Processes for ABB Projects

An Insight in to Car Rental Industry

Team: Santosh, Bala, Smitha and Selvi

April 2006

Agenda

Introduction to Car Rental Industry Rental Types Rental Process Fleet Management Business Partners Customer Service

Introduction to Car Rental Industry

A brief History

A Nebraskan named Joe Saunders was the first person to start a rent-a-car business when he lent out his Model T (Fords Economic Car) to traveling salesmen in 1916. Walter L. Jacobs started his car rental business with a dozen car in 1918 which yielded $1 million annual revenue in 1923 John HERTZ acquired Jacobs business and developed "fly-drive" car rental concept by opening franchises at airports Avis, started by an Army pilot Warren Avis, the first car rental operation located at an airport in Detroit Has been extremely competitive since the 1960s and still closely linked with airline transportation

Introduction to Car Rental Industry [Contd]

Most Popular Brands

Hertz, Avis, Enterprise, Budget, Alamo (Europe), Apex (Australia)

US Car Rental Market

Company Enterprise Rent-A-Car Hertz Avis Budget Rent A Car

U.S. Cars in service 592,426 315,000 200,000 105,000

# U.S. Locations 5,719

2005 $6.4B $3.87B

1,111 773

$2.45B $1.22B

Rental Types
One-Way Rental :

Renters pick up a car at one location and return it to a different location Renters pick up and drops off a car at same location. A qualifying rental is one which meets all qualifications or rules. For example, on a coupon that notes weekend rental only, a qualifying rental will need to take place during a weekend and not during the middle of the week.

Round Trip :

Qualifying Rentals:

Weekly Rental

For Weekly Rental user must rent a car for a minimum of five to seven consecutive days. Weekly rentals usually offer substantial discounts over our daily rental rates. For Mini Lease rental user must rent a car for a minimum of 32 consecutive days or a maximum of 330 days.

Mini Lease

Car Classes
SIPP : Standard Interline Passenger Procedures (SIPP), is the travel industry
standard for identifying and describing various types of vehicles, their features and functions. SIPP is also known as ACRISS - The Association of Car Rental Industry Systems Standards.

Across the entire car rental industry, car classes include

Small (compact and economy), Medium (intermediate and full-size),

Large (premium and luxury),

SUV (intermediate, standard and full-size) and Specialty (convertibles, mini vans and 12-passenger vans).

Car Class Examples

Small (compact and economy), Medium (intermediate and full-size), Large (premium and luxury), SUV (intermediate, standard and full-size) and Specialty (convertibles, mini vans and 12-passenger vans).

Types of cars
Economy
Examples : Chevrolet Metro or similar. Features : Air Bags, AM/FM Stereo Radio, 4-Cylinder Engine,

Automatic Transmission, Air Conditioning

Compact
Examples : Ford Escort, Ford Focus or similar Features for Premium Cars : Air Bags, AM/FM Stereo Radio, 4

Cylinder Engine, Automatic Transmission, Air Conditioning, PowerAssist Steering, Tinted Windows, Dual Mirrors.

Intermediate
Examples : Ford Escort, Ford Focus or similar Features : Air Bags, AM/FM Stereo Radio, 4

Full Size
Examples :Chevrolet Impala, Ford Taurus, Buick Regal 4 door Features : Anti-Lock Brakes, Cruise Control, Power

Locks/Windows, Air Bags, Automatic Transmission, AC, 4 or 6 Cylinder Engine, Power-Assist Steering, Tinted Windows, Dual Mirrors, Tilt Steering Wheel, AM/FM Stereo With Cassette Player

Premium

Examples : Pontiac Bonneville, Ford Crown Victoria, Buick Le Sabre Features : Anti-Lock Brakes, Cruise Control, Power

4 door or similar. Locks/Windows, Air Bags, 6-Cylinder Engine, Automatic Transmission, Air Conditioning, Power-Assist Steering, Dual Mirrors, Tilt Steering Wheel, Delay Wipers, AM/FM Stereo With Cassette Player, Tinted Windows

Luxury

Examples :Lincoln Town Car, Cadillac Deville 4 door or similar. Features : Anti-Lock Brakes, Cruise Control, Power Locks/Windows,

