Avis now tries harder to get a commitment

Rental car company Avis Budget Group has found a way to make money off deadbeats in North America, South America, Australia and New Zealand.

he idea is to begin charging a fee when customers reserve a vehicle but fail to show up for the car keys. The concept is similar to hotels assessing one night’s room rate to the credit card on record should the guest not appear — but it’s a first for the car rental niche. “It’s a long overdue change,” officials are saying.

Currently, the company is working to make sure its GDS partners are equipped to take credit cards in advance for that purpose. Amadeus, Sabre and Travelport spokespersons are saying they’ll have their end ready by mid December.

So far, the travel industry hasn’t raised an eyebrow, even though booking a rental car the traveler has no intention of claiming as part of a package to bring other element prices down is a fairly common strategy among agents and DIY online consumers. Perhaps that’s because Abrams Consulting Group is saying no-show rates for rental cars have reached 30 percent. “You’re planning your fleet around peak periods,” says Neil Abrams. “You run the risk of not renting all the cars you should have or you overbook and leave customers stranded at a cost to the company. It’s a tactical issue,” he told The Beat business newsletter.

Budget says no more to no shows

Add that to the fact Avis Budget Group saw a 14 percent decrease in third quarter revenue in 2009 compared to the same period a year ago. On the other hand, it’s third quarter EBITDA (that’s a faster way to say earnings before interest, taxes, depreciation and amortization) increased 17 percent. “We remained intensely focused on controlling expenses  throughout our operations and have increased our forecast of realized cost savings for 2009 to $350-400 million,” says Ronald L. Nelson, Avis Budget Group Chairman and CEO.

The real test, however, is how well travelers accept the new rules. The risk, of course, is that other rental car companies will fail to follow and customers will give those competitors their business instead, as they like the idea of a no-commitment reservation should they find a lower price elsewhere at the last second. (Enterprise Rent-A-Car  has already said this isn’t part of its business model going forward; Hertz and Dollar Thrifty haven’t committed.) Still, the rules are as friendly as possible under the circumstances: Renters can cancel the reservation up to 24 hours in advance without paying a penny. If a delayed flight is behind the failure to appear, the customer is good as long as he or she gave Avis Budget Group their flight number in advance.

Heck, according to early communications with the GDS firms, Avis and Budget may even choose not to slap a no-show fee at every location.

No word yet on whether the no-show fee will be a flat rate or the average daily rate including applicable taxes and surcharges.

Photography: Avis Budget Group

New ultra cheap airline Jet America Airlines (www.jetamerica.com/) is offering $9 tickets for non-stop one-way seats on its flights between six U.S. cities. The first flights take-off from Newark’s Liberty Airport  on July 13.

Jet America

Jet America is starting off with flights from Lansing, Michigan, Melbourne-Vero Beach, Florida, South Bend, Indiana and Toledo, Ohio to New York- Newark, New Jersey. And starting August 14, Jet America will also fly roundtrip from Toledo to Minneapolis-St. Paul.

It works on the same concept as Europe’s Ryanair and the now-defunct US based Skybus. Which is no big surprise, since Skybus founder John Weikle is also the founder of Jet America.

In a press statement, Weikle said that “Our goal is to fly wherever JetAmerica can offer air fares of at least 40 percent less than competitors. The Jet America business model is based on flying routes to mostly secondary, underserved cities with populations of 3 to 6 million people living within 75 miles of uncongested airports that do not currently provide big jet, direct, non-stop service to key destinations.”

And if you’re thinking how a new airline could possibly take-off and survive in the current economic climate, here’s how it works – there is no airline or crew. It’s all virtual. The company is a Part 380 Indirect Air Carrier which leases planes and flight crew from other airlines. And even that hasn’t been easy.

They were supposed to work with planes and flight crews provided by Sun Country Airlines, but that deal hit a roadblock, so now they’re working with Miami Air International Inc., starting with one leased Boeing 737-800. And the operational logistics (most flights are not daily, see flight schedule) were made even easier by the airports, some of whom are even offering grants and incentives to Jet America.

And as for the $9 fares, it’s something like the $1 Boston-New York fares offered by Boltbus. Jet America fares actually range from in between $9 to $199, with the lowest fares going to the early bookers. And then, there’s the add-ons and extras – mandatory $5 convinience fee, plus baggage ($15 per checked bag), softdrinks and reservation charges ($10 each way).

On paper, the company is based in Clearwater, Fla., but the operational base is in Toledo, OH. The details are not pretty, and neither is their website, but it might just work - there is virtually no competition, and let’s face it - a 40% discount is not something you can ignore.

I could afford a Mexican beach vacation. For one.

In my other life (well, one of them) I’m a frugal blogger, so I am all about the power of budgeting and saving for the good things in life. I love to travel but with two kids and a third on the way there is not much extra money kicking around for trips.

So I was intrigued by TravelMuse’s new Yaycations calculator, which promises to help “discover the vacation budget you never knew you had,” by helping you save money on other stuff. Then the site inspires you to follow through by showing you actual vacation packages you could purchase with your planned savings.

The calculator walks you through common spending categories and asks you to select certain things to sacrifice. For instance, you can choose to sacrifice one $3.50 latte a week and earmark the saved $182 for your vacation budget, then forgo one restaurant lunch a week to sock away an additional $364 to $2500.

Once you’ve worked your way through the 20 spending categories, Yaycations helps you figure out what kind of vacation you could buy with what you hope to save. Promise to give up a lot of expensive restaurant meals, and TravelMuse has you in Kauai; only give up a few lattes and it will suggest something more local.

I tried the Yaycations calculator to try to find vacation money for my own family, but unfortunately our budget is already so close to the bone that there is little I’m willing to give up. I love cafe lattes but rarely buy them (in fact I am thinking of cashing in my SwagBucks from an online promotion for StarBucks cards just to give myself the occasional treat). I don’t currently have a gym membership, and I don’t have cable. I get most of my beauty and personal care supplies for free by using coupons and working the rewards system at CVS.

I did manage to find a couple things to give up: taking my kids out to lunch once a week (estimated cost of $7), a monthly DVD rental ($4), one tech toy per year ($200), 1 pair Payless shoes ($25), 1 beer per week for my husband to give up ($5).

Those hypothetical sacrifices gave me $897 for a vacation. Then Yaycations showed me where I could go for that. Actually, it gave me a range of choices including Carmel and San Jose del Cabo, Mexico. The only problem is that I was talking about our whole household budget, and the choices it gave me were under $897 PER PERSON.

So I guess by making a few sacrifices, I could take myself on vacation and leave the husband and kids at home. Which actually doesn’t sound too bad.

I think TravelMuse’s new tool is a fun way to get you into the mindset for budgeting for a vacation, and would work great for folks who have room in their budgets for discretionary spending. Of course, YOU’RE the one who has to follow through with going out for lunch one less time each week or skipping your monthly mani/pedi.

Photo by Carrie Kirby.