Shuttle Plan Shifts Taxi War Out Of Idle

[ricco67]

http://www.chron.com/cs/CDA/ssistory.mpl/m...politan/2874297

Shuttle plan shifts taxi war out of idle

Proposed airport service renews complaints of influence-peddling by Yellow Cab

By RON NISSIMOV

Copyright 2004 Houston Chronicle

In most cities, people who want to pay for a ride to or from the airport have a choice. They can either hail a cab and pay a relatively expensive fare, or they can share a shuttle ride that typically makes a few stops and costs half a normal cab fare.

But not in Houston, the nation's largest city without door-to-door, shared-ride shuttle service for airport passengers. A taxi ride from Bush Intercontinental Airport to downtown costs about $40. A shared ride from Bush to downtown would cost about $20.

City officials are considering whether to allow such a service to operate at Bush and Hobby airports. The plan has re-started the meter on a decades-long complaint about the muscle that Houston's dominant taxi company, Yellow Cab, flexes around City Hall.

The loudest outcry has come from competing taxi companies that say Yellow Cab has used its political influence to control 63 percent of the market in the city-regulated cab industry.

Small cab companies are saying Yellow Cab persuaded city officials to write the shuttle proposal so that Yellow Cab would get one of the lucrative contracts to operate a shuttle service.

Yellow Cab has, since the mid-1980s, opposed shared-ride service here unless it got the contract to run it, claiming that Houston could not support an independent shared-ride service because of its sprawl. Many smaller cities have shared-ride services not affiliated with cab companies, and a city study recently concluded that Houston could sustain at least two shared-ride operations.

"In a developing country, you give an official cash, but here you do it through campaigns or fund raising," said Berhane "Ben" Tesfamariam, an Ethiopian immigrant. He said his fledgling Texans Shuttle, which provides shuttle rides from the airports but does not go door to door, would likely be forced out of business if it doesn't get one of the proposed city contracts for the shared-ride service.

Yellow Cab executives said competitors simply are jealous.

Joe Chernow, Yellow Cab's chief executive officer and minority owner, acknowledged that he and other high-ranking company officials often contribute to the campaigns of city elected officials and said donating political money is standard practice for a successful company regulated by the city.

Yellow Cab executives have given $5,000 to Mayor Bill White this reporting year and $1,000 to $2,000 to most council members, according to campaign-finance reports.

City Councilman Michael Berry, chairman of the Transportation, Infrastructure and Aviation Committee, which oversees the city's cab industry and airports, has received $3,500 in campaign contributions this year from Yellow Cab officials, an amount second only to the donation given to White. Berry said he is not influenced by political donations.

History of success

Chernow, meanwhile, said well-researched arguments are behind Yellow Cab's success at City Hall.

"I've been called a hit man for the company," said the feisty, Brooklyn-born accountant. "My weapon of choice is a calculator."

Yellow Cab, which also owns taxi companies in San Antonio and Austin, was founded in Houston in the 1920s or 1930s, Chernow said. It rose to prominence after it was bought in 1967 by George Kamins, who had made a fortune stocking automotive supplies in Kmart stores.

Kamins hired his brother-in-law, Stanley Danburg, to be his general manager, then recruited Chernow in 1969.

Within 15 years, the three men persuaded city officials to increase Yellow Cab's taxi permits from 100 to 1,400, 85 percent of the city's total at the time, while officials often denied other companies' requests for permits. In 1970, Yellow Cab also was granted exclusive rights to provide service to the new Intercontinental Airport.

City officials started listening to the pleas of smaller cab companies in the 1980s and began awarding a small number of permits to them over Yellow Cab's protests. The animosity between the company and the city grew; Mayor Kathy Whitmire in 1984 switched seats after she found herself next to Chernow on a first-class flight from Washington, D.C., to Houston.

No new permits

In 1990, council members in a tie vote declined to renew Yellow Cab's exclusive contract at Intercontinental, which, at the time, guaranteed Yellow Cab two of every three rides from the airport.

In 1999, shortly after Mayor Lee Brown issued about 250 taxi permits to Yellow Cab's competitors, Yellow Cab persuaded city officials to toughen the standards for issuing permits, and none has been granted since then.

Today, Yellow Cab's parent company, the Greater Houston Transportation Co., owns 1,419 of the city's 2,245 permits, or 63 percent of the total. The city's second-largest company owns 237 permits, and the rest are scattered among 100 other companies.

