L.A. Airport to Change Off-Airport Agreement

LOS ANGELES –- In a hastily scheduled meeting last week, off-airport operators serving Los Angeles International Airport pleaded with administrators to reconsider plans to restrict access to the central terminal area.

A new off-airport RAC agreement, set to go into effect July 1, will prohibit the businesses from picking up and dropping off customers at the curb outside terminals. Operators said the new policy threatens to put a number of small, independent RACs out of business.

Under the new arrangement, the airport will shuttle customers of off-airport rental companies to Lot C, a remote parking area. At that location, off-airport operators will be permitted to pick up and drop off their customers.

At the meeting, held last Wednesday at the Los Angeles World Airports administrative building, operators voiced concerns that the prospect of double-busing will drive their customers away. During a travel slump, the operators said, they cannot afford to concede such a competitive advantage to the major national brands.

Starting in July, only the 10 on-airport rental operators –- Budget, Avis, Hertz, Advantage, Enterprise, National, Alamo, Fox/Payless, Dollar and Thrifty –- will be authorized to run car rental shuttles within the airport’s central terminal area. The 10 on-airport slots went out for bid last October. The new on-airport operator agreement, which went into effect in February, raised the commission fee from 9% to 10% of gross receipts.

Despite the protests and pleas for a compromise, airport administrators told the off-airport operators that the Board of Airport Commissioners approved the new agreement last October. Terms of the agreement, they said, were no longer negotiable.

The policy changes reflect a multi-phased program aimed at bolstering airport security by easing congestion around the central terminal area, said Richard Janisse, deputy executive director of business development for Los Angeles World Airports. With less congestion, he said, law enforcement personnel can respond more quickly to emergencies or threats.

Moreover, Janisse said, the new on-airport car rental agreement stipulates that the number of on-airport operators is capped at 10, and that they are the only rent-a-car businesses authorized to access the central terminal area. If the board were to reverse its decision and give off-airport operators access to the central terminal area, the action would likely spur litigation, he said.

Janisse also pointed out that the new on-airport operator program includes limits on the number of times company buses can circle the terminal area.

When off-airport operators at the meeting protested that they hadn’t been informed about the proposed changes before the board’s vote, Janisse said his staff had notified all 29 off-airport operators and had held an informational meeting back in October.

"We make the assumption, right or wrong, that people who do business on the airport find out what's on the board agenda because that's where all the rules are made," he said.

Speaking on behalf of the operators, Carol Banihashemi of ABC Rent A Car asked for the opportunity to review the data upon which Janisse and his staff based their recommendation to the board.

"How many people from off-airport companies were on a committee evaluating what the options were, giving you advice and input?" she asked.

"The airport is not a democracy," Janisse responded. "We run the airport. We're empowered to and we have the right to run the airport."

Terms of the new agreement will also no longer exempt each off-airport operator’s first $1 million in revenue from an 8% commission fee. All gross receipts from airport business will be subject to the 8% commission fee, with a minimum annual guarantee of $7,500.

Following the meeting, off-airport operators said they are weighing their options, including taking legal action or hiring a professional lobbyist.

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