FlyerTalk Forums - View Single Post - They have nowhere to park their fleet. Do we see single-digit rates?
Old Apr 7, 2020, 7:22 pm
  #15  
bocastephen
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Originally Posted by dwbf11
Not necessarily. I'm by no means an expert in fleet economics, but on the whole their strategy could be to preserve mileage/wear and tear on the cars rather than send them out for pennies a day. At least in the past, EHI bought their cars from manufacturers outright. Many other fleets (I don't know about Sixt) lease the cars from manufacturers and return them once the mileage reaches a certain threshold. Another thing to consider is that more traffic at the rental lot also means more staff that have to be available to service the cars, attend to customers, etc, which also increases the human-human interaction points.
By the time these cars are put back into normal service, they will need to be replaced by inbound fleet changes, unless EHI has canceled their new car orders and plans on weathering out the losses from this mess by pushing cars back out past their sell-by date and letting them accrue higher miles for another year, and just selectively swap out cars that are in accidents or suffer from mechanical issues along the way. I still feel SIXT has the right approach - keep as many cars out on the road, even if revenue is cut substantially, it's better to earn revenue than to spend cost, and not worry so much about margins. You don't need an MBA to figure out it's better to earn $1 net than spend 0.10 net.

While National at LAX was a virtual ghost town, SIXT at LAX was pretty busy with cars going in and out during the time I was there, so their pricing approach seems to be working.
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