Brilliant New Rental Car Business Model
Next time you fly, instead of parking in an airport lot and paying at least $10/day, would you like the option of free parking, a free car wash, and the possibility of getting paid $10/day? Well, if you live in the San Francisco or Boston area, now you have that opportunity.Three teenagers decided to put their college educations on hold in favor of starting a business that could revolutionize the rental car business. Rajul Zaparde, Shri Graneshram, and Kevin Petrovic had either gained or been offered admission at Harvard, Princeton, and MIT. Instead of heading to college, the three young entrepreneurs saw an opportunity in the market that was not being exploited. Yahoo News reports.
The idea was this: At every major airport, acres of cars sit idle, left parked by owners who have jetted off. Why couldn't these same cars be rented to arriving travelers? Rates could be dramatically cheaper than those charged by traditional car rental companies, since, under this model, the rental company wouldn't have to pay for or maintain the fleet.
Sounds like a brilliant idea. Why the heck didn’t I think of this?The business they founded is called Flightcar, and they began renting cars in San Francisco in February 2013. They have expanded to provide service to Boston Logan and hope to open in a third city before the end of the year.They could be paying hundreds of thousands of dollars for the opportunity to attend prestigious universities, but instead have chosen to keep their money and build a business, thus gaining experience that’s not available in the classroom.Unfortunately, it is not all roses for the entrepreneurial trio, more coverage from Yahoo News.
Doug Yakel, public information officer for SFO, tells ABC News that FlightCar refuses to play by the rules that govern other rental car companies. It doesn't pay the same fees, he says, and it doesn't abide by the same regulations.SFO's objections have taken the form of a complaint filed last month against FlightCar by the city attorney of San Francisco.Zaparde says the airport's lawsuit stems from a disagreement over how to define FlightCar."They want to put us in the same bucket as traditional rental companies," he says.FlightCar is a different animal from Avis or Hertz, he adds, and thus not subject to the same strictures.For example, SFO wants FlightCar to pay it 10 percent of its gross profit and a $20 fee for each rental car transaction -- the same as what the airport gets from every other rental car company.
You can always count on the State and businesses that receive privileges or subsidies from the State to cry foul when innovation knocks their gravy train off the tracks. As per usual, the customer will be the party that is negatively impacted by taxes or fees levied against FlightCar.A lawsuit or several lawsuits probably will not slow the growth of this new business. If San Francisco prices FlightCar out of their local market there are thousands of airports in the US and globally that have demand for this service. These three young men have uncovered an untapped resource. Obviously, this service would not be attractive to everyone, but all rental car customers should be excited by the prospects of lower prices as a result of increased competition in the industry.FlightCar reminds me of another San Francisco start-up that is fueled by car sharing, Lyft. Each of these new business are proof that even when government policies thwart economic growth, the free market will punch back and supply value in ways the central planners could never dream.Receive access to ALL of our EXCLUSIVE bonus audio content – including “Conspiracy Corner”, “Degenerate Gamblers” and the “League of Liberty Podcast” by joining the Lions of Liberty Pride and supporting us on Patreon!
