High Gas Prices Send Drivers to Corporate Rentals

In April, Silver Spring management consultant Yvonne Braxton stopped driving her 1989 Acura Legend on trips to Pennsylvania, New York and New Jersey. The standard 37.5 cents per mile government reimbursement -- a figure set for 2004 long before gas prices began soaring -- didn't come close to covering her costs anymore.

Braxton said she doesn't plan to drive her own car on business until the price falls below $1.50 a gallon. Instead, she'll rent a car under her company's corporate contract, which locks in much lower fuel costs than she'd pay on her own. She doesn't pay out of her own pocket to drive, and the company just passes the cost on to clients.

"As long as we have a reasonable rate, it behooves us to just go ahead and rent a car," Braxton said. "It just makes more economic sense."

Richard Broome, a spokesman for Hertz, said the company has seen "double-digit" growth in the number of corporate-rate rentals during the past two months. In fact, Broome said Hertz is experiencing its largest boom in rentals since the weeks following the Sept. 11, 2001, terrorist attacks. At that time, many business travelers were avoiding planes for security reasons and instead renting cars for shorter trips.

Just as the government mileage reimbursement is locked in for a period of time, so are rental car rates under corporate contracts. And with the big change in gas prices, renting a car now can be a significantly better deal for business travelers.

In a recent survey of 140 members of the Association of Corporate Travel Executives, 67 percent said they had already negotiated fuel prices with the rental companies before the increases took place.

Higher Fares Don't Fly: For at least the fifth time this year, the airlines have backed off on an attempt to raise fares, fearful that passengers wouldn't pay them.

This time, Continental Airlines attempted to add $10 each way on flights less than 1,000 miles and $20 each way on longer ones. It was the third attempt by Continental alone since April to raise fares. Late last month, United Airlines tried to add a $5 fuel surcharge on each flight leg, but backed off the increase within a week.

In an industry where customers can find the lowest price with a click of the mouse, no one wants to be stuck pricing the same product higher than their competitors. So, unless all the major airlines go along with a fare hike, they generally all back off.

Yet this may be as good an opportunity the airlines have had to raise prices in quite some time. Many frequent travelers can relate to the airlines' desire to recoup their soaring fuel costs.