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Avis to profit off e-tolling?

2013-11-29 09:52

OBEYING THE LAW: Avis South Africa has fitted its 25 000 vehicle fleet with e-tags and will charge customers the standard rates instead of the discounted rate. Image: Avis

Avis, a leading rent-a-car company in SA, has kitted its national fleet with e-tags. But what looks like tacit support for e-tolls is in fact an act of 'no choice', says CEO Keith Rankin.

Johannesburg - Avis Southern Africa might have acknowledged the "positive impact" of the Gauteng Freeway Programme on Tuesday but it in no ways means that it supports e-tolls despite fitting it's national fleet with e-tags.

However, while the rental company might be obeying the law, they're still pocketing the profits of customers who will be using the rental cars, even if there's a possibly justified answer.

Wheels24's question to Avis Southern Africa CEO Keith Rankin followed a line in a media release that said Avis would be charging the full toll rates despite the discount earned through its vehicles having e-tags..

In other words, was the company making a second operating profit by pocketing the sometimes large difference in rates?

Avis Southern Africa CEO Keith Rankin said: "We don't want to make money out of this, or rip anyone off, we only want to recover the costs of the severe impact e-tolls are going to have on the company.

"We have 25 000 cars in our national fleet, of which about 10 000 are in Gauteng. If we did the math at the maximum rate of R450 per car per month and had to foot the bill ourselves we would pay millions and the company would end up bankrupt.

"We can't charge our customers a daily surcharge because that would not be fair if the customer does not use the national highway while renting a vehicle."

Rankin said in a statement on Tuesday (Nov 26): "The introduction of e-tolls in Gauteng will be a new experience for us all but we have invested significantly in our systems and people to ensure that our customers' rental experience will continue to be as seamless as possible -  they are our greatest asset."

Rankin told Wheels24's Janine-Lee Gordon: "Avis does not support e-tolls but we are in favour of the Gauteng Freeway Improvement Project (GFIP) to provide better roads for users. That means we're willing to pay for roads, we just don't agree that e-tolls is the right way to go about it."

Avis had installed e-tags in its national fleet of 25 000 cars and had developed the necessary IT systems to ensure that any e-toll fees incurred by its customers during the rental period will be included in their final invoice which will be available only two days after the vehicle is returned and would highlight the total e-toll amount, the company said.

The statement said: "Avis will charge the standard e-toll tariff per e-toll gantry, to a monthly maximum value of R450 as published in the Government Gazette. The standard tariff, which is higher than the tariff paid by registered e-tag users, is being charged to enable Avis to recover the costs of implementing systems and resources to manage e-toll compliance."

Rankin said Avis belonged to a group of shareholders and, as a company, Avis can't willingly and openly disobey the law.  "That's why we've decided to be open and honest with the public and our customers."

When asked about the higher tariff rates, Rankin said: "On December 3 e-tolls are going to become a reality for people in Gauteng. We had a choice, we could have just kept quiet, but as a business we have to comply by the law. Right now we don't have any data. We have no idea how many of our customers will use the e-tolls and we're only dealing with the little information we have."

Rankin said that in a few months Avis would re-evaluate its data to see if it was overcharging or even undercharging customers (through the difference between their tag-reduced rates and the full rate being charged). He also said the discounted rate applied to registered users and that SANRAL would target the owner of the car going through the gantry for non-payments, not the driver, so his company needed a system to capture data to bill clients correctly.

Rankin also explained that some of the company's corporate clients paid their accounts every 30 to 60 days; e-toll bills had to be paid within seven.

The company, where Opposition to Urban Tolling Alliance (Outa) chairman Wayne Duvenage used to work, said it would continue to support upgrades to roads countrywide.

However, Avis is not the only rental company which has accepted e-tolls. Rankin said two of his biggest competitors had also gone this route but had perhaps decided to keep it low-key.

Wheels24 also asked another rental company the same questions posed to Rankin, but Hertz CEO Wils Raubenheimer chose to be less transparent and said: "We do not have any comment at this point in time and we will be providing our feedback via the Southern African Vehicle Rental and Leasing Association.''

Transport minister Dipuo Peters announced on Wednesday that e-tolling on Gauteng's highways would begin on December 3.

Duvenage, former CEO of Avis, said it was always going to be difficult for companies to defy e-tolls. If rental companies had to choose between a fuel levy or e-tolls, he was certain they would choose the fuel levy. "They are under pressure... so I don't blame them for not going against e-tolls," he said.

Duvenage resigned as Avis rent-a-car CEO in June 2013 but his relationship with the company remained strong.

Earlier in November 2013, the Democratic Alliance and Freedom Front Plus political parties announced they would each bring High Court applications to fight the constitutionality of e-tollingbill signed by the president, Jacob Zuma,in September 2013.

A legal challenge to e-tolling by Outa was dismissed by the Supreme Court of Appeal on October 9 2013.

Read more on:    gauteng  |  tariffs  |  e-tags  |  e-tolls

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