Accused of not complying with San Francisco International Airport’s (SFO) regulations and refusing to pay fees, FlightCar is being sued by the city of San Francisco. On May 31, San Francisco City Attorney Dennis Herrera filed a lawsuit against FlightCar, a car sharing startup that allows travelers to rent out their vehicles in exchange for free parking, a car wash, shuttle service and the opportunity to earn up to $10 per day.

According to the lawsuit, FlightCar has flouted SFO’s permitting and fee requirements for rental car companies. The City contends that FlightCar has an unfair advantage over other rental agencies that comply with the regulations and must pay the appropriate fees – 10% of gross profits and $20 per rental.

Rujul Zaparde, co-founder of FlightCar, said his company, which launched in February, refuses to pay the fees on the assertion that it isn’t a traditional airport car rental agency; it’s a peer-to-peer car sharing company.

“The airport has refused to consider us as anything other than an off-site rental agency,” said Zaparde. “And if that’s the case, then it will be decided in court.”

Operating from an off-airport site, FlightCar customers drop their cars at a lot in Burlingame, Calif., and a limo service takes them to and from the airport. And according to Zaparde, the limos are licensed with the airport and pay the appropriate airport fees for each round trip.

Although FlightCar operates from an off-airport location, it is still considered a car rental company that caters to customers of the airport, according to Doug Yakel, public information officer for SFO.

“This company is competing for the same customer base yet without incurring the costs of their competitors,” said Yakel. “We view that as an unfair business practice.”

And with regulatory agencies like the California Public Utilities Commission still trying to figure out how to regulate shared ride businesses, the airport will continue to enforce its existing rules and fees for all rental companies, said Yakel.

FlightCar has until July 1 to respond to the lawsuit. For an Auto Focus blog on the topic, click here.

By Amy Winter