Car hire petrol costs a bit rich
Australia's $1 billion car hire industry has been known to play some underhanded tricks on customers – to the extent that the ACCC has published a lengthy guide specifically on the traps of car hire. The guide runs through a great number of potentially dodgy car hire tactics and explains the various ways in which they may run afoul of Australian Consumer Law.
What the guide doesn't mention is the tactic of charging customers inflated rates for petrol if the car comes back without a full tank, probably because the practice is not technically illegal. Whether it's ethical is another question.
Budget for exorbitant markups
Such hyper-inflation at the pump can really have an impact on your travel budget, and more and more Australians are opting for domestic car-borne overnight trips these days. There were 82.3 million such trips in 2014-15, up five percent from the previous financial year.
In an effort to get a better sense of just how outlandish this tactic can be, we checked average unleaded petrol prices around the country against those charged at airports by two of the biggest car hire companies operating in Australia – Avis and Hertz. The discrepancies were nothing short of dramatic – approaching a 300% markup in some cases.
Two-tiered pricing system
The average national weekly price for unleaded petrol for the week ending 10 July was $1.18 per litre including GST.
State-by-state weekly averages for the same week were in the same ballpark: Tasmania had the highest at $1.25 per litre; Victoria had the lowest at $1.13 per litre. The other states were somewhere in between.
Compare this to what we were able to find out from the Avis and Hertz car hire offices at Sydney and Melbourne airports. It didn't help that car hire companies generally won't disclose their petrol prices until you actually hire a car.
- Hertz: Wouldn't tell us but acknowledged that "you will be charged at a higher rate".
- Avis: Wouldn't give us an exact rate unless we hired a car and had a booking number, but admitted it would be between $3 and $4 per litre.
- Hertz: $4 per litre at all locations in Melbourne
- Avis: $3.70 per litre at the airport
One consumer's story: costlier petrol – and then some
One car hire customer that recently got in touch with CHOICE had her credit card charged $147.80 by Hertz on 11 January without either her consent or the courtesy of an itemised bill.
She had returned her car to a Hertz location in Perth about three-quarters full of petrol and braced herself for the $3.60 per litre charge to make up for the missing quarter tank. What she didn't expect was all the add-on charges, or the poor customer service.
Hertz claimed that she had returned the car late. When she disproved this with documentation, Hertz relented on that point and said they would provide a refund of $65.71. As of late February, she had seen no refund.
When our customer finally received an invoice from Hertz, it said the fuel charges were $58.50 "plus the appropriate fee and taxes".
The next email from Hertz indicated that the fees in question were GST (10%), location fee (22%) admin fee (3.5%) and credit card surcharge (1.5%) – fees that the customer says were not disclosed when she hired the car.
"When I asked which clause of the agreement provided for such charges I was referred to the Frequently Asked Questions on the Hertz website," she told us. "I must admit that this irritated me to no end."
She ended up paying $82.09 for what she estimates would have been 16.25 litres of petrol. At the national average rate, the petrol would have cost $17.79.
Why cheaper rates if you pay in advance?
Hertz gives you the option of pre-paying for a full tank of fuel at "competitive market rates" – which can be a viable option if you bring the car back on empty. If you're not able to time your fuel consumption down to the last drop, it's not so viable because you won't be reimbursed for any petrol left in the tank. Avis and other car hire companies offer similar pre-purchase options, with the same caveat.
What's confusing is why these car hire companies can offer competitive rates to fill your car with petrol before you head off but then turn around and charge distinctly uncompetitive rates if you didn't pre-pay and your car comes back without a full tank. It's confusing because the petrol presumably comes from the same bowser.
It's almost as if the car hire industry is preying on customers who either forget or don't have time to fill their cars before their return.
Petrol stations in or near airports can see significant queues at busy travel times. If you're a traveler in a rush to catch a plane, you might not have time to fill up. Are car hire companies taking advantage of this scenario? It's just a theory at this point.