The burgeoning carsharing industry and companies like Turo are already encountering barriers in the Dallas area at one of their most important hubs – the airports.
After DFW International Airport filed a lawsuit against the largest carsharing provider Turo last fall, it wants to make it more difficult for operators of carsharing fleets to operate on its premises by towing cars on-site in parking lots.
Car-sharing companies have boomed in the last year as a rental car shortage hit incumbent operators and the sharing economy expanded from apartments to pools and backyards for pet owners.
Car sharing has experienced a revolution of its own in recent years, as have companies like Airbnb. Apartment rental websites have evolved from a couchsurfing platform to a network of owners operating multiple and sometimes dozens of properties.
San Francisco-based Turo, which filed for an IPO in January, has evolved from a service where people share their own cars to a network of “hosts” who own multiple cars, sometimes dozens, and make a profit of can fetch more than $1,000 a month per new vehicle, the company said. Turo’s net sales nearly tripled to $330 million last year, though the company still operates at deep losses, which is common for tech startups.
Rival carsharing company GetAround announced plans to go public earlier this year via a special purpose acquisition company valued at about $1.2 billion. That was after more than $500 million had been raised in the private market.
Dallas’ Nicholas Fennema has expanded his fleet to four cars, all new since he began working with Turo three years ago. He said his favorite vehicle, a Ford Bronco, can generate up to $4,000 a month in profit, easily covering his monthly payments.
“I went from one car to another car and another just for fun,” said Fennema, who is a full-time real estate investor.
But just like any new business model where rules and regulations are lagging behind, carsharing has its own growth challenges. Several airports across the country, including DFW Airport, have sued Turo and six operators for conducting business on airport property. Airport officials say car-sharing providers are conducting thousands of transactions on airport premises without the same regulations and costs that rental car companies or transportation companies pay.
“We have a problem with illegal commercial activities, particularly with professional car rental companies who own fleets of vehicles and rent cars online and have them delivered here to the airport,” DFW Airport lawyer Paul Tomme said at an airport board meeting on April 2. August. “They don’t have an airport permit for it, although the code requires them to have one, they don’t pay airport taxes, they don’t collect state rental car taxes or local rental car taxes and remit them to the state.”
Tomme said the idea is to go after major Turo operators with dozens of vehicles, “not mom and pops.”
The lawsuit filed by the airport in Tarrant County Court alleges that the six named Turo operators made thousands of vehicle transfers to customers at the airport, transfers that the airport cannot track because it is done through Turo’s app.
Car rentals are big business for the airport, which is expected to bring in $33.6 million in revenue for the airport this year, while parking will bring in an additional $145 million.
It’s not the only place where Turo has encountered problems. According to the company’s regulatory filings, Turo is facing similar lawsuits from airport authorities in Massachusetts, Tennessee, and Florida. In California, where Turo is based, state courts ruled that San Francisco International Airport cannot force Turo to obtain the same types of licenses to operate on airport premises that rental car companies require.
A spokeswoman for Turo said the company is not a rental car company.
“DFW’s attempt to conflate the peer-to-peer car-sharing community with multibillion-dollar rental car companies and attempt to charge fees that don’t fit with Turo’s business model (which doesn’t include on-site real estate or infrastructure) is inappropriate,” Turo spokeswoman Catherine Mejia said in an email.
Some airports have created frameworks for car-sharing services like Turo, but neither DFW nor Dallas Love Field have.
“Fair access to the airport promotes consumer choice and reassurance that tourism money will flow back into the pockets of residents,” Mejia said.
Tomme said the airport identified Turo operators by conducting covert rental operations. If these new rules are approved by the cities of Dallas and Fort Worth, which oversee the airport, they can begin towing carsharing vehicles in airport lots.
Fennema, who is not named in the DFW lawsuit, said carsharing operators incur costs for delivering vehicles at the airport. When he first started, Fennema would wait for customers outside of baggage claim, but that was tedious due to regulations against long parking and the prospect of delayed flights. The option he and most users have opted for is parking the car in the garage, where customers can open the vehicle via the app or with a code.
“My parking fees are going up pretty quickly,” he said. “We pay at least $15 a day to park.”
Getting to the airport can also be “troublesome” because of time and expense, he said. Even after driving there, car sharing operators have to take an Uber or bus back home. Still, according to Fennema, airports are an important part of the business because of leisure travellers. He sometimes hires teenage neighbors to deliver cars, but often he does it himself.
Reviewers have noted that getting a car from Turo often costs about the same as a rental after fees. Customers can skip the rental counter, but they also risk having their Turo host cancel.
Dallas Love Field is restricted because Texas law doesn’t classify peer-to-peer car sharing services as rental car companies, “causing enforcement difficulties,” spokeswoman Lauren Rounds said.
“Turo has responded to an extent, but there is currently no solution to properly operate or charge for this service,” she said.
After lobbying from Turo and others in the industry, Texas passed legislation in 2021 stating that peer-to-peer car sharing companies are distinct from rental car companies.
Love Field has urged car-sharing hosts to use parking garages for sharing rather than clogging pickup areas outside of baggage claim. This results in Turo users paying fees for parking in the garage. Curbside pickup at Love Field is free.
Car sharing also has its growing pains outside of airports.
In Seattle, residents have complained that Turo operators are clogging up crowded neighborhoods with fleets of dozens of vehicles where parking has already been said to be limited The Seattle Times.
Hawaii lawmakers this year proposed a bill to ban peer-to-peer car sharing because the state of Aloha has concerns about overcrowding, according to Hawaii News Now.
Trevor Davis, a Dallas junior ROTC instructor and retired military recruiter, began listing his car on Turo in 2019 to justify the price of buying a new Nissan Sentra. He also bought a new car and two used cars, all small and medium-sized sedans.
He said he saw a huge surge in demand from 2021 when COVID-19 restrictions began to fall, but the rental car industry faced bottlenecks the year before due to stocks selling out.
Now he said he can make about $1,000 a month from each car, although he doesn’t do it full-time because of his teaching job. Still, he said he earns more than enough to pay for car payments and other expenses.
Avoiding the airport, he now encourages customers to meet at their hotel to avoid airport parking fees and clashes with the airport itself.
“In the beginning, I did a lot of drop-offs at the airports, and then I noticed a bit of friction, like you can’t just stop there and wait,” he said. “Now it’s just easier to find another meeting place.”