Wheels: Peer-to-Peer Car Sharing at the Airport

Along with the Prius and the Honda Civic, the BMW 3 Series was one of FlightCar's most popular rentals at the San Francisco airport.

Courtesy of FlightCar Along with the Prius and the Honda Civic, the BMW 3 Series was one of FlightCar’s most popular rentals at the San Francisco airport.

Most Internet sources that dedicate content to such things agree that Hertz opened its first airport car rental center at Chicago’s Midway International Airport in 1932. Hertz says it was the first of its kind anywhere. But regardless of who started it, airport car rentals changed the way people traveled.

More than 80 years later, a new peer-to-peer car sharing company is trying to change the airport commute at two airports in the United States, introducing a departure from the way airport car rental has usually been done. FlightCar wants travelers to rent out their personal vehicles to vacationers, wooing the cars’ owners with free airport parking while they’re away and attracting renters with lower prices.

FlightCar is a sort of agent for car sharing. Unlike traditional rental companies, there is no fleet to maintain. Users who rent out their vehicles receive compensation, free parking and a free car wash. If the car is not rented, the parking is still free, and so is the car wash. According to FlightCar’s Wes site, long-term parking at San Francisco’s airport can be as much as $18 a day. Car owners who participate in the program get free parking, plus $10 for each day the car is rented.

FlightCar is the latest company to tackle car sharing in a growing marketplace that includes RelayRides, Getaround, Lyft and Sidecar. It first offered service at San Francisco International Airport in February, then expanded to Boston Logan International Airport in May. FlightCar has plans to open at Los Angeles International Airport this summer.

“We are now seeing greater diversification in the shared-use mobility arena; FlightCar is part of this expansion,” said Susan Shaheen, co-director of the Transportation Sustainability Research Center at the University of California, Berkeley, in an e-mail. “Traditionally, car sharing had been a round-trip shared-use model supplied by a third-party operator. Recently, we have seen more peer-to-peer shared use mobility models. These services are facilitated by a third party, which helps to manage and facilitate between individuals sharing privately owned vehicles.”

The company was founded by Kevin Petrovic, who lives in San Francisco, and Rujul Zaparde and Shri Ganeshram who are based in Boston. They said Airbnb was their inspiration.

Mr. Zaparde and Mr. Ganesham are both 18 years old and Mr. Petrovic is 19. They said they received $5.5 million in financing from investors, including the founders of Airbnb and Reddit, Ryan Seacrest and the venture capital firm Andreessen Horowitz.

“It just makes more sense; it’s more green, and the way the trends are going we believe this is the future,” said Mr. Zaparde. “We give you free parking guaranteed. We’re closer to the airport than long-term parking in San Francisco. You pull in and have someone assisting you. We take photos of the car in front of you.”

The company by the end of May had conducted over 1,000 rentals and had 750 cars listed in the San Francisco market, said Mr. Zaparde. The top three rentals in San Francisco were the Toyota Prius, the BMW 3 Series and the Honda Civic.

On the site, a 2006 Honda Accord is listed for $31 per day. A recent search found a black 1999 AM General Hummer listed for a $155 five-day rental in June in San Francisco. A 2010 Kia Forte was listed for $21 per day in Boston by an owner identified as Sara.

Vehicles must be 1999 or newer models to be eligible for rental. A rate of 35 cents per mile is charged after running over the 90-mile daily limit, which the owner receives. There is a $1,000 fine for smoking in the vehicle.

The company, however, has already been sued by the city of San Francisco over the curbside drop-off that FlightCar provides for car owners through a third-party limousine service. In the complaint filed last week, the city argues that FlightCar has broken rules that require rental car companies to use the AirTrain to transport passengers to the terminal and the company dodged airport fees charged to rental car agencies for doing business at the airport.

FlightCar is also being criticized by the insurance industry because of the potential for personal liability cases. Ms. Shaheen said that the policy FlightCar offers was similar to the one offered by RelayRides, which includes a $1 million liability insurance policy for owners and a $300,000 policy for renters.

“The problem remains that once the car is used as a business it’s not considered a typical auto policy; it’s now considered to be a commercial policy,” said Loretta Worters, vice president of the Insurance Information Institute. “Part of the reason is that premiums are based on information from the original policy. Who is going to be at fault? Who has the culpability if there’s a dispute about when the accident occurred? It opens car owners up to a lot of problems. People need to really speak to their insurance agents to understand the scope of their coverage.”

According to an academic paper Ms. Shaheen co-authored, three states – California, Oregon and Washington – have voted on legislation to prohibit insurance companies from making changes to consumer’s policies because of car sharing. Rachael Risinger, a State Farm spokeswoman, said in an e-mail that car sharing does not affect rates or impact customers’ ability to qualify for a State Farm insurance policy, but, on the other hand, the company will also not cover damage incurred during a car sharing rental.

“Rates are impacted by claims experience, car sharing or not,” Ms. Risinger wrote. “While the car sharing laws may vary from state to state, our coverage remains the same. There is no coverage for an insured for damages arising out of the ownership, maintenance, or use of a vehicle while it is rented to or leased to others by an insured. There is no coverage for an insured for damages arising out of the ownership, maintenance, or use of a vehicle while it is being used to carry persons for a charge. This exclusion does not apply to the use of a private passenger car on a share-the-expense basis.”

Mr. Zaparde said he did not foresee liability issues causing problems for the company and its consumers. FlightCar screens renters to make sure. According to FlightCar’s Web site, “For all renters and additional drivers, we do a driving history check that shows us any past driving citations and moving violations. We also verify renter’s identities and may also do a criminal background check.” Flight car requires drivers to be at least 18 years old – 25 or older if they’re renting a car worth more than $40,000 – and they can’t have any major violations, drug and alcohol-related charges or numerous accidents on their records.

“That’s something we’d handle case by case. Most of the time $1 million is pretty sufficient,” Mr. Zaparde said, referring to liability coverage. “We know there are going to be regulatory issues because it’s a new industry, and the government has to figure out new ways to regulate it.”

Some industry experts see the insurance limits as sufficient. Guy Fraker has worked in the insurance industry and served as an adviser to car sharing companies, including RelayRides, regarding risk mitigation. His company, Get2Kno, focuses on transparency in peer-to-peer companies.

“I don’t get too worried about the limits, because that’s a risk we take every single day when we get in the car, and every time we get in a taxi or a limo,” said Mr. Fraker. “I don’t know a car share company out there, including FlightCar, whose membership requirements wouldn’t hold up to any of the top five insurance companies.”

As the sharing industry continues to spread, the complexity of the business models remains to be defined in the automotive market. FlightCar estimates it will take 12 years for the company to become profitable.