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TCRA giving financial break to ailing rental car companies

Hank Hayes • Jul 31, 2009 at 12:00 AM

BLOUNTVILLE — As Tri-Cities Regional Airport goes, so goes the airport’s rental car agencies.

“What’s good for the airport is good for the rental cars. It’s always been that way,” Hertz franchise holder Dennis Rogan said at a recent Airport Commission meeting.

So with business travel down, TCRA’s rental car agencies have been feeling the pain.

Fees paid to TCRA by the rental car agencies were down 8 percent in 2008 and are down another 17 percent year to date for 2009.

A working draft of next year’s TCRA spending plan projected a continued reduction of 10 percent in the first quarter of 2010.

As a result, TCRA has agreed to eat about $55,000 in revenue by waiving a yearly minimum annual guarantee the agencies agreed to pay as part of a deal that began in October 2004.

“However, if business travel increases, the adjusted commission rate could increase the amount of revenue to the Airport Commission,” said a memo prepared by TCRA Executive Director Patrick Wilson.

Rental car income represents TCRA’s third-largest revenue source.

Wilson indicated that giving the agencies a break on minimum guarantees was a fairness issue.

“Business has changed with the increased number of leisure travelers coming through the airport, mostly related to (low-fare leisure carrier) Allegiant Airlines,” he told airport commissioners. “The rental car numbers have proven that the leisure travelers are much less likely to rent cars than business travelers.”

The trend may be a short one, however.

Back in late June, rental car company stocks jumped after Hertz Chairman and CEO Mark Frissora said demand for rental cars was growing as vacationers forgo flights to more exotic destinations for trips within driving distance of home.

“People are staying local when they travel,” said Frissora, who also noted vacation spending was getting a boost from the deep discounts being offered by hotel companies.

Back at TCRA and in a related move, airport officials have decided to increase from $7 to $9 the customer facility charge (CFC) on each rental car contract. The CFC has been at $7 since 2004 and can only be used to pay debt on the airport’s rental car facilities.

At current rental levels, the new CFC charge would meet TCRA’s needs until 2023, according to the airport.

The CFC has helped pay for TCRA’s rental car return area located only steps away from the main terminal.

For more about TCRA, go to www.triflight.com.

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