FlightCar Hopes Car Owners Will Rent Their Ride for Monthly Checks

8/5/13Follow @curtwoodward

If you’re comfortable putting strangers in your car, there’s suddenly some extra money to be made.

A new class of small companies is seeking to build next-generation vehicle fleets by tapping into everyday car owners, either having the owners pick up paying hitchhikers or rent their cars to other drivers.

Among the upstarts is  FlightCar, a startup that recently relocated from the San Francisco area back to Cambridge, MA. FlightCar is attempting to build a new kind of car-rental business by offering free parking to car owners at airports, in exchange for letting FlightCar rent their ride out to other travelers while they’re gone.

If you’re willing to accept FlightCar’s guarantees (it says other drivers undergo background checks, and offers up to $1 million in insurance), you can earn some extra money. When someone rents your car, the owner gets a piece of the action, which FlightCar says is $10-$20 per day depending on the age and model of car.

Starting today, the startup is offering a bigger enticement to people who might leave their car parked for a long stretch: FlightCar says it will pay $150-$400 per month to car owners who let them rent cars to others for 26 days a month.

CEO Rujul Zaparde says the idea is to recruit more city-dwellers who might use their car sparingly, and would want to save on expensive monthly parking fees. Cars are kept at parking lots away from the airport, and are available if the owners want them (another, similar car is offered if the owner’s is currently out for use).

“We’ve had people say, `I had a great experience dropping my car off at the airport … but I don’t travel that often. Why can’t you guys just have my car when I’m in the city and I’ll use it when I want to?’” Zaparde says.

FlightCar will try to limit use to 1,200 miles per month, but will pay 35 cents per mile for any monthly driving over that limit, Zaparde says.

It’ll be interesting to see whether this kind of personal car rental takes off, or if people are too attached to their cars to let strangers and a very young company use them—even if there’s a payment involved.

FlightCar was a part of the Y Combinator program, a Silicon Valley accelerator for startups, and has attracted about $6 million in private investment, from venture capital firms General Catalyst, Softbank Capital, and Andreessen Horowitz and prominent angel investors.

Local regulation is another stumbling block. Many startups that are trying to cash in on rental of personal assets—the so-called “sharing economy”—have run into tussles with local government officials who say these new kinds of businesses either don’t fit into current rules or are flouting the proper permitting.

FlightCar is among them. The startup was sued by the San Francisco city attorney this summer, with officials saying the startup was illegally avoiding paying the fees that are required of car rental businesses.

Boston officials haven’t been that aggressive, but they’re keeping an eye on the upstart. Spokesman Matthew Brelis recently told Boston.com that the local airport agency “does not have an operating agreement with the company” and couldn’t be sure if it’s operating up to legal standards for companies doing business at Logan airport.

For his part, Zaparde says FlightCar doesn’t have to go through the same regulatory procedures as a car-rental company because “we’re a peer-to-peer car sharing company.”

That’s also part of the reason the startup can offer cheaper rides than traditional car rentals, as The Boston Globe noted—car rentals are one of the prime transactions that local officials look to when they want to add some “tourist tax” revenue to their income streams.

Just what is and is not a car-rental company, of course, is one of those questions usually better suited to lawyers. In the meantime, the latest social experiment in renting out your personal property is getting more competitive by the day.

Curt Woodward is a senior editor for Xconomy based in Boston. Email: cwoodward@xconomy.com Follow @curtwoodward

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