Second driver's revenge: Why does car rental pricing suck so much?
As a customer, the pricing plans of the car rental companies baffle me. I mean I understand about the goals for differential pricing -- finding ways to charge richer customers more money -- but still, I find it very frustrating, and I am curious why one of the majors doesn't have the courage to break out of the current pricing models and win over customers.
Everybody knows the insurance prices on car rentals are nuts. They are high mostly because they can be high due to customer paranoia, and also because in theory you have to pay based on the average driver they encounter, your good driving record counts for nothing. It's crazy. While most higher end credit cards will insure your car rental for you, I also discovered that my home auto insurance would cover me on rental cars for $4/year -- not $17 a day like the car rental companies charge.
I was particularly shocked when working with a company which had "take the insurance" as part of their corporate rental policy. For any large company, self-insuring would be the obvious choice, but even if not, I am surprised that corporate liability insurance companies don't sell companies a policy to cover incidents during employee car rental.
I guess one reason to "take the insurance" is the removal of hassle. Obviously dealing with a car accident in a foreign place is difficult, and scary, and people seem willing to pay through the nose to avoid it. I also bet that because the CDW/LDW insurance handles everything that people are more careless with cars that are insured that way. I once heard a friend tell how he was very late for his flight, and he tried to convince the car rental company to let him give the car to an employee at the curb. They could not (most airports ban this or regulate it.) He said, "I have the full insurance. I think I may end up reporting that my car was stolen, and I would not have to pay a dime..."
I really think the fueling charges are against the interest of the company. They typically offer to fill you up for anything from 2x to 3x the local gasoline price. Some now just say, "A flat, but very high fee to refill if you go less than X miles, otherwise the obscene price per gallon." Most also offer to fill the tank for a reasonable price and have you return it empty -- which of course is actually very challenging to do, even when you know you will use more than a tank on your trip.
As a result, many people scramble to refill the car at the airport. They know you are always in a hurry when returning the car, and so they get to charge the extreme gas price. Often it's hard to find the gas near the airport. Fortunately, most cars will let you put in a few more litres of fuel over "full" so you can fill up 10 miles from the airport and still be full when you get there. But still.
I think if they just charged a reasonable price -- a price similar to the highest full serve price in town if they like -- almost everybody would let them fill it. They would make the money from the sale of all that gasoline, but most of all, they would have happy customers who don't feel cheated. Obviously the margin on $9/gallon fuel is very high and they don't need too many hurried / expense account customers to pay that to make it profitable, but I don't think they are counting in the customer resentment.
Best and simplest of all -- buy cars where your computer can link in to the fuel system to learn the fuel level. Just charge me a decent price for any drop in fuel, and even credit me for any gain, and penalize me only if I return it less than half full (so that the next renter has at least half a tank.) Zero work by the company as they don't have to refill it unless I return it with a low tank.
Second driver fees
If you are renting the car with a companion, and you want them to be able to drive sometimes, they charge an additional driver fee. This can be as much as $10/day. The only thing it gets you is that if you have an accident while your companion is driving, they won't say you violated the contract and void your insurance.
What's particularly goading about this fee is that clearly having a second driver does not cost them any extra. At most, a minute to copy another licence, if they really feel they need to do that. It's really just a way to extract some money.
Fortunately, with elite status, some of the car rental companies do not charge a 2nd driver fee for a family member. And guess what, they get my business when we travel as a couple, even when they were otherwise more expensive.
If you are using your own insurance on a car, I wonder if there is any penalty to not paying the additional driver fee. Will your own insurance company refuse to cover it? What if the renter is in the passenger seat? If they will cover it, perhaps there is no reason to buy this at all. If you want the additional driver to take the car out on their own, and there is a problem, perhaps you can't use their roadside assistance.
Tolls and fees
Last month I drove on the toll road in Peurto Rico just once, for a $1 toll. They charged me $12 in fees to collect it. I got a speed camera ticket in Switzerland (two of them, 2 miles apart -- something that would never happen with cops since you always are a bit timid after getting pulled over) and it cost me $300 after all the fees.
At least in some places they put on the transponders. Other places refuse to, and so you have to either go slow or pay large no-transponder surcharges on top of the toll surcharges. They get you coming and going -- literally.
Better search engines
One thing that would help a lot would be if the various travel search engines -- and it seems this is a competitive space -- were to become smarter, and allow people to search for the real price they will actually pay.
That means letting me specify that I'm going to want an extra driver, or insurance, or return the car 3 gallons low etc. And getting the full price, including taxes. Of course you don't know how many gallons you will use, and you usually don't know how many tolls you will get charged, but they could provide decent averages.
If the search engines did this I think the prices would normalize. Ditto on the airplanes -- how many bags will I want, will I want seat selection and so on? This is of course very complex as you also have to understand the perks you get as an elite flyer (free checked bags) and other complex rules. However, the number of companies with complex rules is probably not too many -- 100 airlines, 20 hotel chains, 10 car rental chains -- but they also differ in different countries, sadly. Maybe this could be an interesting AI to build. The AI would go to the web sites of all the companies and attempt to book various things, and start to learn all the surcharges and taxes and put them in its model.
What's up outside the USA?
While I will rant about them, I will say that in the USA & Canada, car rental is ridiculously better than in other places, especially the middle east. In USA/Canada I walk into the car rental area, see my name on the wall (or pick a car) and just drive off. In the middle east, I have never had it take less than 30 minutes to get a car, even as an elite. I also don't know why people don't sign up for the free renter programs of the companies, and avoid the giant lines I often see. It's not like you are giving up privacy since you have to show your licence if not a member.
All those other extras
I never buy 'em. I mean I can't imagine who buys GPS navigation these days. Some people have to get child car seats. I've said before I think they should actually see an opportunity in renting road trip gear, like coolers and certain supplies.
Now don't get me started on resort fees and $20 internet!