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Rent-your-car service gets green light at SFO Airport

Source: RelayRides

It's been stop and go for car- and ride-sharing companies such as Lyft, uberX, FlightCar and RelayRides at San Francisco International, but a new agreement has given one business a green light to operate legally at the airport.

That's good news for fans of RelayRides, a San-Francisco-based peer-to-peer car-sharing company that since August has provided departing passengers free airport parking and car washes, while offering arriving visitors great rental deals on those cars.

RelayRides, which has car shares available in 1,900 U.S. cities, had argued that it was exempt from having to pay the airport the same fees that traditional rental-car agencies pay because it operates in the shared-economy marketplace.

But that didn't sit right with SFO, which derives about 10 percent of its annual operating budget ($94 million in fiscal year 2011-12) from such fees.

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The airport maintained that RelayRides and FlightCar, another business with an almost identical car-sharing service, must pay rental-car concession fees to operate at the airport.

San Francisco International has filed a legal complaint against FlightCar, but under the first such agreement between a sharing-economy company and a major U.S. airport, RelayRides has agreed to be classified as an off-airport rental.

That means that, just like any other off-site car rental company, it will abide by state and airport permitting, licensing and congestion-reduction rules. It also will pay SFO 10 percent of gross revenues from its airport-related transactions, plus a $20 per-transaction fee, said airport spokesman Doug Yakel.

A traveler heading to the airport can reserve a free parking spot for a qualified car at the RelayRides lot, and then take a shuttle to the terminal. RelayRides will wash the car and make it available to qualified renters at a rate the company touts as 20 percent to 40 percent less than traditional car rentals. It also provides owners with a $1 million liability policy.

The agreement, announced Monday, is a win for SFO because the airport "is being creative about new streams of revenue while maintaining and expanding services to passengers," said airport concessions consultant Ellery Plowman of Elleco.

But travelers also gain, Yakel of SFO said. "We want to provide options that our customers are already seeking out. We also need to enforce safety and fairness, and this shows that it can be done," he added.

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In a statement, RelayRides CEO Andre Haddad said the deal illustrates that "airports and sharing- economy companies can work together" and will serve "as a blueprint for how RelayRides plans to grow its business at airports."

Though other peer-to-peer car- and ride-share services are not authorized to operate at SFO, that may change in the near future.

FlightCar CEO Rajul Zaparde said vie email that his company is "in dialogue with SFO," and Yakel said the airport has been meeting with representatives of several sharing-economy groups that it hopes will be soon be authorized to operate there.

The arrangement with RelayRides is being examined by other airports, including some that have taken legal action against FlightCar and other companies operating sharing-economy transportation services without concession agreements.

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The stakes are high. According to the Federal Aviation Administration, U.S. airports earned $1.5 billion from rental car company fees last year—or about 20 percent of their nonaeronautical revenue.

—By Harriet Baskas, special to CNBC.com. Baskas is the author of seven books, including "Hidden Treasures: What Museums Can't or Won't Show You," and the Stuck at the Airport blog. Follow her on Twitter at @hbaskas.

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