Under The Hood - 1997-04-14

Avis Franchise Gets Reprieve

The U.S. District Court for the Eastern District of North Carolina has denied an injunction that Avis sought to terminate its franchise agreement with John Dalton, the North Carolina franchisee who is the target of three lawsuits alleging racial discrimination. Avis must wait until the outcome of the trial, scheduled for January 1998, before taking further action, said John Carley, Avis executive vice president and general counsel.

In December, HFS, which launched an investigation of its own after acquiring Avis in October, said that Avis executives had been informed of complaints about Dalton as early as 1992. The company had referred the charges to the licensee for comment, a situation that "might have been treated in a different way," Carley said.

Still, Carley denied what he said were the plaintiffs' claims that discrimination was practiced throughout Avis. He noted that between 1988 and 1992, 41.4 percent of Avis' 17,000 employees were minorities.


Avis, Hertz To tax young drivers

In the wake of a March 27 decision by the New York State Court of Appeals that car rental companies may no longer refuse to rent to drivers under age 25, both Avis and Hertz plan to charge an extra fee on those rentals to cover the cost of insurance. The ban itself did not affect businesses because most vendors waived it for corporate and government accounts.

Legislation pending in the New York State Assembly would prevent car rental vendors from charging the fees, as well as ban the high surcharges that apply to renters who reside in the Bronx and Brooklyn. The legislation also would make it illegal for vendors to refuse business on the basis of geographical residency, lack of ownership of a credit card, race, creed, religion, ethnic origin, sex, marital status or disability.


Texas Taxes Proposed

At 10 percent, Texas' tax on car rentals is already high. If a bill introduced by Rep. Kim Brimer passes the state legislature, however, Texas renters would be required to pay even more-a $2-a-day surcharge, designed to help pay for new sports stadiums. The bill has created a furor among car rental firms and hoteliers, whose properties also would be subject to additional taxes. Some vendors have formed an anti-tax lobbying group called Texans for Fair Play.

Three Texas municipalities also want to tax rental car customers as a stopgap measure, in case the state bill doesn't pass. The city councils of Dallas, Houston and San Antonio, which all want to build new sports facilities, have introduced proposals of their own calling for a 5 percent additional tax on car rentals. Car rental executives and hoteliers have long argued that targeting the traveler to pay for local sports facilities is unfair. The proposed tax also has excited the ire of the state's lieutenant governor, Bob Bullock, who asserts that public money should not be used to subsidize the wealthy owners of sports teams.


New Developments On The Web

Thrifty Car Rental has introduced an online booking feature to its Website (http://www.thrifty.com), which applies to reservations around the world. The service has real-time connectibility with Thrifty's central reservations and rates system. Users can check the status of reservations they've already made or cancel them. Sounds good, except that when a user recently attempted to get on the site, it took forever....Budget has launched a Website (http://www.budgetrentacar.com) that provides a directory of Budget locations, information about car models, an overview of the firm's airline partnerships and loyalty programs, and special offers on rates.