New Startup FlightCar Could Shake Up Car Rental Industry

Inspired by the home and apartment-sharing startup Airbnb, FlightCar allows car owners to park free at select airports in exchange for sharing their vehicle. This daring concept is the lovechild of Shri Ganeshram, Rujul Zaparde and Kevin Petrovic. The three men founded FlightCar after taking a good, hard look at Airbnb. They believed that if people are willing to share their most valuable asset (their home), they might be willing to share their second-most valuable asset (their car). "We applied in May [2012] to a startup accelerator called The Brandery in Cincinnati," Zaparde told Benzinga. "We were accepted. We moved there, went through the program, and then launched in February of this year." The Brandery provided FlightCar with $20,000 in startup funds, mentoring opportunities and other benefits. From there, the car-sharing startup raised $570,000 in seed funding from SV Angel, YC VC, TEEC Angel Fund and a handful of others. Related: New Startup LOCK8 Wants To Make Bike Theft A Thing Of The Past FlightCar raised an additional $5.5 million from General Catalyst Partners, Brian Chesky (founder and CEO of Airbnb), Softbank Capital, and Alexis Ohanian (co-founder of Reddit), to name a few. "I think they buy into the concept," Zaparde said of FlightCar's investors. "I think Airbnb has been the poster child for the sharing economy and they see potential for other startups and other companies in the sharing economy, so I think that's where they're coming from." Before launching FlightCar, Zaparde and his co-founders spent a couple of weeks talking to people at San Francisco International Airport. They boarded the airport shuttle several times to interview travelers and gauge their interest in sharing an automobile. Roughly twenty percent said that they might be willing to list their vehicle with FlightCar -- in exchange for free parking and a small mileage fee. A larger, unspecified number of travelers said that while they may not be willing to share their own care, they are okay with the idea of renting a vehicle that belongs to another individual. "If you're an owner, we will wash and vacuum the car before and after it gets rented," said Zaparde. "We haven't had that many issues with cars coming in completely trashed from the owners. I'm sure there have been a couple of instances where they were so dirty we couldn't rent it out. If it is like that, we'll do our best to clean it." Related: RapidMiner Gains $5 Million To Better Serve PayPal, Pepsi And Other Major Clients In the event that a car is too dirty to properly clean, Zaparde said that FlightCar will let the vehicle sit in its lot until the owner returns to pick it up. "We haven't had any issues where a renter trashed a car," he added. "Somebody will forget their Starbucks drink or a bag of chips. But I can't think of any time where there was an issue. If there is something like that, we'll charge the renter and go and get the car detailed at a local facility."

Image Credit: FlightCar To protect renters and car owners alike, each vehicle is insured for up to $1 million. According to the company's website, FlightCar provides a "primary $1,000,000 single limit per occurrence for bodily injury and property damage to third parties." That said, FlightCar's insurance policy will not allow the company to rent a vehicle that has a current Blue Book value greater than $60,000. Drivers with an old clunker need not apply. The company will only list vehicles from 2001 or later that have no more than 150,000 miles. FlightCar brags that the average car owner can make $30 by using its services. The company pays $0.05 per mile for vehicles released between 2001 and 2008, and $0.10 per mile for vehicles released after that. Luxury vehicles receive double the rate. For owners who travel frequently, the free parking benefits could significantly outweigh the money they might make if the vehicle is rented. Renters also benefit. Since FlightCar does not have to purchase any vehicles and maintain the same kind of car rental network that its competitors operate, the company can afford to charge less for rentals. For example, a 2001 to 2008 coupe or sedan can be rented from FlightCar for $10 at Los Angeles International Airport. A newer model costs $15 per day. Avis and other car rental companies may charge double or more for a comparable vehicle. "Most cars never sit in the parking lot for more than 24, maybe maximum 48 hours, because they're going to the owner or to a renter," said Zaparde. "But we have to make the math work, because if we go over [our limit] we have a storage issue. We have to make sure we have that worked out. We do have some overflow locations if we need to use them. Sometimes we do use them over holidays, like Thanksgiving." Zaparde said that one of his co-founders, Kevin Petrovic, estimates that there are four or five FlightCar vehicles on the road for every vehicle that is parked in one of its three lots. The company currently has about 70 parking spaces in Boston, 80 or 90 in San Francisco and 140 in Los Angeles. FlightCar is still in the "growth and expansion" mode, but Zaparde said that he and his co-founders have not decided where they will go next. Until then, most travelers will have to continue paying high prices for parking and/or car rentals. Disclosure: At the time of this writing, Louis Bedigian had no position in the equities mentioned in this report. Louis Bedigian is the Senior Tech Analyst and Features Writer of Benzinga. You can reach him at louis(at)benzingapro(dot)com. Follow him @LouisBedigianBZ