Airport car rental audit shows minor problem

The city of Austin collected about $10 million in 2012 and $12 million in 2013 in airport car rental fees, according to a city audit.

Assistant City Auditor Walt Persons told the Council Audit and Finance Committee on Wednesday that one rental car company owed the city $15,000 in concession fees in 2013 and another company failed to report revenue from off-airport locations as required by its concession agreement.

However, Persons said his department concluded its audit without making any recommendations because the Aviation Department was already addressing the problems cited in the audit.

Persons noted that the Aviation Department has agreements with nine rental car companies and that those agreements earned $10 million to $12 million a year during the two years the audit covered, 2012 and 2013. The concession fee paid by rental companies is equal to 10 percent of their gross receipts. The fee applies to out-of-state customers who fly into Austin and rent a car either at the airport or within 10 miles of the airport within 48 hours of arrival.

According to the audit, rental agencies had not been audited since 2009. But in October 2013, the Aviation Department hired an outside accounting firm to review data from three car rental companies.

Aviation Department Director Jim Smith told the committee, “We have over 100 contracts at the airport with different firms doing different things. So it’s usually about a three- to four-year cycle before we get around to doing an audit on any one of those.

“But the audits go back to cover the period of that particular gap,” Smith said, so the department can determine how much is due and negotiate with the companies for payment. He noted that they also discuss interest penalties with companies who fail to make timely payments, and that was the case with those companies cited in the audit.

Smith said his department also had negotiated and executed a new contract with the car rental companies that would eliminate fee collection from customers who rent their cars at a non-airport location. He said they negotiated the contract in conjunction with the planned opening – slated for Oct. 1 – of Austin-Bergstrom International Airport’s new rental car facility. The contract becomes effective on that date.

The previous Council approved that contract in 2014, Smith said. In response to questions from Council Member Leslie Pool, he said airport negotiators gave up collecting fees from non-airport rental car locations but got other concessions. For example, he said, negotiators wanted to lower emissions being generated at the airport.

Smith later told the Austin Monitor that the amount of money the airport is giving up by not collecting fees from off-airport locations is “marginal” because most cars are rented at the airport.

He added, “It was more of a policing problem because the car companies didn’t like charging their customers” the extra fee at their downtown locations. “So we would have to go check up on them, and we were spending more time with inspectors and auditors than we were earning in revenue.”