FlightCar is taking on the airport parking and rental car industries with a new model, where air travelers rent out their cars. The startup, founded in February by three teenagers, joins the growing car-sharing industry.
FlightCar, a car-sharing service that launched in San Francisco in February, lets travelers rent out their cars while they are out of town. As long as a car is less than 14 years old and worth less than $60,000, it can be listed on FlightCar’s website as being ready to rent.
In return for dropping off their car with FlightCar, car-owners get black-car valet-service to terminals, a car wash, the peace of mind of not leaving their car in a fee-eating lot, and up to $10 a day if their car is rented. Car-renters skipping traditional rental companies for FlightCar save up to 50 percent on their vehicle and get free insurance, GPS, and curbside pickup and drop-off services no matter where they live within a 10-minute radius of the lot.
If a driver finds a car that can be rented more cheaply, FlightCar guarantees the driver a free rental.
It sounds simple, but it took a trio of teenagers to come up with it. The founders of FlightCar – who turned down Harvard, Princeton, and the Massachusetts Institute of Technology to do so – say their ambitions are big: to “revolutionize the airport parking and car rental industries one car at a time.”
The concept has caught on, attracting more than 1,400 of car-sharers and clinching more than 1,500 reservations in a matter of months, says Rujul Zaparde, CEO and cofounder of FlightCar. Within the span of a few weeks in April, FlightCar raised $5.5 million and got American Idol host Ryan Seacrest and Airbnb cofounder Brian Chesky to sign on as investors.
The company joins the fast-growing car-sharing industry, which by one estimate (.pdf) could become a $9 billion to $10 billion market by 2016.
But even as FlightCar rides the momentum and promotes its new site by Boston’s Logan International Airport, the company faces legal trouble.
On June 7, San Francisco’s city attorney filed a lawsuit against FlightCar accusing it of dodging fees and unfairly undermining its competitors in the rental-car business at San Francisco International Airport (SFO).
SFO requires all off-airport car rental agencies to operate under a permit and pay it 10 percent of their gross profits and $20 for each car that is rented out. FlightCar, which says it “operates under an entirely different business model” than competing off-airport rental car businesses, does neither, arguing it is exempt from the rules because of its unique infrastructure.
"We're not a traditional car rental agency, but a [peer-to-peer] car sharing company. Most of our owners come from word of mouth. We also have a few billboards on the peninsula that attract owners dropping off cars to our service," Mr. Zaparde says.
For now, FlightCar says it does not expect to see any business impact from SFO’s legal actions. The complaints it has received from SFO were perhaps only to be expected, Mr. Zaparde says.
"There are three companies — Enterprise Global, Avis Budget Group, and Hertz — that control the vast majority of this market, and they've been doing it the same way for decades. We have a new, more efficient model that's disrupting this industry ... so we only expect to face opposition," Mr. Zaparde says.