Airport rental car users face a $3.50-a-day fee hike starting in September to finance a $497 million plan to build consolidated rental car facilities at four Hawaii airports.
The increase to $4.50 from $1 a day will last 20 years or more and was pushed by rental car agencies and state airport officials. Their goal is to create close, centralized facilities for auto rental companies that will improve customer service and reduce costs.
"The goal is, if they improve their operational efficiency, then they can save on costs because now they have some shared areas," said state Transportation Director Brennan Morioka. "The intent obviously is for them to pass the savings on to their customers in terms of lower rates."
The estimated $50 million a year raised will finance a planned four-level, $229 million facility at Honolulu Airport located on the site where the Avis, National, Budget, Hertz and Dollar agencies share an open-air lot at the Diamond Head end of the airport.
Another, $190.5 million project is planned for Kahului Airport, and smaller facilities are planned for Lihue and Hilo.
Those new facilities, which could start opening sometime in 2013, depending on when construction begins, will be financed by raising a current $1-a-day rental vehicle facility surcharge to $4.50 a day. The Legislature approved the increase earlier this year.
That hike represents about a 30 percent increase in the $11.47 in typical fees and taxes due on a $45 a day airport car rental. However, the added $3.50 a day charge represents a fraction of the typical visitor budget. Through May the average Hawaii visitor from the Western U.S. spent $141.20 a day, according to the Department of Business, Economic Development and Tourism.
PAYING THE PRICE
The customer facility charge for airport car renters rises to $4.50 from $1 a day starting in September. Example of major Honolulu airport daily rental car fees as of Sept. 1:
» Economy car, base rate: $45
Source: Star-Advertiser research
At least one tourism executive questioned whether Honolulu really needs a new $229 million rental facility. Visitor money spent on that facility is money that otherwise would have gone to restaurants, tour operators and others that cater to tourists, said Reg White, vice president for project development for Paradise Cruise Ltd., which operates the Star of Honolulu.
"It hurts us. It hurts the restaurants and other businesses," White said. "All of them get beat up when you take money away from them.
"I don’t see why they need something like that. If the (auto rental) industry wants this facility, they should pay for it themselves," White added.
Honolulu’s new facility will allow for enhanced security for rental vehicles and increased comfort for customers, who’ll no longer have to wait outside when renting vehicles, said Aaron Medina, general manager for Hertz Hawaii operations.
The construction of consolidated rental car facilities is part of an industry trend, said Medina, who is also president of Catrala-Hawaii, a nonprofit trade group representing major rental car companies. Centralized facilities allow rental agencies to share some physical resources along with services such as shuttle buses.
Similar consolidated rental car facilities exist at mainland airports ranging from Anchorage, Alaska, to Fort Lauderdale, Fla. Costs vary widely and include $170 million spent in Las Vegas and a $419 million five-story facility at the Seattle-Tacoma airport.
According to a feasibility study conducted by the state, Honolulu rental agencies will get about one rental car day of business from every five air passengers to Oahu.
Whether that number declines once fees rise remains to be seen.
Medina said there’s no concern that consumers will balk at the higher price resulting from the fee hike. If anything the new facility should increase business, he said. "The industry has pursued these facilities in many airports around the country, and in no cases have we seen a drop in business as a result."
Customers who don’t want to pay the higher fee can always rent from a rental agency that’s not located on airport property, Medina said. Customers of those agencies aren’t subject to the $4.50-a-day fee.
"A customer has a choice," Medina said.
However, the number of off-airport rental agencies in Honolulu is expected to decline as some, including Alamo and Enterprise, relocate into the new facility, according to the state.
That should result in increased revenue for state airports, Morioka said.
"Because we’re consolidating all the rental car companies onto airport properties, we do expect to see some of our concession revenues go up because there are some rental car companies that are off property (and) they don’t pay any revenue into the airports, but their customers are coming from the airports," he said. "We would have had issues if all of them did not come on" to airport property, Morioka added.