Industry Research

Airport Rental Car Fee Increase Signals Tougher Times For Transportation

Posted on October 13, 2010 by LCT Staff - Also by this author - About the author

CALIFORNIA AIRPORTS: Following a 33% hike on limousine fees, LAX is determined to milk transportation providers despite losing passengers over the past decade.

LOS ANGELES — Gov. Arnold Schwarzenegger recently signed a bill that enables California airports to herd all of their car rental franchises into a single location, according to a recent article in the San Diego Union-Tribune. And while SB 1192 was written specifically to help Los Angeles International Airport, other airports stand to benefit as well.

The Union-Tribune further reports:

The bill, from Senator Jenny Oropeza, D- Long Beach, enables airports to increase the fees assessed against the rental agencies to help pay for a centralized facility. Airports now charge a flat $10 fee per rental. Now they have the option to base the charge on the number of days a vehicle is rented, up to a maximum of five — thereby increasing revenues that can be applied to construction of the consolidated rental car facility (CONRAC).

According to supporting data on the bill from Oropeza’s office, LAX has plans for an $800 million rental center, housing up to 33,000 vehicles. So far it has collected $47 million in fees toward construction.

Mark Adams, chief government affairs representative for Los Angeles World Airports, which operates LAX, testified that the airport’s 800,000 annual rental agency shuttle trips would be cut nearly in half by the new facility — even more if a light-rail train is built from the airport to the center. Adams and others hail the rental terminal concept as a significant victory for “air quality mitigation” at the airport, as well. [End Union-Tribune excerpt].

Hikes Hurt Ground Transportation

The increase on rental car fees follows a whopping hike on chauffeured transportation providers, and a glaring disparity between the fees charged to taxicabs versus limousine operators and their respective shares of airport access usage. LCT LAX LIMO FEES ARTICLE HERE.

The ground transportation hikes come at a time when LAX, the sixth busiest airport worldwide, saw its international passenger traffic decline 9.6% during the past decade, from 16,081,332 in 2000 to 14,535,532 in 2009. LAX was among five of 18 major U.S. airports that lost international passengers during that period. LAX ranked 17th in international passenger growth on the list. Charlotte and Phoenix airports topped the list, growing 155% and 102% respectively in international passengers during the same time period.

Total passenger volume at LAX has fallen from a peak of 67 million in 2000 to 56.5 million in 2009, still below the 1996 level, according to figures from Los Angeles World Airports.

Will Fees Discourage Ground Travel?

For chauffeured transportation operators and other ground transportation providers, concerns are mounting about higher fees being passed on to travelers who will then choose to fly, rent cars, and use ground transportation services elsewhere. International tourists who want to travel around the U.S. can just as easily arrive into and depart from airports in Las Vegas, Phoenix, or Atlanta, to name a few alternatives.

The big question for LAX is if the fee increases will eventually cause more consumers to choose to do business in an airport where the fees are not so high.

By favoring taxi-cabs and rental cars over chauffeured transportation operators, LAX serves as an example of how government taxes behaviors it wants to discourage and subsidizes behaviors it prefers. Tourism and global business travel are major factors in the Southern California economy and beyond. In their zeal to pay for amenities and services by socking private businesses following a crippling recession, will LAX, LAWA, and other governmental authorities trample the golden economic eggs?

Sources: San Diego Union-Tribune; Los Angeles World Airports; Martin Romjue, LCT Magazine.

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