Next clash over ‘sharing’ business models – cars – being waged at Orlando airport Scott Powers 10/29/2018 Our Politics 2 Yet again, a 21st-century business model is clashing with how business always has been done — creating a running battle at Orlando International Airport and other airports where authorities are trying to stop emerging car-sharing operations from acting, in the airports’ views, as unpermitted, unregulated rental-car companies. Specifically, the Greater Orlando Aviation Authority and Turo, a San Francisco-based company, are butting heads in what is now nearly a yearlong dispute. Now the skirmish, perhaps an early battle in a potential full-out turf war for a huge, multibillion-dollar rental-car business sector in Florida, is drawing the attention of state lawmakers. The context of the battle broadens to the potential rivalry of traditional rental-car companies versus operations such as Turo and Getaround, much as the business community and regulators have seen high-profile battles in the past several years between traditional taxicab companies versus Uber and Lyft; and traditional hotel companies versus Airbnb and HomeAway. GOAA has sent Turo a cease-and-desist letter. Turo says the airport doesn’t understand what is going on. The company has a couple of times asked the airport to consider negotiating a new business plan. The airport has rejected the idea saying Turo first must play by current rules. So GOAA has started citing Turo’s car owners for running illegal businesses on airport property. “We’re not going to tolerate it,” said GOAA Board Chairman Frank Kruppenbacher. “It has become a real issue and we’re probably going to move to the next step, which is litigation.” “They sent us a cease-and-desist letter and we responded with, ‘Surely you’re confused; that’s not what we do. That’s not how this works. But let’s talk about creating a permit,'” said Michelle Peacock, Turo’s vice president and head of government relations. “But that’s the part of this equation that keeps getting ignored by the airport, is that we’re saying, ‘we’re willing to work with you, just like you did with the ride-sharing businesses, to create a permit that makes sense.'” A similar car-sharing dispute reportedly is beginning to boil at Tampa International Airport, and another may be quietly percolating at Miami International Airport. Nationally, regulatory, legal, and legislative battles between car-sharing and rental-car companies are being waged all over. The battles have caught the attention of state Sen. Jeff Brandes, the St. Petersburg Republican who has been running a crusade for several years to persuade — or, if that fails, force — Florida regulators to make way for nontraditional business upstarts, even at the outrage of some of the pillars of Florida’s tourism economy: taxicab companies, hotels, and now rental-car companies. “These are all disruptive technologies or disruptive business models that are challenging the traditional game, the traditional norms, of historically how people have done business,” Brandes said. “Florida has to be a leader in allowing new technologies to emerge. We can’t be Luddites. We have to be open to new technologies, especially in our largely taxpayer funded platforms.” This time it’s about the emerging car-sharing business and whether it represents the next-big-thing — or a loose operation devoid of regulatory oversight that consumers might expect and local governments might feel responsible to provide, and at the potential expense of the highly regulated, traditional rental-car companies. Companies such as Turo and Getaround have created platforms where people who own cars can rent them directly to people who want cars. This works efficiently at airports, where millions of people are getting off airplanes and considering their options from there: taxi, Uber, bus, traditional rental cars, or cars from someone they met on the internet. Companies like Turo and Getaround provide online marketing, communication, and a payment platform to assist anyone with a car pick someone up at the airport, drive off the airport property, get out of the car, hand over the keys, and then get paid by the day, or even the hour, until the car is returned. The companies provide insurance and other support, including roadside assistance. “This isn’t a rental-car company. We don’t own those cars. They’re not in our control. They’re not managed by us. We don’t have parking lots of black asphalt with cars on them,” Peacock said. “We don’t have employees managing suites of cars. We’re a marketplace. We’re just like eBay. When you buy something on eBay, they don’t have a warehouse of goods. They are helping facilitate a transaction between a seller and a buyer.” They’ve been doing that in Florida for about six years now. It started at the usual imperceptibly tiny scale and now is big enough that they’re clearly getting the attention of the airports. Peacock insisted, however, they’re not big enough to dent the profits of the traditional rental-car companies. In Orlando, Peacock said, the airport has been running sting operations to catch its car-owner clients. Turo says it has client car owners signed up in more