Air Bags, Automatic Transmission, Air Conditioning, Power-Assist Steering, Tinted Windows, Dual Mirrors, Tilt Steering Wheel, Delay Wipers, 6 Cylinder Supercharged Engine, AM/FM Stereo Cassette, Leather Interior, Power Driver Seat, Tire Inflation Monitor, Dual Climate Zone

SUV
Examples : Chevrolet Blazer, Ford Explorer or similar. Features :Anti-Lock Brakes, Cruise Control, Power

Locks/Windows, Air Bags, 6-Cylinder Engine, Automatic Transmission, Air Conditioning, Power-Assist Steering, Tinted Windows, Dual Mirrors, Tilt Steering Wheel, Delay Wipers, AM/FM Stereo With Cassette Player.

Standard

Examples :Chevrolet Monte Carlo, Ford Mustang coupe or similar. Features : Anti-Lock Brakes, Cruise Control, Air Bags, AM/FM

Standard car can be a sporty 2 door model. Stereo Radio, Automatic Transmission, Air Conditioning, 4 or 6 Cylinder Engine, Power-Assist Steering, Tinted Windows, Dual Mirrors, Tilt Steering Wheel

Mini Van
Examples : Chevrolet Venture, Ford Windstar or similar. Features : Power Locks/Windows, Air Bags, AM/FM Stereo Radio,

6-Cylinder Engine, Automatic Transmission, Air Conditioning, PowerAssist Steering, Tinted Windows, Dual Mirrors, Delay Wipers

12-Passenger Van
Examples : Features :

Convertible

Examples : Chevrolet Cavalier convertible, Ford Mustang

convertible or similar.

Features : Anti-Lock Brakes, Air Bags, AM/FM Stereo

Radio, Automatic Transmission, Air Conditioning, 4 or 6Cylinder Engine, Power-Assist Steering, Tinted Windows, Dual

Mirrors, Tilt Steering Wheel, Power Top, Power Door Locks

Pick Up

Examples : Ford Ranger or similar.

Features : Air Conditioning, AM/FM Stereo with Cassette,

Automatic Transmission, V6 Engine, Dual AirBags, Rear Anti-Lock Brakes, Power Steering, Secured Spacious 6-foot Trunk, Power Brakes, Dual Mirrors, Rear Sliding Glass Window, Closed Cab.

Rates and Fee

The fee types have been divided into taxes, common fees, and Other possible fee Taxes : There's no getting around taxes. User will be subject to local and state
taxes when he/she rent a vehicle

1] State and local sales tax:

This tax varies by state. For example, on a Hertz rental in Boston, the sales tax was five percent; while on an Avis rental in San Francisco, the sales tax was eight percent. For international rentals, taxes can be high. For instance, a Hertz rental in Paris carried a tax of almost 20 percent, and on an Avis rental in London the tax was over 17 percent.

2] International taxes:

Common fees :
Here are some of the more common fees that exists in car rental industry. These fees are hard to avoid, although you may not find all of them on every bill. Knowing what each is may not lower your bill, but it will make you a more informed consumer.

Deposit:

Rental agencies generally charge customer credit card for a deposit on the rental vehicle, but do not process the amount unless, upon return, the car has been damaged or misused. The amount varies but may be hundreds of dollars. For example, at Budget, the minimum deposit is $200 or the total estimated rental charges plus 25 percent, whichever is greater.

Airport concession fees: Some airports charge car rental companies a fee for every customer transaction
at that airport location. When airport authorities impose this fee, car rental companies operating out of that airport generally pass on this surcharge to their customers in the form of Air-port Concession fee. Airport Concession fees is also called recoup fees, consolidated facility charges (CFC), facility usage fees, and concession recovery fees.

Parking tax:

Fee that the car rental agency charges to cover the rental of the parking lot.

Usually around 30 cents.

Reimbursement fee/Vehicle license fee:

The fee that contributes to the cost of registering and titling the car, usually between three and eight percent of the base rate. This fee is sometimes referred to as a vehicle excise tax.

Convention center/stadium/sports arena tax:

The money from this fee goes towards construction of area centers. Charges of this type are calculated as daily fees or as a percent of the rental rate.
For example, you'll pay $10 at Boston's Logan Airport, and five percent of the rental rate at San Antonio International airport. You pay regardless of whether or not you visit the venue.

