Shamelessly stolen from the Avis blog here in the UK.

Avis Rent A Car explains one way rental charges for car hire between countries.
Posted by Nick Mountfield on April 23rd, 2010
In Announcements, We try harder
Following the disruption caused by the closure of European airspace a number of customers have wanted to rent a car one-way to another country. There has been some press commentary on the levels of charges for such rentals and some unfounded accusations of profiteering. I wanted to set the record straight on this issue by explaining why Avis (and other car rental firms) have these charges in place.

As a consumer, rather than an employee of Avis, I can understand that a fee of €1,000+ for a one or two day rental might initially seem excessive, if not outrageous. However, when you begin to look at the costs involved for a car rental company in fulfilling such a one-way rental the picture changes somewhat and you can quite quickly appreciate our position.

Firstly, many such rentals will typically incur significant mileage. Whereas we would usually expect a car to run up around 100 miles a day, these one-way journeys can easily add up to 1,000 miles – plus 1,000 miles back. Therefore a “one day” rental has used nearly a month’s worth of allocated mileage! Depending on the car type, this can be £2-300 of cost to us as we will need to return the car to the manufacturer one month early.

Secondly, we are not set up to cope with a large volume of such rentals and typically need to hire a driver to take the car back. Assuming it takes 3 days on average this means a further £300 of cost. On top of this we need to account for fuel, motorway tolls, hotel and food allowances for our driver and a flight home which in total can exceed £400.

Finally, we need to account for the opportunity cost of the likely missed rentals we miss while the car has unexpectedly been taken out of its home country, which again could mount up to hundreds of pounds of lost revenue.

Once they understand the very real and significant costs incurred by us, customers I have spoken to about this over the past couple of days have recognised that Avis is acting reasonably to apply these fees, however counterintuitive it may seem at first glance. Indeed in many cases we will end up losing money on these rentals. Volcanoes notwithstanding, there are usually better ways for customers to make such a journey, for example by plane!

We would like to ensure that customers still returning from the Continent inform us before bringing any continental car into the UK. This will ensure they are fully aware of costs, and also avert the potential for them to be driving uninsured in the UK (which may be the case if we are not informed at point of pickup).

Avis UK has taken a number of steps to help our customers over the past few days. Firstly, we have waived one way fees for left hand drive cars being taken back to their home location on the continent. Secondly we will of course refund or amend prepaid rentals which were meant to pick up during the flight ban and will not be applying our standard non-cancellation fee. Thirdly, we are making sure we cater for the needs of customers finally arriving back into the UK by moving fleet to key ports and airports, extending opening hours and until Sunday offering a one-way rate within the UK for only £76 for up to two days to help people get back home (this offer is valid until midnight on Sunday 25th April 2010).

I hope this post helps to clarify the situation, and would be happy to answer any further questions