Financial Technology

Financial Technology

August 28, 2012

Hertz Moves to Number One Spot for Airport Car Rentals

The recession has had a major hand in reshaping the airline industry. There are fewer major airlines now than before due to mergers and other factors stemming from necessary cut backs. Industries outside of airports have seen similar consequences. From rental car services to hotels, only the strongest have survived.

Hertz, the company familiar at airports by its signature black and yellow logo, is moving toward acquiring Dollar Thrifty for $2.3 billion – a move analysts predict will take Hertz’s car rental service from number three to number one. The acquisition is pending on approval from the Federal Trade Commission. However, analysts are also predicting that the FTC will likely approve the merger.

But the merger doesn’t necessarily mean higher prices for consumers. Neil Abrams, an expert industry analyst, told USA Today that the Hertz/ Dollar Thrifty deal will be “unnoticeable from a consumer standpoint.” People who agree with Abrams point to the fact that there are still competitors that will keep prices at a fair rate.

So who are Hertz’ major rivals? Reports indicate that there are four major car rental services that dominate the market. Hertz currently owns about 25 percent of the market, but Enterprise Holdings is currently leading with 34 percent. Auto Rental News disclosed that Enterprise Holdings generated $11.1 billion in revenue last year. Avis Budget Group claims about 24 percent and Dollar Thrifty, 12 percent.

Even after the acquisition, Hertz will still need to work at catching up to Enterprise Holdings. Hertz generated $4.2 billion in revenue last year and Dollar Thrifty, $1.6 billion. But Dollar Thrifty is a company that Hertz has had its eye on for awhile, so the merger will be the first step towards expanding the brand.

According to Hertz CEO, Mark Frissora, “We are pleased to have finally reached an agreement with Dollar Thrifty after a lengthy — but worthwhile — pursuit.”

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Edited by Rachel Ramsey

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