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Second driver's revenge: Why does car rental pricing suck so much?

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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.

Crazy insurance

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..."

Fueling charges

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!

Comments

Gas stations are in on this racket too. The stations nearest Orlando airport charge double or triple the going rate for gas, taking advantage of thousands of visitors with rental cars (who could save money if only they drove a little further down the road.)
(And to comply with the law, they post the prices on a tiny sign that's very hard to see, and of course you don't notice until you've already filled up.)

Gas stations near the airport are always a little bit more but I have never seen 2x or 3x. Most people don't realize they can safely fill up 10 miles out. Once nice thing is the new functions in waze and similar programs that find gas along your route with the minimum detour.

What seems odd is if the gas stations are charging 2x, that's where the smart car rental company could take that business.

My personal gripe, along with hotels, are the taxes and fees applied specifically to rental cars. So you don't just pay sales tax (which is a bit odd given it's a rental, but I could live with it), but a list of special local tax, special airport tax, special fee for picking up at a central off-airport rental car location, etc. such that the taxes and fees can easily be 40-60% of the actual rental price, and sometimes even around 100%. Similar special hotel taxes and lodging fees are charged there, although usually not quite to the same extreme.

I honestly have no clue how these don't fall under the founding American principle of taxation without representation. These taxes and fees are clearly imposed the vast majority of time on people from out of town who don't get to vote for the folk who imposed them.

Yup, towns love to tax tourists because they don't vote. The tourism industry has people who vote, but they don't seem to be able to win that one.

It's an economic equilibrium -- the tourist towns know that if they gouge their tourists the ROI of the trip could slip below a threshhold that says, don't come back or have the convention here, etc. But they do push it right to the edge! And I'm sure that's frustrating. I went for a long time (pre Uber days) not owning a car in a major tourist city and I rented cars all the time. What's funny is that if you show a license with a local zip code, they waive those tourist taxes here. Pandering to the voters indeed!

My biggest pet peeve of car rentals is that they *never* will have the cheapest cars they book you. They will always have some random more expensive car waiting. I learned to just put on a sad face and say stuff like "Ohh. I was really looking forward to driving the Kia." And next thing you know, I'm driving their luxury car away at the Kia price because I refused to pay for an upgrade upsell (that they were committed to giving me all along). The only flaw in that plan was the mileage on those fancy cars often was much worse than the cheap small car. And I would rent unlimited-miles cars for long drives of course.

Nobody in SF knows this, but if you rent a car at SFO, you pay $20 for the ride on the monorail to the rental car center. It is added to your car rental. Ditto if you rent from a car rental company not at the rental center -- they are forced to pick you up at the monorail and charge you for the ride. If they were allowed to pick you up at the terminal, they would be better than the companies that paid to be in the CONRAC, and that would not go down well.

It was at the time, in effect the most expensive transit ride in the Bay Area, perhaps any major city. There is a BART fare that is over $10 between two endpoints but it's an hour long ride I think. $10 to go under a mile.

Well, the one-way fare from the Millbrae BART station (where Caltrain lets out) to SFO proper is $4.55 Clipper, $5.05 paper ticket. Which is pretty bad, although not quite at the $20 level. But then the connection from Millbrae to SFO should always have been AirTrain (aka the monorail), with BART ending there, and Caltrain to SFO only requiring one change of transport rather than two.

Yes, bart to SF was a giant boondoggle. People got in their minds "we must get BART to SF." They got BART only to the edge of the international terminal, at a very high price, and no connection from the airport to Caltrain that somebody would actually use.

That sounds crazy. How do they know you didn't walk from the airport to the car rental place? Or have a friend drive you?

I think you can attest that you did not take the monorail and possibly avoid the fee, for example, if you are just renting a car at the airport even though you live locally. However, the default is they charge you.

In some states, PA for example, your spouse is legally a second driver at no extra charge. Some CC allow this as well.

On a recent trip, instead of paying the ridiculous fees for car seats, we went to Target and bought new ones instead. Worked out cheaper that way.

Now in many countries you can also buy things on amazon and send them to a pick-up depot like Amazon Locker or equivalent, and not even have to go shopping, just pick one that's on your route out of the airport. Well, for a car seat, technically to stay fully legal you have to have one parent go buy it and come back I suspect most people just take the risk of the short drive the way we all used to drive before car seats arose. Up to you.

I am buying a cooler for the back seat on amazon this way, so I can have a hardside rather than the foldable ones I usually try to pack.

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