Feb 16, 2017
Denver International Airport lost nearly $1.5 million in rental car concession revenues from two companies over a two-year period, Auditor Timothy M. O’Brien, CPA, found in a recent audit. A rental car company did not comply with its concession agreement in regards to its satellite offices. The concession agreement between the rental car companies and DIA requires the rental car companies to collect and remit a concession fee and a customer facility charge (CFC) from all airport customers. The audit found that one rental car company owed DIA approximately $1.46 million in concessions fees, CFC fees, and interest. In addition, DIA’s procedures to update the rental rates for the rental car companies’ onsite facilities are faulty. This breakdown resulted in a loss to DIA of thousands of dollars.
If airport customers use the rental car companies’ satellite offices within a 20-mile radius and within 24 hours of their flight, they are required to pay the CFC. Also, the revenue from the rental should be included in the concession fee calculation. The audit team examined two rental car companies and found that the customer rental form for one company did not identify airport customers. This resulted in neither the CFC fee nor the concession fee being paid to the airport. Although these fees and a definition of airport customer are clearly identified in the concession agreement, these provisions were ignored by at least one company, resulting in a loss to DIA of nearly $1.5 million from 2014 to 2016.
Ground and facility rental rates are established by DIA and then provided to the rental car companies by DIA’s Property Division. This division failed to provide two rental car companies with reestablished rental rates until as late as April of the rental year. This resulted in almost $9,000 in underpaid facility and ground rent for the period audited.
“DIA agreed to make sure that rental contracts for the satellite offices will be designed to capture whether the customer recently flew into the airport. If so, the daily fee along with the 10 percent rental fee will be transmitted to DIA. In addition, all 12 rental car companies will get timely notice of the correct concession rental rates, and DIA officials will follow up to confirm that the proper rent has been paid,” said Auditor O’Brien.
At the time of this audit, DIA itself was auditing several rental car companies. To avoid duplicating work, the Auditor’s team selected two of the companies possessing the largest market share who were not being audited by DIA.
“Roles and responsibilities in DIA’s Property Division and Finance Unit need to be clarified and the associated policies and procedures updated,” explained Audit Supervisor Sonia Montano. “When rental car companies aren’t abiding by their concession agreements, the result can be lost revenue for DIA.”
Twelve percent of DIA’s 2015 operating revenue came from the rental car concessions, making the concessions the fourth largest revenue stream at the airport. Rental car activity grew by 19 percent in 2014 and an additional 9 percent in 2015, contributing $85 million to the airport’s total operating revenue that year.
Denver Post story February 17, 2017
Denver Business Journal story February 16, 2017
Denverite story February 17, 2017