", I think that'd be a great plan.
But SFO is a public entity, using state power to enforce extra monopoly privileges. It doesn't get to just say "because we want to do it this way with 'our' property", even if it's silly. It's the city of San Francisco's property, and their actions should be serving the public interest.
An equitable regime of charging based on actual visit impact achieves that. On the other hand, enforcing the old formulas out of tradition is lazy and destructive - and suspiciously protective of SFO's longtime partners among the incumbent rental agencies.
We still have state owned toll roads across the country. There is an established habit of limiting road traffic via tolling even on public roads.
Toll roads (state owned or private) charge by use, which is fairly reasonable and efficient, not by a deep inspection of your gross revenues.
"This week, Forbes reports that “Airports are the next big battleground in the sharing economy” as the startup FlightCar, which competes with the car rental industry at airports, faces a legal challenge.
The city and county of San Francisco has sued FlightCar for running a rental car company without certification from the airport. "