Greater Houston Transportation, which also includes Fiesta Taxi, United Cab, Towne Car and Airport Express Shuttle, provides 2 million rides a year, primarily through Yellow Cab. Chernow declined to disclose the income of the privately held company, which has 250 salaried employees and 1,500 contract drivers.

In 1996, Kamins and Chernow sold the business to Coach USA for stocks valued between $25 million and $30 million, and a year later the company was acquired by Stagecoach. In 2003, Chernow and two other investors, Steve Harter and Raymond Turner, bought Yellow Cab for $28 million.

Chernow said Yellow Cab was the only taxi company willing to invest millions of dollars on a sophisticated dispatching system.

A 300-foot transmission tower juts out from the company's expansive headquarters in the 1400 block of Hays on Houston's near northside. Every vehicle is tracked with a satellite navigation system and has a digital security camera. A classroom for prospective drivers includes a taxi meter at every desk, and a large generator can keep the company running for five days in the event of a natural disaster.

Competitor's lawsuit

But it's Yellow Cab's investment in politics that the company's critics say is also paying dividends.

Months before the recent shuttle controversy, Tesfamariam filed a $15 million lawsuit claiming Yellow Cab and city officials concocted a story that Yellow Cab's sister company, Airport Express, had an exclusive contract to serve major business centers inside the Loop.

After Texans Shuttle was kept out of the lucrative market for 10 months, Richard Vacar, the city's aviation director, agreed that the contract with Airport Express was not exclusive, and in May 2003 Texans Shuttle was allowed to serve that area.

Vacar said the contract language was ambiguous. Chernow declined to comment on the lawsuit.

Tesfamariam welcomed Vacar's initial proposal for shared-ride shuttle service in August because he proposed using competitive bidding to hire two companies that don't have Houston taxi permits, which would have given Texans Shuttle a much better chance to compete.

Yellow Cab complains

But one month later, after Yellow Cab fired off angry letters to officials that a city consultant underestimated the impact shuttles would have on the city's taxi industry by $4 million a year, Vacar unveiled a plan that would virtually assure Yellow Cab one of the lucrative contracts.

The second proposal would guarantee one of the contracts to a taxi company, and only Yellow Cab has the resources to qualify to bid.

Vacar denies he is being influenced by Yellow Cab, saying he offered his second proposal to try to help the city's cab industry, which has seen a 20 percent drop in business after the terrorist attacks of Sept. 11, 2001.

Because Yellow Cab owns more than 90 percent of the dispatched business in the city, most of its competitors rely on airport business.

"The contract was written for Yellow Cab," said Jerry Brady, president of the city's second-largest taxi company, Liberty Cab, which has donated about half as much money as Yellow Cab executives have to Houston politicians this year.

[ricco67]

To be fair, I am including additional information included in this article as well as the Yellow cab website:

FACTS ABOUT YELLOW CAB

[dbigtex56]

Comes as no surprise that Michael Berry accepts large campaign donations from Yellow Cab; it confirms and fortifies my opinion that's he's a political whore.

But something that wasn't mentioned in the article (if I missed it, please bring it to my attention): there's a shuttle from the Hyatt Regency to both Intercontinental and Hobby, which costs about half of what a cab fare would be.

I've heard the argument made that by forcing visitors to use cabs that it helps Houston to maintain a large fleet, providing better service than if cabs were to rely solely on local trips.

As an aside, I'm no fan of Yellow Cab. In the 1970's they had a reputation for providing poor service (and a nasty attitude) to Montrose residents. It became a matter of principle to call United Cab instead, and I do, to this day.

[ssullivan]

But something that wasn't mentioned in the article (if I missed it, please bring it to my attention): there's a shuttle from the Hyatt Regency to both Intercontinental and Hobby, which costs about half of what a cab fare would be.

Such a shuttle is also available from the Marriott Westchase (formerly the Adams Mark) and the Westchase Hilton. Which brings me to this point -- if there are shared shuttle services operating from these hotels, which are not owned or operated by the hotels themselves, then how is this happening if supposedly shared shuttles aren't allowed in Houston? I know they exist because I've taken the one from the Adams Mark to IAH on several occassions before, and it was not operated by Yellow Cab or the hotel. The cost was about $24, far less than a cab would have been.

[ricco67]

Well, I'm not familiar with how a shuttle work, but do the shuttles WAIT for you to show up at an airport?

Perhaps they are simply private livery drivers who charge a flat fee to drop off hotel customers, but won't take up fares from the airport? (therefore, wouldn't be considered a "taxi" service)

I could be totally wrong.

Ricco

[midtown_resident]

http://www.airportexpresshouston.com/

Here's what I usually use to get to the airport. I've been able to avoid the cabs...

