Turo Inc. operates an online platform that allows car owners to rent out their own vehicles. But because the company doesn’t own the cars itself, it’s not a car-rental company, a state appeals court says — so it doesn’t have to pay San Francisco for a permit to operate at San Francisco International Airport.

Turo is based in San Francisco and operates in other U.S. states, Great Britain and Canada. Like rental companies, it charges fees to renters, provides insurance and sets rules for smoking and other conduct in the vehicles.

“Turo’s entire business consists of enabling the public to rent motor vehicles,” the First District Court of Appeal observed Tuesday. But it said the definition of a car renter under California law — someone who has a contract for “lease or hire of a passenger vehicle from a rental company” — applies only to companies that own or control the rented vehicles, and not to a business like Turo that arranges rents of vehicles owned by others.

In addition, the court noted, state law says that if a driver damages a rented vehicle, the driver is responsible for the costs of repair, plus towing and storage charges.

“These limits presume that the rental company owns or controls the rented vehicle,” which is not the case for Turo, Justice Marla Miller said in the 3-0 ruling. The court overturned a 2020 decision by Superior Court Judge Ethan Schulman holding Turo responsible for rental fees at SFO.

The case is somewhat similar to disputes over whether ride-hailing companies such as Uber and Lyft are in the business of transportation, as state regulators contend, or merely provide technology for drivers and passengers to use, as the companies maintain. A number of courts have classified them as transportation companies, increasing regulation and allowing their drivers to be considered employees rather than contractors, an issue now under review in a state appeals court.

But Miller said the Turo case is different because the car-rental law contains the word “rent,” which applies, she said, only to companies that rent their own vehicles.

Turo, founded in 2009, describes itself as “the world’s largest car-sharing marketplace,” with 217,000 vehicles on its online platform as of March 31. Spokesperson Steve Webb called the ruling “a major win for Turo and peer-to-peer car-sharing in California” and said it could influence courts in other states that are considering similar cases.

The company is willing to pay a fee to local governments but should not be charged as much as car-rental firms, said Lou Bertuca, another Turo spokesperson.

“We don’t get the same benefits they do,” he said. “There’s no train that takes you to (Turo vehicles), no signage.”

Jen Kwart, spokesperson for City Attorney David Chiu, said no decision has been made yet on whether to seek review in the state Supreme Court.

“Turo’s unpermitted activities negatively impact SFO’s operations and unfairly undercut the rental car companies at the airport with which Turo competes,” she said. Regardless of (Tuesday’s) decision, other aspects of San Francisco’s lawsuit will move forward. SFO still has the authority to regulate Turo’s conduct on airport property whether or not it is deemed a rental car company.”

Bob Egelko is a San Francisco Chronicle staff writer. Email: [email protected] Twitter: @BobEgelko

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