Audit Discovers $1.5M Loss at Denver Airport’s Car Rental Businesses

Denver International Airport. Photo via Wikimedia
Denver International Airport. Photo via Wikimedia

In a recent audit, Denver Auditor Timothy O’Brien found that the Denver International Airport (DIA) lost nearly $1.5 million in rental car concessions between 2014 and 2016, according to a report from the Denver auditor’s office that tracked Avis Car Rental and Alamo Rent A Car. 

Avis didn’t comply with its concession agreement in regards to its satellite offices. The concession agreement between the rental companies and DIA requires the rental companies to collect a concession fee and a customer facility charge (CFC) from all airport customers, according to a release by O'Brien.

If airport customers use a rental car company’s satellite offices within a 20-mile radius of the airport and within 24 hours of their flight, they are required to pay the CFC.

The audit discovered that Avis owed the airport approximately $1.46 million in concession fees, CFC fees, and interest, according to the report. The audit found that the customer rental form for Avis didn't identify airport customers. This resulted in neither the CFC fee nor the concession fee being paid to the airport — although these fees and a definition of airport customer are identified in the concession agreement.

Ground and facility rental rates are established by DIA and then provided to the rental companies by DIA’s property division. This division failed to provide these two rental companies with re-established rental rates until as late as April of the rental year. This resulted in almost $9,000 in underpaid facility and ground rent for the audited period, says the report.

“DIA agreed to make sure that rental contracts for the satellite offices will be designed to capture whether the customer recently flew into the airport,” said O’Brien. “If so, the daily fee along with the 10% rental fee will be transmitted to DIA. In addition, all 12 rental car companies will get timely notice of the correct concession rental rates, and DIA officials will follow up to confirm that the proper rent has been paid.”

At the time of this audit, DIA itself was auditing several rental car companies. To avoid duplicating work, the auditor’s team selected two of the companies (Avis and Alamo) possessing the largest market share who were not being audited by DIA.

In 2015, 12% of DIA’s operating revenue came from the rental car concessions, making the concessions the fourth largest revenue stream at the airport, according to report. Rental car activity grew by 19% in 2014 and an additional 9% in 2015, contributing $85 million to the airport’s total operating revenue that year.

Comments

  1. MERCY NORKOR KODJOE [ September 6, 2017 @ 05:29AM ]

    THE DIA HAS DONE EXTREMELY BY RECOVERING THE LOST REVENUE. CUSTOMER FACILITY CHARGE AND CONCESSIONAIRES FEE IS VERY MUCH WELCOME IDEA AS ANOTHER AREA OF REVENUE MOBILIZATION AT THE AIRPORT ASIDE OF OTHER REVENUE SOURCES. THE REVENUE WHEN RECEIVED CAN ASSIST MANAGEMENT OF THE AIRPORT TO MAINTAIN AND PROVIDE A WORLD CLASS AIRPORT FACILITIES TO THE NUMEROUS USERS AT THE AIRPORT.

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