Peak season surcharge:

Sometimes car rental companies will charge a per-day or flat fee for rentals during popular times. For instance, a Dollar compact car rental in Boston during August has a $3 per-day peak season surcharge.

Vehicle License Recovery Fee (VLF or VLRF)

Industry wide, at select locations, this fee is sometimes charged to renters for vehicle registration and licensing

fees

Other possible fees

One Way Fee (OWF) :

One Way Fee (also called Drop-off fee) is the fee for returning the car to a different site than the pick-up location. Fees of this type can be high

Frequent flyer tax:

Charges that you incur when earning miles for your rental. The fee tends to be 7.5 percent of the value of the miles. This charge covers taxes the rental company pays on the frequent flyer miles it gives to customers Late Fee rates are charged based on the 24-hour clock. ex: If you pick up the car at 9 a.m., you must return the car at 9 a.m. on the last day of your rental, or charges will be added to the bill.Some companies, such as Budget, grant drivers a 59-minute grace period, while others begin charging late fees immediately.

Late fee:

Late fees are charged by the hour until the hourly charges exceed the daily rate, at which point most companies charge you for a full extra day.

Mileage fee:

Depending on the car rental agreement, a mileage allowance entitles the customer to drive a specified distance at no extra charge before a mileage surcharge takes effect.

For rentals without unlimited mileage, a per-mile fee based on the number of miles overall, or number of miles over the per-day allotted usage.
Mileage fees tend to come from smaller rental companies that offer a certain number of miles per day and then charge a fee (usually between 15 and 50 cents per mile) for mileage above the allotment.

Additional drivers fee:

Usually a flat fee charged for extra drivers other than the renter. Some rental agencies, such as Avis, allow the spouse of the renter, or in the case of business travel, an associate of the renter, to be added as a driver for no additional fee.

Additional drivers fees vary wildly by location and company, and range from no fee to upwards of $25 per driver.

Out-of-state fee:

Fee charged for driving the vehicle outside of the state where you rented it. Some companies restrict which neighboring states you can drive in, or have mileage allowances for out-of-state driving. There is no standard for out-of-state fees, so it is best to call and check with the company before booking.

Equipment rental fee:

Equipment rental fee is the charges for items such as car seats, ski racks, cellular phones, and GPS devices.
Examples of fees for such items include $8 per day for child safety seats from Avis, and $6 per day for a cell phone and 10 minutes of use from Budget.

Government Admin Rate Supplement:

For U.S. Government rentals, the government imposes a $5/day Admin Rate Supplement (GARS/GA) charge for each rental. Rental car companies pass on this surcharge to government renters either directly or indirectly.

Insurance fees : The main types of insurance offered by rental agencies are

CDW (Collision damage waiver), also referred to as as LDW (Loss damage waiver): CDW covers damage to the rental car. It is usually an optional feature. ALI (Additional liability insurance): ALI is optional insurance that protects the renter against claims made by third parties in the event of an accident. Rental companies are required by law to provide the minimum level of liability insurance, which varies from state to state. PAI (Personal accident insurance): PAI is optional insurance that provides payment in the event of the injury or death of the renter or an accompanying passenger from a car accident. PEC (Personal effects coverage): PEC is optional insurance that provides protection against theft or loss of personal belongings from the rental car.

Rental Types
One-Way Rental :

Renters pick up a car at one location and return it to a different location Renters pick up and drops off a car at same location. A qualifying rental is one which meets all qualifications or rules.

Round Trip :

Qualifying Rentals:

For example, on a coupon that notes weekend rental only, a qualifying rental will need to take place during a weekend and not during the middle of the week.

Weekly Rental

For Weekly Rental user must rent a car for a minimum of five to seven consecutive days.

Weekly rentals usually offer substantial discounts over our daily rental rates.
For Mini Lease rental user must rent a car for a minimum of 32 consecutive days or a maximum of 330 days.

Mini Lease

Rate Types :
Hourly Rates :

In most cases the minimum rental charge is for one day and is based on a 24hour period. An hourly charge applies till the additional rental period (delay) exceeds one hour. Rental charge for One Day i.e. 24-hours To get this rate, user must rent a car for a minimum of five to seven consecutive days To qualify for a weekend rate, user must pick up car any time after 12:00 noon on Thursday and return it by 11:59 p.m. (one minute before midnight) the following Monday. Some rates require a Friday or Saturday night stayover, and might require a two-day minimum rental.

