Business

Airport car-share firm sued in California

Service operates at Logan, too

BURLINGAME, Calif. — Out of a tiny green shack in an industrial area south of San Francisco International Airport, three teenagers are trying to change the airport car rental business. All they need are your cars, and strangers to drive them.

Their company, FlightCar, rents out people’s cars while they are traveling, and gives them a share of the proceeds, free airport parking, and a car wash. The company also operates at Logan Airport in Boston.

Advertisement

‘‘How does it make sense that there’s one parking lot at the airport where there are thousands of cars sitting there and people are paying for them to sit there and do nothing, and there’s another parking lot with thousands of cars owned by Hertz?’’ said 18-year-old chief executive Rujul Zaparde.

Zaparde and cofounders Kevin Petrovic and Shri Ganeshram, both 19, created FlightCar, joining others in what has been dubbed the ‘‘sharing economy.’’ These new businesses are trying to make it easy for people to share their property — such as cars or houses — and earn some money.

Get Talking Points in your inbox:
An afternoon recap of the day’s most important business news, delivered weekdays.
Thank you for signing up! Sign up for more newsletters here

These companies are, however, running up against government regulations. San Francisco officials and those at the airport say FlightCar undercuts rental companies by acting like a rental company but ignoring rules that govern them.

‘‘We’re simply trying to enforce a consistent standard,’’ said Doug Yakel, an airport spokesman.

The city has sued FlightCar, hoping to shut it down until it complies with the regulations, including paying 10 percent of gross profits to the airport plus $20 per rental transaction.

Advertisement

Such conflicts nationwide are creating challenges for governments.

‘‘It’s happening so fast, practically at breakneck speeds, and it’s constantly challenging these assumptions cities have made,’’ said Yassi Eskandari-Qajar, who studies legal issues at the Sustainable Economies Law Center, an Oakland-based nonprofit that supports such industries.

Last year, California issued cease-and-desist orders and $20,000 fines to San Francisco ride-sharing companies Lyft and Sidecar, stating they needed permits certifying their drivers are properly licensed and insured. It lifted the orders this year in exchange for certain safeguards.

Residence-sharing companies have also run afoul of laws. A judge ruled last month that Airbnb violated a New York City law barring short-term rentals.

The central question in the FlightCar lawsuit is what type of company it is. The founders say it’s not a traditional rental company. Yakel said FlightCar is like Hertz or Avis because it caters to the airport’s customers and draws most of its revenue from passengers flying into the airport. That means FlightCar needs to follow airport regulations, he said.

The company, which has attracted investors, employs about 30 in San Francisco and Boston. The company, which usually has about 80 cars on its lot, recently expanded to Logan International Airport in Boston.

A spokesman for the Massachusetts Port Authority, which runs Logan, said companies at the airport need an operating agreement, but FlightCar has no such contract. He said Logan officials are aware of San Francisco’s suit and are watching the situation.

Loading comments...
Real journalists. Real journalism. Subscribe to The Boston Globe today.