BURLINGAME, Calif. (AP) — In a story June 30 about a startup car sharing company, The Associated Press reported erroneously that a judge found that Airbnb rentals violated a 2010 law disallowing short-term apartment rentals in New York City. The judge found that one rental, not multiple rentals, violated the law.
A corrected version of the story is below:
SF bay area car rental startup faces lawsuit
SF bay area startup taking aim at airport car rental business faces city lawsuit
BURLINGAME, Calif. (AP) — Out of a tiny, green shack on a parking lot in an industrial area south of San Francisco International Airport, three teenagers are trying to change the airport car rental business. To do it, 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 in exchange. And their lot has had a few unusual rentals, including a 2001 Porsche Boxster and even a Lotus.
"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?" 18-year-old FlightCar CEO Rujul Zaparde said.
Zaparde and co-founders, Kevin Petrovic and Shri Ganeshram, both 19, created FlightCar, passing on elite colleges in the Northeast and 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.
These companies are, however, also running up against government regulations. In FlightCar's case, San Francisco city officials and those at the airport say the company is undercutting rental car companies at the airport by acting like a rental company but ignoring the regulations that govern them.
"We're simply trying to enforce a consistent standard," said Doug Yakel, an airport spokesman.
The city has filed a lawsuit against FlightCar, hoping to shut it down until it complies with the regulations, including conducting pick-ups and drop-offs at a special area, paying 10 percent of gross profits to the airport and paying a $20 per rental transaction.
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 up to this point," said Yassi Eskandari-Qajar, who studies legal issues in the sharing economy at the Sustainable Economies Law Center, an Oakland-based nonprofit that supports such industries.
Last year, the California Public Utilities Commission issued cease-and-desist orders and $20,000 fines to San Francisco-based ride-sharing companies Lyft and Sidecar for operating illegally, stating the companies need permits certifying their drivers are properly screened, licensed and insured. It lifted the orders this year in exchange for certain safeguards, such as driver records checks.
Residence-sharing companies, such as Airbnb, have also run afoul of existing laws. A judge ruled last month that a rental posted on Airbnb violated a 2010 law against short term rentals in New York City.