Startup car rental service FlightCar reached an agreement with Travelport to be distributed via Worldspan-connected travel agents, marking what is believed to be the first partnership between a GDS and a peer-to-peer travel service.
FlightCar’s business model consists of brokering rentals of privately owned cars by vehicle owners who are flying out of an airport to travelers who are arriving.
Travelport and FlightCar last week would say only that they had reached a “multiyear distribution agreement” but did not offer details. FlightCar, which began service at San Francisco Airport early this year, has since added service at Boston’s Logan Airport and Los Angeles Airport.
Until now, the company’s only existing sales channel has been its website. FlightCar CEO Rujul Zaparde confirmed that his company had approached Travelport about a distribution agreement that would expand sales to the agent channel. He also said FlightCar would expand to more airports in 2014, though he didn’t identify which airports they would be.
“It’s a great step, and it’s a good sign to see travel industry folks taking on to the sharing economy,” Zaparde said. “I do think we have an uphill battle in convincing brick-and-mortar agencies to book with us, but we do have the best rates and, in many ways, a more premium service.”
Indeed, the agreement pairs a traditional channel, Travelport’s GDS services, with an incipient travel concept, the “shared-economy” car rental startup FlightCar.
With U.S. car rental bookings projected by PhoCusWright to grow less than 5% this year and with the industry further consolidating under Enterprise, Hertz and Avis Budget, Travelport sees FlightCar as a potential growth area.
“We are focused on growing with our customers,” said Travelport spokeswoman Jill Brenner. “New business models like FlightCar are an important complement to our core business.”
FlightCar was founded in 2012 by three high school students who had been admitted to Ivy League schools but decided to put off their educations in order to take the car-sharing network concept to the travel industry.
The idea is to eliminate the inefficiency of having a traveler leave his or her unused car at or near an airport. Instead, he or she can make the vehicle available for rent by an inbound traveler.
FlightCar coordinates the transaction by pre-screening renters, brokering the transaction, insuring the vehicles in question for as much as $1 million and shuttling both parties via town car between the airport and a nearby FlightCar lot.
The value proposition is that the vehicle owner gets free airport parking, not to mention a free car wash, while the renter gets a late-model vehicle for less than what traditional car rental companies charge.
For example, at LAX, FlightCar charges $30 total for an all-inclusive (though with a 90-mile daily limit) two-day rental on a mid-January weekend. That compares with a starting rate of $47 for the majors.
“FlightCar wants to have more control over its demand creation, and rather than simply relying on customers to generate use, they’re turning to professionals to provide an option,” said Henry Harteveldt, a travel industry analyst with Hudson Crossing. “Travelport should be applauded for thinking outside the box and being creative.”
FlightCar’s introduction has not been without controversy. The city of San Francisco sued the company earlier this year, charging that the startup was violating airport policy by paying neither the gross profit percentage nor the $20-per-transaction fee that other car rental companies were paying at the airport.
The company has argued that it should be exempt from airport charges because none of its operations are on site. The case has been transferred to Santa Clara County, where it is pending.
It might be some time before travel agents generate a substantial amount of sales for FlightCar, since the concept is a new one and the idea of booking clients into non-fleet vehicles in varying conditions might strike some agents as too dicey a proposition to compensate for the savings.
Ensemble Travel Group, Signature Travel Network and Travel Leaders Group were among consortia contacted last week that either did not respond to questions about booking clients with FlightCar or declined to comment.
Still, FlightCar can take encouragement from Airbnb (whose CEO, Brian Chesky, is a FlightCar investor) as an example of a company that applied the shared-economy ethos to travel and has grown substantially as a result. Privately held Airbnb, which was founded in 2008, has better than quadrupled its listings since the beginning of last year, to more than 500,000.
“This will not be for every travel agent or for every client,” Harteveldt said. “But look at Airbnb. It’s on the verge of becoming one of the world’s largest hospitality companies. So FlightCar has potential, if they continue to be careful in their planning and execution.”