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The Sensible Traveler

Rental car rates reflect supply and location

Email|Print| Text size + By Bruce Mohl
Globe Staff / August 17, 2003

The rental car operations at the nation's 100 busiest airports have a cookie-cutter sameness to them in terms of companies and vehicles, but the prices being charged vary wildly from market to market.

A new study by Travelocity, the online travel agency, found that the base rates for rental cars are dramatically different from one airport to the next, as are the fees and charges that get tacked on by local governments.

Texas, for example, hits visitors with higher add-on fees and charges than any other state in the nation, according to the study. At Houston's Bush Intercontinental Airport, taxes and fees increased the base price of a rental car by a whopping 71.7 percent.

Yet even with those steep taxes and fees, renting a car at Bush Intercontinental was still a lot cheaper than it was at many airports where base rates were significantly higher.

At Bush Intercontinental, the total base rate for a three-day rental in the Travelocity study was $498.40, well below the $531 base rate at Chicago's O'Hare International Airport, which included a tax-and-fee markup of 22.3 percent.

Total three-day rental costs were even higher at Hartsfield Atlanta International Airport ($720.42), Boston's Logan International Airport ($792.67), and New York City's LaGuardia Airport ($1,672.65).

Phil Kennewell, director of car and rail products at Travelocity, said the wide variation in base rate prices reflects operating costs that differ from one market to another and supply and demand differences.

Indianapolis, for example, ranked No. 3 in terms of base rates in the Travelocity study, right behind the two New York airports. Kennewell said the only reason Indianapolis ranked so high was because the weekend selected for the Travelocity study was the same weekend the Brickyard 400 was being held at the Indianapolis Motor Speedway. Demand outstripped supply and prices shot up, a common experience in the car rental business, Kennewell said.

Paula R. Stifter, a spokeswoman for the Hertz Corp., confirmed that rates vary from city to city even for the same car and rental period. She said local market and competitive factors influence the rates.

Travelocity, which prides itself on disclosing the full cost of a car rental upfront, developed its base rate by taking the average of the three lowest prices for both a full-size car and a compact car over a weekend from Aug. 1-4. Some of the taxes and fees were simple add-on costs, while others were applied as a percent of the base price.

The average base rate for a single-day rental at the 100 airports was $29.56. The average markup in taxes and fees was 24 percent. But there was a wide range on either side of those averages.

Overall, the airports in Texas had the lowest base rates and the highest tax and fee markups. Houston's Hobby Airport had the lowest base rate at $15.08 per day, but it had the fifth-highest tax and fee markup at 51.7 percent.

California airports had the lowest overall tax and fee markups, in part because many of the add-on charges are rolled into the base rates. Of the 10 airports with the lowest tax and fee markups, eight were in California. Sacramento was the lowest at 7.7 percent.

Logan's base rental rate of $31 was 23d overall in the Travelocity study, just behind Atlanta and ahead of San Diego. Its tax and fee markup was 38.4 percent, 13th overall.

Most airports charge rental car companies concession fees, which in turn are passed along to customers. But several local governments also tack on special fees to pay for sports stadiums or convention centers.

Minneapolis, for example, assesses a 6.2 percent markup on car rentals to finance a local sports stadium. Reno, San Antonio, Phoenix, and Cleveland all do the same, with fees ranging from 6 percent in Reno to a $2 flat fee in Cleveland. Texas recently authorized a car rental tax to help pay for a new Dallas Cowboys stadium.

At Logan, a $10 fee per rental is assessed to help finance the convention center. The fee raised $50.7 million between fiscal years 1998-2002, according to the state Revenue Department.

Stifler said Hertz and other rental car companies are particularly opposed to new taxes that are used to offset budget deficits or finance sports stadiums and convention centers "because rental car customers will rarely use the facilities they are funding."

To avoid the charges, Stifler said consumers can seek lower-cost alternate airports within a region or rent vehicles at downtown or suburban locations that tend to assess fewer surcharges.

Kennewell at Travelocity said the wide variation in prices means consumers also have to scrutinize ads for rental cars. "What is advertised is the rate, not the total price," he said.

Bruce Mohl can be reached at mohl@globe.com.

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