than 5,500 cities worldwide and serving more than 500 airports. It says it has more than 350,000 vehicles listed, offering curbside pickup to customers who make connections with the vehicles’ owners over the Turo website. The company says in eight years of operation it has booked more than 6 million vehicle rental days. Florida naturally is ground it does not want to lose, and Orlando is Turo’s 18th largest market, despite the current airport fight. The airports have plenty on the line. At Orlando International, deals with rental-car companies are tied up both in contracts and in long-standing, good-faith relationships, assuring the traditional rental-car companies direct access to the huge Orlando tourist market. That’s in exchange for fees and facility rentals for counters, signage, car inventory parking, delivery space, and other facilities. It’s a huge business, and it’s very lucrative for the airport. Car rental companies are paying Orlando International a projected $99 million in fees this year, the airport’s second-biggest source of revenue behind airlines’ fees, and not by much. There also is, at least in Orlando, the issue of image. The Greater Orlando Aviation Authority aggressively pursues, promotes, and protects what it calls the “Orlando Experience,” demanding high levels of quality product, appearance, and customer service from its business partners. That’s easy to do with rental-car companies governed by detailed contracts, but perhaps an uncertain effort if it involves thousands of individuals renting out their cars through a website. Also, a big issue in the legislative debates over Uber and Airbnb, with the potential to emerge in the car-sharing business, is the home rule argument. Cities, counties, and other local authorities argue for local regulation, contending that they know what’s best for their communities and that the Florida Constitution’s home rule provisions set that belief as the intent and spirit of Florida law. On the other hand, supporters of the new business models, such as Brandes, argue that Florida’s economy needs the flexibility to compete for 21st-century business, and local governments shouldn’t block opportunities out of loyalties to old ways of doing things. Specific to the Orlando-Turo fight is the airport’s regulation of its property. GOAA has explicit rules for ground transportation operations and rules that forbid commercial businesses from operating in any way on airport property without a permit, including in a parking garage or at a passenger-pickup curb. Turo is in clear violation of both of those, airport officials have informed the company. Drivers of Turo-facilitated car rentals who have been caught have been slapped with at least a dozen citations. Orlando has offered Turo the chance to apply for a permit to operate as a rental-car company. Turo has declined, saying there’s no reason that it or its car “hosts” should face the kinds of fees and rules designed for rental-car companies, when they don’t need counters, signage, inventory parking lots, or anything else from the airport, except a couple minutes at the curb to pick someone up. Peacock also charged that airports may be shortsighted, perhaps irresponsibly so, when they invest huge sums, as GOAA currently is doing, in expanding rental-car facilities without first seriously considering how emerging business models like car-sharing could impact the future. Instead, Turo offered to help GOAA create a new business sector permit plan for car-sharing, with “commensurate fees to compensate the airport for the negligible impact Turo users may have at the terminal,” according to Peacock’s July 17 letter to GOAA. GOAA has declined, charging that the company is, in fact, simply running a car-rental operation. “You do not get to flaunt the rules simply because you do not think that they should apply to you,” stated an Aug. 9 letter from attorney Jessica Maugeri, of Marchena and Graham, GOAA’s legal counsel. Brandes said the critical point for him is: What do visitors want? “Ultimately, you have to give consumers what they want. What we’re seeing is consumers wanting more options,” he said. “In a state with 120 million tourists, we should focus on the desires of the tourists coming here. And what they want are options.” Brandes said he has no current intention of pushing legislation, as has been done in the past several years during the ride-sharing and home-sharing business fights. But he left open the possibility. “I think we have to give airports a wide berth to do the right thing,” Brandes said. “To the extent that we hear outlier stories as we did with Uber, then ultimately there is a responsibility to make sure there are opportunities for everybody to participate.” 2 Responses Will 10/29/2018 Interesting Reply Justin 10/30/2018 As a former Turo host and Florida resident, I have recently shared my insider perspective on this battle in an article at: https://www.linkedin.com/pulse/insiders-perspective-secret-war-between-carsharing-rental-norwood/ Reply Leave a Reply Cancel ReplyYour email address will not be published.CommentName* Email* Website Notify me of follow-up comments by email. Notify me of new posts by email.