Daily Rates:

Weekly Rates :

Weekend Rates

Rate Types :
Monthly Rates :

To qualify for a Monthly rate, the renter must rent a car for a minimum of 28 consecutive days or a maximum of 31days. Monthly rentals usually offer substantial discounts over weekly rates. To qualify for a Mini-Lease rate, the renter must rent a car for a minimum of 32 consecutive days or a maximum of 330 days. Mini-Lease rentals usually offer substantial discounts over monthly rates.

Mini Lease Rate

Car Rental Process.

Why Customers Rent Cars ?
Renting a car can enhance the flexibility of any trip

Business OR Leisure .

Different modes of Reserving a Car

Car Rental Companies are trying to make more flexibility to Customer by Providing the different Channels by Which a Car can be reserved.
1.

Direct Booking through Agents.

Customer can call up the reservation Agent and book the car. Confirmation numbers will be provided to the Customer via email or Phone.

2.

Corporate Portals.
The customer can go online at the different Portals and shop for the rates and the availability of car and can book the car himself by giving all the necessary details.

3. Portals which gives a Comparison of the Pricing of Corporate Portals

These are Portals which gives comparison of the pricing of the cars provided by the different car Rental companies in one shot. E.g.: Priceline,Hotwire etc.

Through GDS ( Global Distribution System)

These are main service providers that maintains information about the different services and Pricing given by different Car rental Industries ,so that Travel Agents will be benefited the most. Galileo and Sabre are known in Car Rental Industry.

Different Steps in Renting a Car

Book a car through any of the Reservation Channels and get the Confirmation no. In booking process Reservation system will communicate to fleet system and confirms the Car.)
Customer on the Pick up date gets to the Rental Counter , and shows his reservation no. Counter Agents Check for the Reservation and Confirms to the Customer. Customer has to Show the Drivers license , Credit card and can Opt for a new Insurance or Change the Insurance with the booking and then signs the Rental Contract.

Customer makes the Payment .

After signing the Rental contract Customer takes the car from Rental Location. On the Return date for that Particular Reservation ,Customer returns the car and make remaining payments. (Say if additional mileages he has traveled)

Consoles for Preferred Customers

Some Car Rental Companies provides an easy way of picking up the car for their preferred Customers. This is available only in selected Locations like Airports. Process is

A booth will be placed near car Rental Location. System placed in the booth will communicate to the main Database and will get Refreshed at a particular stipulated time.

Customers check against the Confirmation number which parking lot a car is placed.

System placed in the booth will communicate to the main Database and will get Refreshed at a particular stipulated time. Customers fill the Vehicle identification tag and provide drivers License and take the car.

Customer Books a car and specifies his reservation details and preferences

Customer arrives at the Pick up date at the Rental Counter Inquires about his reservation

Customer shows his Driving License , Credit ID and opts for the Insurance and signs the Rental Contract

Becomes Reservation Rental Contract

Customer Drives the car from the Rental Location

Customer Returns the Car and Settles his remaining Payment

Condition of the Car is checked and the number of miles is noted

Fleet Management
Back office Operations of a car rental company deals with Purchase Maintenance and Auction of fleets.

After every Car Rental corresponding fleet is send for Servicing. As per normal industry standard fleets that cross 15 20K miles will be auctioned.( Exceptions are there if car conditions are so good).

Business Partners and Affiliates

Airlines Hotels Online booking engines. For ex, travelocity, expedia, etc.

Online booking engines compare the prices across the popular Car rental companies for the customers

Affiliates

promotes the Car Rental business by providing a link to the car rental website to do online reservation. gets commission for every reservation made from the Affiliates web site

Business Partners and Affiliates [Contd]

Airlines and Hotels are the key business partners for Car rental industry Airlines and Hotels are interconnected with the Car rental industry in many ways.

The car rental company requests a flight arrival time from the airline, the airline responds with a flight time, and the car rental company receives the flight time. Now let's suppose the car rental company wants to make a special offer; for example, it tells its customers, "If your flight is going to be very late, we find out which hotels are available in the area in case you need a place to spend the night." Through these partnerships, customers can earn miles or points and enjoy special discounts Customers can provide their airline or hotel account number at the car rental counter and provide frequent traveler information to obtain points / miles to rental

Imagination

Action

Joy