Fri August 9, 2013
Cab Industry Shrinks Following Airport Taxi Changes
In the two years since the Charlotte airport overhauled its taxi operations and kicked all but three companies off its curb, the city's cab industry has been transformed.
From the baggage claim curb, it looks like a well-oiled machine: the taxis are plentiful and sparkling-clean; drivers are in uniform.
But the city's decision to allowing just Yellow, Crown and City Cab to operate full-time at the airport thrust the rest of the industry into upheaval.
Six cab companies in Charlotte have gone out of business or consolidated since 2010. At least three others are on the verge of collapse, including Diamond Cab, which is owned by Nazakat Khan.
Khan says he raised $120,000 selling land he owned in Pakistan to cover his cab company debts last year. More debt has built up since then, because he can't keep enough drivers to cover rent, utilities, insurance and dispatch services that run him about $10,000 a month.
Why did his drivers leave? "Because I don't have airport," says Khan.
"In my opinion, that was the beginning of the end," says Frank Hinson, co-owner of Charlotte Checker Cab, which was one of the city's oldest until it shut down last year when he lost most of his drivers.
In Charlotte, (most) cab drivers are independent contractors. They own their cars and keep all the money they collect in fares, but the city requires them to affiliate with a licensed taxi company. Those companies charge drivers a weekly franchise fee that ranges from $25 and $400.
Before 2010, pretty much every company in Charlotte had a dozen airport permits for which they charged drivers much higher fees. Those fees were their lifeblood.
Victor Kamara is one of the drivers who left Checker Cab for a spot working at the airport with Crown Cab.
He's sorry to have helped put Checker out of business, but "the airport is a much better job."
For one thing there are no "dead calls" where someone calls for a cab but when the driver arrives, the passenger is nowhere to be found. At the airport, the shortest trip is still worth $14 for a driver.
"You just drop off and come right back and wait (at the airport)," says Kamara.
The work is steady and the hours more regular, but Kamara and other airport drivers say they're making less money than they used to because franchise fees went up when the contracts became exclusive to just three companies. Yellow's fee went up from $360 a week to $400 now. Crown charges $300 a week – which is $100 more than before.
They're now the biggest cab companies in Charlotte because drivers sign on just to get in line in case an airport spot opens up. Crown Cab vice president Mayur Khandelwal says they also get the spillover effect of out-of-town visitors who call the same company that brought them from the airport to their hotel when they're ready for a return ride.
The upshot of all of this is that by the end of the year, Charlotte will likely be down to just six cab companies – from 13 in 2010. The only thing keeping two of them alive is a contract with Mecklenburg County Department of Social Services.
Royal Cab general manager Rudolph Kirkham says transporting Medicaid and Medicare patients for the county is 75 percent of his business, but adds that it's not as lucrative as airport work.
Mecklenburg County documents show Royal Cab collected just shy of $1 million on the contract last year. The other main DSS contractor – Prestige Taxi – took in close to $1.5 million.
And then, there's United Cab, which has no government contract and is only two years old, but has grown to rival the size of Royal and Crown Cab. United is a co-op jointly owned by all 70-or so of its drivers. Most of them used to work at the airport and got fed up with paying high franchise fees which their President Kesete Tesfay likens to parasitic blood-sucking.
"Drivers, they have their own insurance, they buy their own cars, they do their own maintenance – everything – only just for the taxi's name they paying this much money," says Tesfay, voice rising passionately. "Is that fair? These companies take this opportunity and they suck the driver's blood."
United Cab drivers pay $50 a week to cover dispatch services. Getting back to the airport is their ultimate goal.
"When the day comes, we are ready," says Tesfay. "We have the latest equipment, the newest cars. We can do everything that the other companies can do."
But that's unlikely to happen for at least three more years. The original airport taxi contract allows for five, one-year renewals before other bids need to be entertained.
Assistant Charlotte Aviation Director Herbert Judon says they just renewed for a third year because, "we have seen a significant increase in the quality and service of the taxi cab agreements, so we're very satisfied with the service we've received from the three companies."
And those three companies have been handsomely rewarded.
But, cab drivers both at the airport and on the street say the changes have made it harder for them to make a living.
A Peek Under The Hood Of Charlotte's Taxi Industry
Airport Taxi Contracts and the City Council