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Phoenix council weighs Sky Harbor car rental hike

PHOENIX – The economic meltdown has hit the airport car rental business in Phoenix.

The City Council is poised Wednesday to raise airport car rental fees at Phoenix Sky Harbor International Airport by 33 percent.

If approved, the customer facility charge will go from $4.50 per vehicle, per day up to $6 beginning Jan 1.

Airport officials blamed the increase on financial forces that are out of the city’s control.

The fee increase is tied to the construction price tag for the $285 million off-airport car rental facility, which the city bankrolled with $270 million in bonds.

The rental-car center opened in 2006 and covers 141 acres. It consolidated all of the airports rental-car businesses into one facility.

Phoenix also bought bond insurance from the Federal Guaranty Insurance Company for the project.

That insurance firm’s rating tumbled from AAA, the highest possible rating, to BB.

The dip kicked in a contract clause that forces the city to scrape together a $21 million debt reserve in 12 months, prompting the city to raise car rental fees at Sky Harbor. The $21 million is the equivalent of one annual debt payment.

“FGIC’s rating problem is linked to the subprime-mortgage mess,” said Jeffrey DeWitt, assistant finance director for the city.

“Because many bond-insurance companies invested in subprime mortgages, their ratings took a dive,” he said.

Sky Harbor is ranked as one of the most expensive airports in the country when it comes to rental car fees, according to a 2007 Travelocity study.

An average of 4,913 cars are rented each day at the airport.

Sky Harbor’s fees are competitive with similar airports, said Deputy Aviation Director Deborah Ostreicher.

“We are commensurate with other airports,” Ostreicher said. “We are not the lowest, but we are not the highest either.”

When it comes to renting a car and paying a higher fee, business travelers say there’s not much they can do.

“It’s the increasing cost of travel,” said Brent Bebout, 43, a businessman from Santa Monica, Calif., who flies to Phoenix two or three times a month and rents a car each time.

“You really don’t have a choice,” said Cindy Tixeira, 48, of Fresno, Calif. She and her husband, Tom, decided to pay out of pocket for a rental so she could shop during his business trip.

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