SHARING AMERICA'S TECH NEWS FROM THE VALLEY TO THE ALLEY
SAN FRANCISCO –A Santa Clara car rental startup has provoked a legal dustup at San Francisco International Airport, making it the latest in a series of battles between rule testing tech entrepreneurs and officials.
San Francisco City Attorney Dennis Herrera is accusing FlightCar, Inc. of dodging fees and undercutting its competition at the airport so the city wants the startup to give a cut of its profits to SFO and follow a few rules or shut down.
In a lawsuit filed Friday in San Francisco Superior Court, Herrera argues FlightCar — which allows travelers to rent out their cars instead of paying for airport parking — also has flouted car rental agency rules.
No legal action has been taken on the city’s request to force the company to shape up or close down. FlightCar’s response to the suit is due by July 1.
But it’s yet another battle between tech-based transportation startups and those who would police them.
Last year, state regulators pushed ride sharing services like SideCar to shut down and threatened them with fines before the California Public Utilities Commission announced it would weigh how to regulate them. A handful are operating provisionally on agreements with the commission.
The struggle with FlightCar seems to be propelled in large part by money. The start up has refused to pay SFO what rental car companies must pay: 10 percent of gross profits and $25 per rental. In 2012 the airport collected more than $94 million from rental companies, which was over 10 percent of the airport’s operating budget.
FlightCar says it has refused because it’s not a car rental agency, rather it’s somewhere between ride sharing and off-airport parking. Co-founder and 19-year-old Chief Operating Officer Kevin Petrovic said the company is working on a proposal to pay the airport accordingly.
“I think they have a lot of pressure from rental car and airport parking companies,” he said. “We do take away some of their business.”
He said his business operates off airport property and thus is out of its reach, in terms of fees. Restaurants and hotels who get their business primarily from travelers don’t pay SFO, he argued. The city sees things differently.
Its lawyers say SFO is entitled to collect fees from rental car companies that primarily serve its travelers, even if the rental operation isn’t on airport property.
“Flight car has refused to comply with any of the rules,” Deputy City Attorney Jennifer Choi said. “We want the court to order them to comply with the law.”
The city has also brought up regulation. FlightCar has refused to get either a commercial Ground Transport Permit, which is required by the airport to carry passengers, or an off-airport business license. And the company drops its customers off curbside in defiance of airport rules for rental car companies, the suit says.
Petrovic, who says he put off entering Princeton University to help run the business, insists these problems have come up because their service is new and thus requires new rules. FlightCar has only been around since the beginning of the year and recently expanded to a second location at Logan Airport in Boston. He says the service is growing fast but declined to give any numbers.
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