2008 December « Info Ireland

Every year the press go to town on the fact that prices in the car hire industry increase for Christmas. Like clockwork the Independent have not disappointed us this year with Breda Heffernan not really understanding how markets work. Almost to the day last year we had “Car hire firms under attack for festive price hike“.

Do car hire prices in Ireland go up each year during the festive time? Of course they do, but so does demand and as demand rises prices rise. We can see this simply economic principle at work everywhere in Ireland today as shops all over Ireland reduce their prices to drum up demand. When demand was high prices were high.

I have a number of serious issues with the Independent’s stance:

1 – Prices in the car hire market are at an all time low so comparing a period of high demand from an all time low is always going to be sensational
2 – Prices of car rentals is often the last aspect of a holiday to be booked and therefore not really going to have too much of an impact on the tourism matters
3 – Airlines and hotels always raise their fairs for high demand period such as Christmas

Senator Brendan Ryan described the price rises as ‘truly shocking’ to add some credence to the article, but in fairness you’d hardly expect a politician to back a company over the electoral. It is a pity he wasn’t asked for a quote on the record low prices and he is right when he says it is the job of the car rental companies to make a profit.

“At a time when we should be doing everything we can to attract visitors to Ireland, we have car hire companies engaging in this kind of gouging. This is profiteering plain and simple.” – Senator Ryan

Senator Ryan then went on to say that savings could be made by people booking cars over the internet from other countries and to a certain extent he is right. Unfortunately for him and this article, prices from American branches of international car hire firms are quoted without insurance so they are always going to be cheaper. Car rentals in the US are different to car rentals in Europe in that the European prices are quoted with insurance. But then again if this article had of been properly researched they would of known this.

Ann Fitzgerald of the National Consumer Agency meanwhile provided some resemblance of reason when she said that price increases were not illegal and advised consumers to shop around.

“As there is no price control in Ireland, companies will charge what they think the market can bear and prices do seem to increase during the busiest periods” – Ann Fitzgerald: National Consumer Agency

Indeed it is competition among the car rental companies which means cars can be rented for extremely low prices at the moment and that is of course good for the consumer. But competition is still at play when prices are increased and it is up to the consumer to make a choice. The article references one example where prices have risen 213% for the Christmas period, but this is probably due to the fact the car rental company is sold out and has limited availability. You would hardly expect to get the last seat on a Ryanair flight for the same price as the first one.

Ann went on to make the point that car rental is often advertised with a basic price and not inclusive of essential costs which is correct when it comes to renting from the US as Senator Ryan would have us do. Basic insurance is always included in European prices but things like one way drops and out of hours returns do incur extra charges as they incur extra costs on the company and are not part of the basic price.

“A big problem with car rental is that the advertised basic price may be displayed as inclusive of essential costs with insurance and tax, but often excludes additional key services such as hiring and returning the car to different places, returning outside business hours or crossing a boarder” – Ann Fitzgerald: National Consumer Agency

I contacted Gary Curtin of Atlas Car Hire Ireland to get a comment on the article and while he did not want to comment on the article itself he did have this to say:

“I have always viewed Christmas rentals as an opportunity to demonstrate to our clients that Atlas Car Hire is a good value car rental company. Our rates are always excellent value compared to Ryanair or Aer Lingus. My philosophy is to treat people as you would like to be treated yourself.” – Gary Curtin: Atlas Car Hire.com

The basic point is that car hire prices are reflective of demand and are subject to the same economic rules as every other product. I think it is unfair to lay the troubles of the tourism industry at the feet of the car rental companies. There is always some confusion over car rental products among consumers, particularly in reference to fully inclusive insurance charges which are extra but are a mater of choice. Maybe my next article should be on how car rental works.

To be fair to the article and the author I would like to offer the opportunity for a response, in fact I will publish any response to this article, good or bad. Comments as always are appreciated.