What are the characteristics that make a city ideal for the chauffeured transportation industry? LCT surveyed significant industry players in the major markets across the country — including association presidents, company presidents, chauffeurs, and city administrators — to determine the most and least “livery-friendly” cities in America.
LCT posed many questions in its survey including what operators should expect from the city they operate in, what are some of the innovative regulations that help operators, are partnerships easily formed, how receptive are officials to institute change, what is the business climate like, how costly is insurance and worker’s compensation, and how “livery-friendly” is the city’s airport?
Unfortunately, many cities across the country are slow to work with the chauffeured transportation industry, resulting in adverse relationships between city officials and chauffeured transportation operators.
Denver is a dream for local operators. The local tourist trade from the ski business provides local operators with a significant revenue boost.
Understandably, the results of this study may anger some that received a poor rating. However, LCT stands behind its report and believes long-term benefits could result for the operators in cities where officials are willing to address the issues and make improvements. Results are summarized in the following article.
Denver a Dream for Local Operators
According to the data collected by LCT, the following five cities appear to be the most responsive to operator needs. Colorado, like many western states, is pro-business with low worker’s compensation rates and minimal government bureaucracy. “We are regulated by the Public Utilities Commission (PUC),” says Gene Cookenboo, president of Presidential Limousine Co., the state’s largest limousine service. “We pay a $35 fee to register each vehicle with the state and a $5 per vehicle renewal charge each year. I recently renewed my entire 25-vehicle fleet for $125.” New York City charges 10 times more and Pennsylvania charges eight times more.
Major investment companies, such as Jannus, Founders, Ivesco, Berger Investments, and Denver Investments, are all headquartered in the Denver area. “We are doing hundreds of thousands of dollars in road show business and it gets better every year,” says Cookenboo.
The Colorado PUC is now permitting limousine companies to use vans, buses, and sport utility vehicles. “It took a major effort from the Limousine Association of Colorado, but we were able to enact this change,” says Cookenboo. “It benefits us all in this area.”
Cookenboo’s auto insurance premiums are about $1,400 per vehicle for $2 million in coverage. His worker’s compensation premium has gone down in successive years. According to a survey of the area’s leading limousine services, including Presidential, only a small percentage of their invoices are more than 60 days old. “On occasion, I will spend an hour calling clients who are behind,” says Cookenboo. “We do not need to use collection agents or assign a person to call. This community simply pays its bills.”
Additionally, the local tourist trade from the ski business gives local operators a significant revenue boost. Mid-December to late March is equivalent to a second prom season for the industry.
Finally, Denver International Airport (DIA) is the “Fantasy Island” of airports for limousine companies, Operators pay a $100 bond and purchase a $50 Automated Vehicle Identification (AVI) tag for each vehicle doing business at the airport. Chauffeurs enter the airport and go directly to a holding lot where they monitor flight arrivals. When a flight arrives, the driver proceeds to Level 5 baggage claim where he or she is charged on a per minute basis. There are about 20 designated parking spaces that are close to each terminal’s baggage claim area. The arriving passenger has a short walk from the terminal to his or her hired vehicle.
According to Cookenboo, the average cost of a sedan pickup at DIA for his company is about $1.69. “It is the finest institutional airport in the country,” he says.
“Our chauffeurs have quick access to the holding area. There is almost no time wasted because they can monitor flight arrivals. Airport officials have made it extremely easy to do business.”
The Dallas-Fort Worth area is hot! The local economy has moved from complete dependence on the oil business in the 1980s to a diverse corporate nerve center that is home to an increasing number of Fortune 500 companies. Jay Allen, president of Carey/Dallas, is a veteran of more than 30 years in the limousine business. He says that Dallas is less than a three-hour plane ride from both coasts “We have become the place over the past 20 years where companies relocate,” he says.
Texas is a pro-business state that favors employers. “I believe we are a state where government basically lets businesses operate,” says Allen.
