All products featured on WIRED are independently selected by our editors. However, we may receive compensation from retailers and/or from purchases of products through these links.
Drop off your car at the airport and get free parking -- plus a car wash. That was the proposition. All you had to do was let someone else drive your car around while you're gone. The idea sounded so sensible, there had to be a catch. And so there was.
Amid conflict over fees and congestion, San Francisco International Airport (SFO) -- the air-travel gateway to Silicon Valley -- pushed back against car-sharing companies FlightCar and RelayRides (not to mention their ride-sharing counterparts, Uber and Lyft). But a peace has been reached, at least partially.
Airport officials said today that SFO had reached an agreement with RelayRides that will allow the company to offer its services to air travelers.
Companies such as RelayRides are pioneering the idea of private individuals renting out their cars to one another, much like Airbnb has with people and their homes. The San Francisco startup has started focusing heavily in recent months on airports, which anchor the U.S. rental car economy.
Elsewhere in the U.S., RelayRides allows would-be renters to search for cars whose owners live near or have stationed their vehicles close to airports. But at SFO, the company is piloting a service aimed specifically at air travelers not just arriving at but departing from the airport. Flyers leaving SFO can park their cars in a parking lot near the airport and take a hotel shuttle to the terminal. Travelers coming to SFO can take the same shuttle to pick up those same cars, which they've rented out through RelayRides.
Unlike other RelayRides rentals, where car owners keep most of the money, users of the SFO service aren't getting paid. Instead, the incentive is not having to pay for parking while away. Still, RelayRides makes money, which is an issue for SFO.
Airport regulations allow SFO to take a cut from any business that derives revenue because of its connection to the airport. Traditional rental car companies are charged 10 percent plus $20 per vehicle rented. RelayRides CEO Andre Haddad says those rates didn't make sense because his company didn't fit the traditional car rental model. Over the course of months of discussion, Haddad says, RelayRides and SFO were able to reach an understanding that the startup was a kind of hybrid between a car rental and a transportation operation.
Officially, however, RelayRides will be classified by the airport as a standard offsite car rental company, SFO spokesman Doug Yakel says.
"The way they identify themselves may not be the way we identify them," Yakel says. But he called RelayRides' willingness to work within the airport's regulatory scheme "an example that others can follow of how to make it work."
It appears, however, that RelayRides in accepting the designation of a traditional rental car company may not have to pay the traditional rate. Haddad said the 10 percent plus $20 per vehicle didn't make sense given how his business operates and that RelayRides and SFO were able to negotiate financial terms he calls "fair," though he won't disclose exact figures. Yakel says he didn't have information on the rates agreed to by RelayRides.
Also a concern was the potential for extra traffic at the airport, Haddad says. RelayRides was able to persuade SFO that its operation wouldn't create more congestion because its customers were using the same shuttles already being run by the hotel, and no additional trips were being created, he says.
RelayRides isn't he only car-sharing company that has tangled with SFO. FlightCar, which began operating at SFO before RelayRides, was sued by the airport over what the complaint filed by San Francisco City Attorney Dennis Herrera described as unfair business practices for its alleged "flouting of SFO's permitting and fee requirements." According to the complaint, FlightCar began operating its car-sharing operation for travelers in an SFO parking garage in February, then moved offsite after the airport ordered the company to stop, but still refused to pay the traditional rental car company fees.
FlightCar says it's paying what amounts to about 15 percent of each transaction in fees to SFO for the Town Car services it uses to bring its customers to and from the offsite location where its shared cars are parked. And it appears to be standing firm against allowing itself to be classified as a traditional rental car company.
"The City wants more than that [15 percent]. They want FlightCar to pay 10% of total revenue and $20 per transaction, equal to what the conventional car rental companies do, even though FlightCar and its customers do not burden or use the airport's infrastructure the way conventional companies do," the company says.
FlightCar says another sticking point is the Town Cars themselves, which drop customers off at the terminal curb, which the airport says without permits violates SFO regulations. "SFO wants FlightCar to drop off at a less convenient place for customers," the company says.
(Update -- November 25, 2013, 2:00 p.m. EST: FlightCar says that the Town Cars themselves are operated by third-party drivers fully permitted to ferry passengers to and from SFO. The company describes itself as a customer of local Town Car operators. This is an interesting distinction, because it would seem to allow FlightCar to argue that, as with RelayRides using existing hotel shuttles, its customers aren't adding additional traffic, since those Town Cars would be picking up and dropping off at SFO anyway.)
The airport in its suit demands that FlightCar require its customers to use AirTrain, SFO's rail transport system, as required by airport rules. FlightCar CEO Rujul Zaparde says talks with SFO are ongoing. Yakel said he did not know of any current discussions but that FlightCar's response to the lawsuit was expected shortly.
RelayRides, perhaps taking a cue from the head-butting between FlightCar and the airport, says it began talking to SFO about its plans before it launched its service in August, which appeared to have smoothed its path. At the same time, RelayRides didn't wait for permission from the airport either. Asking forgiveness rather than permission appears to be the lesson taught by most of the successful sharing-economy startups, from Airbnb to Uber.
Typically, these companies have faced problems and even crackdowns from regulators. But bureaucracies move so slowly that, as the creaky wheels turn, these companies continue to operate. By the time regulators get around to making a decision, consumers have come to know and want these services. This consumer demand acts as political leverage that give small startups an asymmetrical advantage against government agencies (gobs of venture capital also helps).
Ultimately, as dramatic as these conflicts may seem in the moment, we suspect they ultimately represent the typical fits and starts that accompany new technologies and new ways of doing things. There were cars before there were the rules of the road.
"I think they're realizing the sharing economy players are here to stay, the sharing economy is here to stay," Haddad says of regulators, "and they need to evolve."
For SFO's part, Yakel says the airport is open to new innovations and wants to provide customers the amenities they want. At the same time, he says SFO has obligations to ensure safety and fairness for all businesses operating in connection with the airport: "As a public agency, it's important to us to provide a level playing field."
