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Concession Agreements 25 See CRP-CD-81 (enclosed herein), Appendix to Chapter 2, Concession Agreements, for excerpts from the BWI parking management services agreement which includes a detailed dis- cussion of the management responsibilities to be performed. 2.6.2 Revenue Control Procedures Vehicle parking at an airport generates significant revenue. In many cases, it generates the high- est level of non-airline revenue for the airport sponsor. A sponsor must have detailed revenue con- trol procedures to ensure this revenue is maximized. Revenue control is ensured by monitoring several key contract elements. These include parking tickets for which there is no accounting, miss- ing or lost ticket inventory, and the requirement that a parking manager utilize a computerized parking facilities management system. See CRP-CD-81 (enclosed herein), Appendix to Chapter 2, Concession Agreements, for excerpts from the CMH parking management services agreement which includes a detailed dis- cussion of revenue control procedures. 2.6.3 Additional Services Airports have been expanding their parking operations so as to enhance revenue and protect their market share from competition from off-airport parking operators. These services typically include all of the self-parking operations, and, more recently, have included provisions for valet parking. See CRP-CD-81 (enclosed herein), Appendix to Chapter 2, Concession Agreements, for excerpts from the OAK parking management services agreement which includes a detailed description of valet parking services. 2.7 Rental Cars Additional Issues for rental car concessions · Location of operations · Definition of gross revenues · Definition and calculation of MAG · Definition of transaction days · Credit card acceptance · Dual branding privileges · DBE requirements · Valet, pick-up, drop-off restrictions · Vehicle sales · Pass-through of concession fees · Space leases · Consolidated facilities · CFC calculation and customer presentation · Shuttle bus operations · Employee parking · Performance security · Underground storage tanks · Environmental conservation
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26 Guidebook for Developing and Managing Airport Contracts 2.7.1 Location of Operations The location of rental car operations has also seen changes in the past 10 years. Smaller and medium-sized airports may offer the convenience of locating these operations in the parking garage--this can reduce or eliminate the need for buses, but can reduce available parking spaces. At larger, space-constrained airports, there is a movement toward consolidated car rental facil- ities (CONRACs) located close to the terminal or located more remotely to increase parking rev- enues or expand terminal areas. 2.7.2 Definition of Gross Revenue Airport operators seek to maximize the gross revenue definition because this becomes the basis for the calculation of percentage rents and MAGs. In addition to time and mileage expenses associated with car rental transactions, revenues from the sale of personal accident insurance coverage, car seat rentals, global positioning system (GPS) unit rentals, or any fees associated with future technology amenities should be included in the gross revenue definition. Exclusions from the gross revenue definition are items such as the following: · Revenues collected for damage or repair of vehicles · Fuel sales · Sale of vehicles if permitted on the airport (Some airports ban the sale of vehicles on the air- port premises.) · Federal, state, and local taxes · Customer Facility Charges (CFCs) · Sales of uniforms to employees See CRP-CD-81 (enclosed herein), Appendix to Chapter 2, Concession Agreements, for excerpts from the IAH Car Rental Agreement for definition of gross revenues. 2.7.3 Definition and Calculation of MAG The MAG is the minimum amount the car rental operator must pay to the airport. The amount can be a minimum fixed-dollar amount or a minimum percentage amount. Using a fixed-dollar amount enables the airport to determine budgeted revenue amounts. The fixed-dollar amount can be stated as an annual amount divided by 12 to calculate the monthly amount due from the operator. See CRP-CD-81 (enclosed herein), Appendix to Chapter 2, Concession Agreements, for excerpts from the IAH Car Rental Agreement. There is typically a process to calculate the difference between the percentage rent calculation and the MAG to determine if the percentage rent is higher and therefore the Operator may have an amount due to the airport. The process should occur within 90 days of the end on the con- tractual year. 2.7.4 Definition of Transaction Days The Transaction Day definition can either encompass a 24-hour period for regular rentals or calendar days for rentals used for insurance replacement purposes. In many cases, if a rental exceeds a 24-hour period by more than 2 or 3 hours, the customer will be charged for another full day. This definition has less effect when the Gross Revenue definition includes all charges for time and mileage. It is relevant for CFCs.
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Concession Agreements 27 On-airport car rental operators require a minimum 1-day rental. The advent of Smart Cars, which specialize in short-term hourly rentals off-airport, may spur the traditional car rental com- panies to offer a rental period of less than 24 hours. See CRP-CD-81 (enclosed herein), Appendix to Chapter 2, Concession Agreements, for excerpts from the IAH Car Rental Agreement. 2.7.5 Credit Card Acceptance Some car rental agreements, such as those for the Metropolitan Washington Airports Author- ity (MWAA), which operates Dulles International Airport (IAD) and Ronald Reagan Washing- ton National Airport (DCA), specify that a minimum number of credit cards must be accepted for payment (e.g., one to three cards). Car rental companies have various policies with regard to debit cards. Companies that accept debit cards may require large minimum hold requirements or $300 to $500 per transaction. Companies may also require additional identification or credit checks with the use of debit cards. See CRP-CD-81 (enclosed herein), Appendix to Chapter 2, Concession Agreements, for excerpts from the IAH Car Rental Agreement concerning credit card acceptance. 2.7.6 Dual Branding Privileges Currently, Avis and Budget are both owned by The Avis Budget Group, while Alamo and National are both owned by Vanguard Car Rental. Under newer agreements, these brands may want to operate two brands under the same contract. The concessionaires may also want the abil- ity to separate in the future if a brand is sold or discontinued. See CRP-CD-81 (enclosed herein), Appendix to Chapter 2, Concession Agreements, for excerpts from the MWAA Car Rental Agreement. 2.7.7 DBE Requirements DOT 49 CFR Part 23 governs the disadvantaged business participation presently defined as Airport Concession Disadvantaged Business Enterprise (ACDBE). The goals established for car rental concessions tend to be lower than the goals for other concessions. Historically, car rental operations had achieved lower levels of participation because the business had less participation by minority- and women-owned businesses available to meet the goals. See CRP-CD-81 (enclosed herein), Appendix to Chapter 2, Concession Agreements, for excerpts from the MWAA Agreement concerning meeting ACDBE participation through pur- chase of goods and services. 2.7.8 Valet, Pick-up, Drop-off Restrictions Airports may specify where customers can be picked up and dropped off for car rental oper- ations. This location will depend on the location of the ready and return lots and provisions made for customer transportation between the terminal areas and the ready and return lots. Valet ser- vices permit the customer to return vehicles somewhere other than the ready and return lot areas. Most airports prefer to restrict customer pick up and drop off to specified loading areas and/or ready and return lots. See CRP-CD-81 (enclosed herein), Appendix to Chapter 2, Concession Agreements, for excerpts from the IAH Car Rental Agreement.