Dallas requires two operating permits and new companies must “demonstrate need” before they receive their permit. Allen’s insurance costs are about $2,000 per vehicle, which provides $5 million in coverage.
Dallas-Fort Worth Airport (DFW) provides designated limousine parking at each terminal, as well as limited curbside pickup. Enforcement officials are always working in the airport. This is sometimes a nuisance for operators, because many feel overly scrutinized. However, this is a mechanism to discourage illegal operators.
“DFW is a good airport for chauffeured transportation operators,” says Allen. “There is not a lot of limousine parking. Nevertheless, it’s adequate and the pickup fees are reasonable.”
Chauffeured transportation companies are charged $3.50 per pick up at DFW regardless of the actual time chauffeurs need to locate clients.
How could LCT rate Boston’s Logan Airport as one of the least friendly - chauffeured transportation airports in the country in its March 1998 issue and then select it as one of the nation’s best chauffeured transportation cities in December of 1998? Read on.
Boston’s local economy is booming! According to the Boston Chamber of Commerce, Boston has more colleges and universities than any other city in the world. Harvard, MIT, and Boston University are all located here. The city also has the largest concentration of world-renowned teaching hospitals. It is a major corporate center and the region attracts a huge number of business travelers. Additionally, because of the presence of major industry players, most established companies receive a fair price for their services.
The city of Boston accepts the licensing requirements of the sub-urban companies. Neighboring companies are not harassed by city officials for additional permit fees to operate. Larry White, president of American Livery Systems in Waltham, says this is significant.
“The City of Boston allows my company to operate without additional permit costs,” says White. “They don’t hammer me for a city license. I save a significant amount of money, as well as time, because I don’t have to deal with the red tape.”
To conduct business in Massachusetts, operators are required to have MASSPORT plates — which is a good way to discourage gypsy operators. “Companies that are not licensed are easy to spot,” says White. “This is an excellent enforcement mechanism.”
Boston is a hub for the ground transportation industry with BostonCoach and Dav El having a major presence, as well as Carey, which has established a monumental presence in the city by purchasing its affiliate A & A Transportation in Somerville and Custom Transportation Service in Braintree. This is not a coincidence.
“The area is booming,” says Mike Fogarty, vice president for Boston- Coach. “The corporate world has accepted premium ground transportation service as a viable transportation option. Boston is currently a great place to do business.”
Also, according to David Kiely, New England Livery Association (NELA) president, the local association is the largest in the country with more than 200 member companies.
NELA has established a good working relationship with Logan Airport in Boston. John Faro, director of ground transportation services at Logan, and industry ally, consistently solicits input from NELA on the current construction under way at the airport.
“John Faro has helped us tremendously at Logan,” says White, NELAs secretary. “We have been directly involved every step of the way regarding airport access. The airport is a small downtown facility that is inadequate. Construction projects, including the rebuilding of the nearby tunnel, have negatively impacted chauffeured transportation. However, the chauffeured transportation industry has been treated as a partner, not a nuisance.”
“There is only so much space at the airport, but we believe that John Faro understands that we are important to the city and have a right to conduct business at the airport,” says Kiely. “He has helped us tremendously.”
Charlottes Douglas International Airport is an outstanding place for a chauffeured transportation operator to do business. There are eight protected spaces in each terminal that provide limousine companies quick access to their arriving passengers. The North Carolina Limousine Association has negotiated a program with airport officials that issues free permits to duly licensed and insured operators. The permits have minimized problems at the airport and helped successfully curb unlicensed operators.
Charlotte has a booming economy with low unemployment and reasonable worker’s compensation rates. Auto insurance premiums average about $2,000 for $2 million in coverage. Professional sports teams have all done well in Charlotte with the NFLs Carolina Panthers and the NBAs Charlotte Hornets selling out every game.
“Every home game for our professional sports teams has been a big bonus for us, as well as many of our competitors,” says Darryl Norman, president of Riches & Roses Limousine Service in Charlotte.
Additionally, Norman says his corporate accounts have an excellent payment history and his company has been able to raise its rates over the past five years.
