Econ 919 — Bracing for a rental car shortage

May 28, 2021

Credit Photo: Sabine Poux/KDLL

The western Kenai Peninsula is car territory. Even for locals, a car is pretty necessary to run most errands or to take part in most fishing, kayaking or hiking trails in the area. That’s the case for tourists, too, particularly those who fly here and want to explore the state on their own.

Unfortunately, this year, rental cars are thin on the ground. Really thin.


Sarah Hondel, the tourism and education manager at the Soldotna Chamber of Commerce, said the chamber staff have been fielding a lot of calls about what visitors should do about it.

"The news about the rental car shortage has made it down to the Lower 48, so they’ve been asking what to do, because they have not been able to find rental cars at the Anchorage airport for the dates they want," she said. "So we’ve been encouraging them to reach out to Midway Auto and also to the Alaska Bus Company, two of our Soldotna chamber members. If that doesn’t work for them, and they’re a smaller party, we’ve been telling them they could pick up a rental from UHaul, either a van or one of the small pickup trucks."

The COVID-19 pandemic essentially turned off the tap of out-of-state tourists to Alaska last summer. In 2020, most of the tourists on the Kenai Peninsula came from elsewhere in state, and most of them have their own vehicles.

With most of the vehicles just sitting on the lots, many rental companies sold their fleet to make up for lost income last year. But with the COVID-19 pandemic now abating, it looks like the summer will bounce back.

However, the rental car market hasn’t kept up with it. Rental car agencies need to buy newer cars to make sure their customers have a good experience in a reliable car, and those just aren’t hitting the market. A supply chain interruption in car production, particularly for the chips that newer cars need to run their electronics, has made production grind to a halt.

Hondel said the chamber staff is making a point to warn people about it if they haven’t yet booked their trips.

"We have been asking them if they have looked into getting a rental car, and then encouraging them to secure local transportation before they purchase those airline tickets," she said. "A couple of them were very appreciative of that information because they hadn’t thought of it in the reverse order."

Getting around the peninsula is only half the problem. Getting to the peninsula in the first place is entirely another. Those who are willing to pay for the extra airfare can take a short flight from Anchorage to Kenai or Homer over Ravn or Grant, but most travelers land at the Ted Stevens International Airport in Anchorage. The Alaska Railroad runs passenger service from Anhorage to Seward, but getting to the west side was more limited.  

There are a handful of shuttle services that will pick people up in vans. Three years ago, the Alaska Bus Company started offering shuttle services between Anchorage and Homer. Brian Reid and his wife started with one bus, and this year, they’ve expanded to three. They’re already looking at it being a pretty packed season.

"Judging by reservations over years past, I think it’ll be a very busy season," he said. "Definitely filling up more. We’re getting a lot more private charter requests even for medium to larger size groups, doing either more customized trips or just need to get from one place to another. We also do quite a few weddings and weekend events. Last year, there were really no large group gatherings, we didn’t do almost any private charters compared to this year."

The primary route they run is to transport people from Anchorage to Homer. Reid said Homer has a central area that most tourists can visit without a car, or they can hop on a charter or water taxi straight out of town. But there are more businesses out of town or further out the road that visitors would need a car to visit. Reid said he’s worked with some of the businesses along the way for private charters or drop-offs, and would make stops on the way to Homer like Soldotna or Kasilof.

"There’s various options for lodging and fishing packages, and when people staying with a fishing lodge, they’re set from there," he said. "We have been working with a few of the lodges along the way, Anchor Point mostly, Ninilchik, Deep Creek."

There are still a few rental cars left for the peak of the season. Some peer-to-peer options, like Turo, have a handful of rentals in the central peninsula area.

Art Goolsby of Midway Auto in Soldotna, which has been renting cars for about 10 years, said he still has a few cars left for June and July and is booking out to August now. He said his business and others can’t get their hands on cars new enough to rent out, so their current stock will have to hold. However, he said he’s certain it’s a bubble in the market that will work itself out with time—just another effect of the COVID-19 pandemic.

Hondel said the chamber is optimistic about the tourism season. Many of the lodge owners, who primarily serve out-of-state tourists, found out about the rental car shortage ahead of time and proactively called clients to make sure they had secured transportation and are working with others to transport them.