[ssullivan]

http://www.airportexpresshouston.com/

Here's what I usually use to get to the airport.  I've been able to avoid the cabs...

That's the service I've used before too. It's just like the shared shuttle services I've used in other cities. Again, I'm somewhat confused with what the problem is with the Shuttle USA Airport Express operation already running and selling tickets both at the airport and area hotels. Maybe this is something entirely different that Yellow Cab is upset about?

[ricco67]

Do the "hotel" shuttles pick up fares from the airport?

I think what they were talking about are independent shuttles picking people up and depositing them at designated parts of the city, maybe?

[midtown_resident]

I've had those shuttles drop me off at home before...a simple $5 tip usually gets me that...but of course, I live in very close proximity to the Hilton Americas and Four Seasons where the others get dropped off first.

Another services is http://www.texansshuttle.com

I've only used this once...but it's the same as the other one...

[ssullivan]

Do the "hotel" shuttles pick up fares from the airport?

I think what they were talking about are independent shuttles picking people up and depositing them at designated parts of the city, maybe?

Yes, they do. Their website even says you can purchase tickets at the airport in Terminals A and C.

[713 To 214]

March 29, 2005, 6:45AM

Airport shuttle contract disputed

By RON NISSIMOV

Copyright 2005 Houston Chronicle

After some City Council members balked at a surprise proposal to award an exclusive contract for a new shuttle service to Houston's airports, airport officials relented Monday and said they would hire two companies.

Houston Aviation Director Richard Vacar had proposed in August to hire two companies through competitive bidding to provide door-to-door, shared shuttle service to and from Bush Intercontinental and Hobby airports.

But on Monday, Vacar said a recent analysis shows the Houston market can support only one shared-ride service during the initial years because of the large start-up costs involved. A consultant hired by the city said in September that Houston could support two companies.

The service would pick up passengers at locations of their choosing rather than at fixed stations and transport them to the airports.

Primarily because of long-standing opposition from the city's taxicab industry, Houston is the largest city in the country that does not have such a service, which typically costs half of what taxis charge.

Raymond Mbala, a lawyer for the Texans Shuttle firm that likely would be forced out of business if it did not get a shuttle contract, accused Vacar of caving in to the demands of Houston's Yellow Cab.

Through its various sister companies, Yellow Cab owns 63 percent of the city's taxi permits. Yellow Cab officials have lobbied the city to allow only one shared-ride service to operate in Houston, and the company is believed to have the best shot at getting the contract because of its size and sophisticated dispatching equipment.

"This is a move to force my clients out of the market and award an exclusive contract to Yellow Cab," Mbala told two City Council committees. Several owners of small cab companies said the city should not start a shared-ride service because it would drive them out of business.

Vacar said several other major cities have only one shuttle provider.

Texans Shuttle now is authorized to provide a "fixed point" shuttle service between the airports and major areas in Houston such as the Galleria and Texas Medical Center. Under the proposal to create door-to-door shuttle service, the city would eliminate fixed-point airport transportation.

After a few council members said they were concerned that the proposal to hire one company would benefit Yellow Cab at the expense of others, Vacar agreed to seek two "viable" vendors for the shared-ride service, which he hopes to start by the beginning of next year.

Yellow Cab officials attended the committee meeting but did not speak. After the meeting, Raymond Turner, one of three investors who bought Yellow Cab in 2003 for $28 million, said he is not sure Yellow Cab would want the shuttle contract if it were not exclusive. He said his company likely will bid on the contract but will continue to lobby for an exclusive contract.

Turner said the turn of events Monday shows that Yellow Cab does not have as much pull at City Hall as some competitors claim.

The city estimates that a shared-ride service would decrease taxi business 20 percent at Intercontinental and 12 percent at Hobby.

Turner said he now believes that a shared shuttle service would not affect taxi business at airports, although Yellow Cab officials have said it would.

ron.nissimov@chron.com

[713 To 214]

How do forum participants feel about this issue? I want to disclose that I am the attorney representing Texans Shuttle.

[Houston19514]

Why should the city have a "contract" with any shuttle service? Why not just open it up and allow people to provide such services in a free market? It seems especially weird that Houston, generally one of the most "free-market" cities in America, has perhaps the least-free market in America when it comes to airport transportation. Shameful, really.

[713 To 214]

Why should the city have a "contract" with any shuttle service?

[LTAWACS]

yet another example of our inept, asinine, corrupt, and incompetent city leaders...

YAY!!!