The future is looking brighter for companies involved directly or otherwise in the travel industry. This, combined with an article in a major newspaper about a new law for rental companies, helped push Avis Budget Group's (CAR 7.03%) shares up past the 12% mark on Thursday.
It's safe to assume that a great many Avis investors were unaware that there's a new California state law that should put plenty more coin in their company's pocket. An article published in The New York Times Thursday morning is enlightening both consumers and investors about this legislation.
The law, which took effect on Jan. 1, strikes a long-standing state ban on auto-rental agencies charging extra fees for additional drivers. They're now permitted to impose such fees throughout the massive state, known for its long distances, extensive freeway network, and car culture.
Although the law places some limits on this -- for example, if the additional driver is the spouse or a child of the renter -- it can be quite the money-spinner. In other states, rental agencies typically charge $13 to $15 per day for this extra human.
Consumers won't be overjoyed about this new freedom enjoyed by Avis and its numerous peers operating in California. The Times quoted Robert Herrell, the Consumer Federation of California's executive director, as saying that, "It's just another way to get additional money without having it show up in the rack rate or the base rate on the car."
Not surprisingly, as it's a consumer-facing business, Avis hasn't made an official comment about the new law. It also hasn't provided any estimates as to how it will affect its business. While the change likely won't have a massive impact, it will offer some relief to the company and other agencies, which are still reeling from the deleterious effects of the coronavirus pandemic.