The AutoSlash Fee Detective series is one topic where we answer traveler questions and we got one from a traveler to Los Angeles International Airport. We've previously written about LAX, which has been collecting a $10 per car rental fee to construct a rental car facility since 2002. And of course, the facility doesn't yet exist -- the current plan is for the rental car center to open in 2023. However, one of our readers noted that renters who keep a car more than 24 hours now pay far more than $10 for the rental car facility that doesn't yet exist, for a reason noted in our previous article. In fact, LAWA (Los Angeles World Airports) is simply taking advantage of a provision written in California Civil Code. And remarkably, LAWA isn't (yet) at the current legal cap for user fees on the not-yet-constructed rental car facility.
Throughout the first 15 years of the Customer Facility Charge (starting in 2002), LAWA simply took advantage of a provision in State law that allowed the airport to collect a flat $10 per rental for the eventual rental car facility. Fortunately, those funds can only be used to design, finance, and build a rental car center and/or transportation to get to the rental car center. Given these are restricted funds, they have been collecting in a pool since 2002. However, the pool of funds already collected isn't sufficient to build the rental car center and the 2.25 miles of Automated People Mover (APM, think monorail) line to get users to the rental car center. So LAWA took advantage of the second provision in State law that instead allows the airport to collect up to $9 per rental day, up to 5 days to help fund the rental car center and
monorail Automated People Mover as this Enterprise example shows.
That's definitely more than $10 per rental!
The "Alternative" Customer Facility Charge.
The legal name for LAWA's new scheme is an "Alternative Customer Facility Charge". Yes, that's really the name. The lawmakers assumed most California airports would simply collect $10 on every rental car contract. And most airports do simply collect $10 on every rental car contract, as there's no paperwork required by the state when using that collection mechanism for the user fee. Need to raise money for a future initiative related to rental cars at an airport? The airport can collect the easy $10 for every rental or actually provide evidence for a daily, alternative assessment instead. LAWA has decided to demonstrate a need for a fee of $7.50 per rental day, up to 5 days. Given the limit is $9 per rental day, up to 5 days, a customer could conceivably view this as a slight break -- we're sure the staff at LAWA could create projections that would seem to necessitate the maximum charge allowed by law.
In order to switch from the $10 per rental fee to the variable fee, the airport was required to comply with laws related to public hearings in the State of California and per Civil Code:
(A) The airport establishes the amount of revenue necessary to finance the reasonable costs of designing and constructing a consolidated rental vehicle facility and to design, construct, and operate any common-use transportation system, or acquire vehicles for use in that system, based on evidence presented during the hearing.
(B) The airport finds, based on evidence presented during the hearing, that the fee authorized in subdivision (a) will not generate sufficient revenue to finance the reasonable costs of designing and constructing a consolidated rental vehicle facility and of designing, constructing, and operating any common-use transportation system, or acquire vehicles for use in that system.
(C) The airport finds that the reasonable cost of the project requires the additional amount of revenue that would be generated by the proposed daily rate, including any rate increase, authorized pursuant to this paragraph.
(D) The airport outlines each of the following:
(i) Steps it has taken to limit costs.
(ii) Other potential alternatives for meeting its revenue needs other than the collection of the fee.
(iii) The extent to which rental companies or other businesses or individuals using the facility or common-use transportation system will pay for the costs associated with these facilities and systems apart from the fee collected from rental customers.
The airport adopting the "alternative fee" is also required to send reports and audits to the public and the State Legislature. LAWA did indeed hold the necessary public hearing (here's the actual video) and switched from the $10 per rental to a fee that is $7.50 per day for up to five days and increasing up to the maximum of $9.00 per day for up to five days when the facility opens and that fee is expected to last until 2047, maybe longer. Yes, the airport authority is currently estimating that it will take more than 40 years of abusive fees to pay for the Consolidated Rental Car Center (CONRAC) and
monorail Automated People Mover. And remember, the new CONRAC isn't really convenient -- those who complain Tampa's new CONRAC is 1.5 miles away from the terminal will get to hang on for a 2.25-mile ride in Los Angeles (when the project is actually finished).
There were actually two bright spots among the commissioners in the public hearing -- President Burton encouraging flexibility in the CONRAC acknowledging that the face of airport transportation has changed rapidly from rental cars and Mr. Daar asking whether the increased fees would encourage some renters to seek alternative transportation, specifically off-airport rental car companies. Economists would clearly say "yes, higher taxes and fees change behavior" but the airport -- by limiting how people can get on and off property and charging fees for all transportation services -- can make the opportunity cost of avoiding airport fees very high. Perhaps we'll need to study public transportation options in a bit more detail before our next visit to LAX.
The current fee of $7.50 per day? Among airports that charge a daily fee in the United States, this ties LAX with Daniel K. Inouye (Honolulu) International Airport for fourth highest in the nation. When the fee increases to $9.00 per day (ceteris paribus), LAX will be tied with San Diego International Airport for highest CFC in the nation. And as a daily fee, those with longer rental will now pay a disproportionate share of the cost of designing, building, and financing the future rental car facility.
|Rental Length||Customer Facility Charge (Old)||Customer Facility Charge (New)|
|Less than 24 hours||$10||$7.50|
|Over 4 days||$10||$37.50|
So yes, the fee structure did indeed change at LAX. In a rarity, the airport staff accepted that customers who had booked before the increase was approved would pay the old fee rate rather than the new one, of great benefit for those with longer rentals. And while LAWA has already approved an increase to the maximum amount allowed by California Civil Code five years hence, consumers have to always be aware California Civil Code can be changed!
Fees, facility charges, and taxes got you confused and/or down? The Fee Detective can explain. Send your query to email@example.com and we might feature your question in an upcoming post.