S.F. sues Turo over its airport rentals

San Francisco is suing Turo, which arranges rentals of people’s personal cars, for allegedly flouting fee requirements and other rules at San Francisco International Airport. Turo’s defiance of SFO regulations, such as bans on terminal curbside rental pickups and drop-offs, contributes to airport traffic congestion and gives it an unfair advantage against competitors, according to the complaint, which was filed Wednesday in San Francisco Superior Court.

San Francisco’s Turo said it was “stunned” by the lawsuit, and that it had been trying for years to work with SFO on a permit system that would acknowledge its status as a “peerto-peer car-sharing company.”

Turo executives “seem to think traffic congestion is someone else’s problem and that their company doesn’t need to pay its fair share for the public facilities it is profiting off of,” said City Attorney Dennis Herrera in a statement. “You don’t get special treatment just because you claim to be a disruptor.”

But Turo said it’s more a matchmaker than a rental company, noting that it owns no cars and that many of the car owners who use it make only a few hundred dollars a

month.

“Turo, under California law, is not a rental car company and SFO does not have the ability to regulate us as such,” said Michelle Fang, Turo general counsel. “It would be putting a round peg in a square hole.”

Rental car company fees comprise 11.5 percent of SFO’s 2016-17 operating budgets. Rental car companies with sites outside SFO property pay $18 per rental for the Air-Train, as well as 10 percent of receipts above a certain threshold. Seven such companies paid $5.1 million in fees to SFO last year. (Companies on airport grounds pay similar fees plus rent for the space.)

Turo had an SFO permit from 2013 to 2017 but relinquished it on Aug. 10, saying it would cease airport operations, the complaint said. Herrera’s office said Turo paid about $50,000 a year in 2015 and 2016, and $20,000 for the first seven months of 2017.

Turo’s Fang said it agreed to that permit “under protest” and “as a show of good faith” while conducting a now-ended pilot program in which it handled listing and pricing of car rentals and occupied a site near the airport.

Since August, Turo has continued to operate at the airport “in defiance of SFO’s repeated directives” in letters and an in-person meeting, the complaint said. To reduce traffic backups, SFO requires rental car companies to do all pickups and drop-offs at its Rental Car Center, which travelers reach on the Air-Train, a free peoplemover system. But Turo instead touts curbside delivery at SFO terminals, the complaint said.

Turo said its airport presence is minimal compared with traditional rental car companies, and that it’s unfair to expect it to pay as much as they do, which would require it to charge “exorbitant fees” to its users, effectively preventing them from renting cars at or near the airport. The company said its curbside deliveries are allowed because a 2010 California law recognizes “personal vehicle sharing programs” as not subject to rental-car laws.

“It’s more akin to picking up or dropping off a loved one at the airport,” said Michelle Peacock, Turo vice president of government relations. Turo is “more than happy to pay a few bucks a trip” for that access, she said, but does not want to pay for infrastructure it does not use, such as terminal counters, parking lots, Air-Train and signs. She pointed to Uber and Lyft as potential models. Those ridehailing companies pay $3.80 per airport ride.

Turo, which was called Relay-Rides until 2015, has $192 million in financial backing, including from major car companies like Daimler.

Turo claims that the lawsuit is part of a concerted campaign by Enterprise Rent-A-Car, the nation’s largest car rental company, to undercut it. Fang said that Enterprise has pushed airports nationwide to regulate Turo as if it were a traditional rental company. “Enterprise is leading a charge to kill Turo,” she said.

Herrera’s office said Enterprise played no role in the lawsuit. Enterprise did not immediately respond to a request for comment.

Turo arranges car rentals by the day, week or month, and requires renters and car owners to meet in person for handoffs. San Francisco’s Getaround, the other leading U.S. peer-to-peer car rental company, arranges hourly rentals as well as longer-term ones. It does not have an SFO permit and officials said it does not appear to operate there. It installs unlocking devices in cars so renters can pick them up from parking spaces.

France’s Travel-Car is a peer-to-peer rental company that operates only at airports. It started operations at SFO in July and has a permit. Its renters pick up cars from lots near the airport.

San Francisco is seeking a court order to stop Turo from operating at the airport and from referring to SFO in its marketing materials until it gets a permit. The city also seeks civil penalties of up to $2,500 per violation, and reimbursement for its legal costs.