Airport Car Rentals: The Next $10 Billion Industry Ready For Disruption

If you travelled by air for the wonderful holiday weekend, you might have been faced with the hell that is the typical airport car rental experience. There are the lines, the hassles, the constant upsells, confusion around cost of gas and insurance, and about 15 pages of paper that you have to sign before being able to pick out your car and leave the lot. Frequent travelers and members of rewards programs aren’t treated that differently. They have a shorter line and can generally have a better choice of available cars from the lot, but the experience isn’t fundamentally better.

Airport car rentals are a big business — more than $10 billion a year, by some estimates — but the experience is pretty bad all around. Which means it’s time for disruption! Time for the incumbent car rental agencies to get some competition from nimbler startups with new ideas, processes, and ways of doing things better! Thankfully, there are a few promising young companies working on this problem, and they could be coming soon to an airport near you.

Flightcar: An Airbnb For Car Rentals

Hundreds of thousands of travelers leave their cars in long-term parking lots while they’re away on vacation or business. But what if, instead of paying to park in those lots, they were able to get paid while they were out of town? And what if instead of paying high rates to rent a vehicle from one of the incumbent car rental agencies, you could get discounted rentals on someone else’s car while you’re traveling in a different city? That’s the idea behind Flightcar, which seeks to create a marketplace model for airport rentals.

Flightcar isn’t much different from on-demand car rental marketplaces like Getaround or RelayRides — except that while they primarily focus on short-term, hourly rentals in urban areas, Flightcar is more for multi-day rentals. And while Getaround and RelayRides have their inventory spread out across a city, Flightcar users would only be able to pick up their cars from partnering parking lots near an airport.

Those renting out a car would simply drop it off at an airport parking lot in the same way that they usually would, and shuttle to the terminal. But when they return, they could be issued a check for the time that their car was rented while away. If it wasn’t rented while they were away, they would simply pay the parking fee instead.

The startup not only provides the marketplace for listing and renting autos, but also cleans cars before and after a car is rented and provides necessary insurance and support for drivers while they are renting. It also provides supplemental insurance for all vehicles that have been rented through its system.

Flightcar co-founder Shri Ganesham told me that there were approximately 360,000 cars parked in airport parking at any given time, collecting fees. So there’s a potentially huge inventory of cars that are just waiting to be used. The hard part comes in aggregating that inventory, and matching up potential drivers with rides, since the amount of time varies for travelers on both sides of the transaction. Flightcar is on track to launch soon in Oakland and San Jose airports and expects to expand quickly thereafter.

Silvercar: A Premium Experience For Airport Rentals

If Flightcar is Airbnb for airport rentals, then Silvercar is more like Uber, providing a more expensive, but more convenient process than incumbent options. The startup uses a mobile app to process reservations, pick up and drop off of cars in airport rental lots, and expedite the actual process of renting a vehicle.

Silvercar strips out a lot of the complexity associated with getting a rental, in part because it only has one model of car that it rents out — the Audi A4. There’s no upsell on car class, and customers will always know what kind of car they’re going to get. Rates will be competitive, but could be slightly more than the cost of full-size vehicles at the incumbents. But what customers pay more for in price is made up for in convenience.

Customers won’t have to worry about getting gouged for gas at 3x the price for bringing a car back with a half-empty tank, for instance: Since cars are connected to the cloud, they’ll merely report back how empty or full the tank is, and automatically charge users for refills based on the market rate for gas. Customers will also have a limited number of insurance options to choose from, rather than having to navigate the confusing choices that more car rental agencies provide.

Silvercars will be available in the same consolidated rental lots as the traditional car rental agencies, but the process for checking a car out will be completely different: Rather than waiting in line to talk to an agent about a rental, users will be able to reserve through a mobile app, which can also be used to unlock the car to start driving.

The startup plans to open for business at one airport at the end of this year, and then expand to about one new airport per quarter. It’s raised $11.5 million from investors like Austin Ventures, Crunchfund, SV Angel, Dave Morin, Chris Dixon, and others.