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28 Guidebook for Developing and Managing Airport Contracts 2.7.9 Vehicle Sales The car rental contracts should specify whether or not vehicle sales are permitted on the airport premises. If vehicle sales are permitted, then the Gross Revenue definition must specify whether or not the revenues from vehicle sales are included or excluded from the Gross Revenue definition. 2.7.10 Pass-through of Concession Fees The car rental operators will want to pass through the concession fees to their customers and display the fee as a separate line item on the customer receipt. The contract should specify whether the fees can be passed through to the customers and whether the fees can be displayed. See CRP-CD-81 (enclosed herein), Appendix to Chapter 2, Concession Agreements, for excerpts from the IAH Car Rental Agreement. 2.7.11 Space Leases In addition to concession fees, airports can charge car rental operators for leased areas as an annual fee per square foot that is charged on a monthly basis. The price per square foot should be based on the type of area, and the associated costs that the airport needs to recover for the space. The typical leased areas for car rentals include the following: · Service Counters. Counter positions within the terminal areas used to serve customers. · Telephone Alcoves. Used instead of or as a supplement to service counters in the terminal ground transportation areas. · Ready/Return Lots. Place where customers can pick up and drop off vehicles for rental. For cus- tomer convenience, it is preferable to have the ready and return lot in easily accessible parking garages, thereby reducing the need for shuttle buses or other forms of ground transportation between the passenger terminal areas and the ready and return lots. · Quick-Turnaround Areas. Usually used for car wash and fueling, but no heavy maintenance. · Service Centers. Maintenance and vehicle service area. 2.7.12 Consolidated Facilities The current trend is to consolidate car rental operations in one area, which can be a park- ing garage for ready and return lots or a building remote from the terminal areas. The ready and return lots are usually separated from the service centers in consolidated operations. 2.7.13 CFC Calculation and Customer Presentation The Customer Facility Charge (CFC) may be instituted by ordinance by the local governing jurisdiction, or it may be tied to a bond issue to fund construction of new car rental facilities. The document governing the CFC may be referenced in a section of the car rental concession agree- ment and it may be documented with associated bond issues in separate agreements (e.g., Special Facility Leases). The CFC is considered property of the airport or the bond trustee to be used to service debt associated with constructing new facilities. The CFC may expire once all approved costs have been paid and is normally stated as a fixed-dollar amount per transaction day. The amount of the CFC is calculated to cover the applicable costs of new facilities within a specified period. See CRP-CD-81 (enclosed herein), Appendix to Chapter 2, Concession Agreements, for excerpts from the BNA Agreement for provisions regarding separate statement of concession recovery fee.
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Concession Agreements 29 2.7.14 Shuttle Bus Operations Shuttle busses are usually operated by the car rental companies to transport customers and employees between the passenger terminal areas and the ready/return operations. The contract should specify what entity will operate the bus (i.e., whether it is the car rental operator, the air- port, or a third party) and should also assign loading and drop off areas using an exhibit and include specifications for any signage standards. The airport may choose to limit the number of buses at the loading area to minimize curbside congestion. 2.7.15 Employee Parking Airports may permit car rental employees to park in designated airport employee parking areas. Employees using these lots may require a badge or medallion to access the lot. This per- mission and any associated rules should be provided in the car rental agreement. 2.7.16 Performance Security The airport may require a performance bond from the car rental operator. The amount is fre- quently within the range of 3 to 5 months or up to 100% of the annual MAG. See CRP-CD-81 (enclosed herein), Appendix to Chapter 2, Concession Agreements, for excerpts from the IAH agreement concerning performance security. 2.7.17 Underground Storage Tanks Car rental operators may require fuel storage tanks at the Quick-Turnaround Area and/or the Service Centers. Provisions in the contract should address descriptions of tanks, location, owner- ship, installation, removal, operation and maintenance, leak detection, and vapor recovery. Addi- tionally, the contract should require airport approval of installation of additional fuel storage tanks. See CRP-CD-81 (enclosed herein), Appendix to Chapter 2, Concession Agreements, for excerpts from the IAH agreement concerning installation, removal operation and maintenance of tanks. 2.7.18 Environmental Conservation Car rental operations consume large amounts of water and paper. Some car rental companies are conducting internal reviews to improve conservation efforts. Drought conditions affecting various areas of the country may necessitate formal conservation policies and recycling meas- ures as part of future agreements. See CRP-CD-81 (enclosed herein), Appendix to Chapter 2, Concession Agreements, for excerpts from the MWAA Car Rental Agreement.