“You can fire a bad employee here and not worry about losing your shirt in a lawsuit,” says one Charlotte operator. “I believe an employer is still entitled to the benefit of the doubt in Charlotte. It is not like New York or California.”
Operators Fight Daily Battle in New York City
Life in certain cities can be difficult for chauffeured transportation operators. The following input from survey respondents was used to determine the least friendly chauffeured transportation cities and the typical problems operators face everyday in these areas:
New York, NY
If you can make it in New York City, you can make it anywhere. If you can put up with huge multi-level governmental bureaucracy, crushing expenses for insurance and worker’s compensation, fierce competition from the nation’s largest ground transportation market, and the new threat of unionization, you can make it in New York City.
Toss in the most populated U.S city, more than one million cars, a few million tourists, decaying roads and bridges, and the largest collection of gypsy operators in the world and you have one of the toughest cities in America for chauffeured transportation company owners to conduct business. New York City is the home of the 1999 LCT Show March 11-13, 1999 at the Javits Center/Grand Hyatt, but it is also a city teeming with frustration for members of the chauffeured transportation industry.
“This is a very difficult city to do business in for a lot of reasons,” says Victor Dizengoff, a 40- year New York City ground transportation veteran, who has owned and operated a black car service in New York City and is currently the editor of Black Car News and the executive director of the Black Car Assistance Corp. “The government plays a significant role in determining how difficult it is to operate in a particular city. In New York, there is the city and state government, the Department of Motor Vehicles, the Department of Transportation, and the Taxi and Limousine Commission (TLC). All provide obstacles for a transportation company.”
Dizengoff says the visibility of the industry has hurt operators. “The more visible the limousine business has become, the more our industry has been subjected to prying by government agencies,” he says. “All of these agencies look to our industry and each seems to provide new encumbrances for the small business person.”
The sheer volume of traffic in New York City is a logistical nightmare when attempting to dispatch vehicles. “The trip from midtown Manhattan to Kennedy Airport can take anywhere from 30 minutes to almost two hours,” says Rich Guberti, president of Excel Limousine Service in New Rochelle, NY. “We must allow our drivers a significant amount of extra time to get to the airport. It has a tremendous impact on our bottom line because we cannot charge our client more money for the trip.”
New York is one of the few major cities in the world where a traveler cannot go from the airport to downtown by train. This impacts traffic significantly going in and out of JFK and LaGuardia airports.
Bob Kubik, president of the Nassau Suffolk Limousine Association (NSLA), has been in business for eight years. “Our fare to get from Long Island to the airport has not increased since I started my business in 1990,” he says. “Traffic, construction, and competition increase every year. There are so many limousine companies in New York that operators will slash prices just to make a car payment. The NSLA has 150 member companies, but there are several hundred more non-members in Long Island alone.”
According to Kubik, there is also an exorbitant number of non-certified vehicles in the New York market. “There are several 175- inch stretches and exotic vehicles, such as stretched Lincoln Navigators, that provide competition for legitimate companies,” he says.
The other major competitive disadvantage is the presence of non-licensed operators. “Gypsy operators are prevalent at both New York airports, as well as the financial district,” says Kubik. “Illegal operators are everywhere. They will transport a client from midtown Manhattan to JFK or LaGuardia in an older model limousine for about $35.”
New York City is also the home of a plethora of taxi drivers from all over the world. Many of these entrepreneurs go from taxis to the relative glamour of a Lincoln Town Car. “Getting dressed in a suit and driving a Town Car is a big step up psychologically for these drivers,” says Dizengoff. “However, many of these drivers are not licensed or properly insured.”
Kubik says the problem with enforcement is simple. “The TLC spends the majority of its time policing licensed operators, rather than going after the gypsies,” he says. “Our association members receive expensive tickets for technical violations, while a guy with no authority to operate is ignored.”
According to Dizengoff, the illegal operating advantages are obvious. “Gypsies do not have to pay for a license, livery insurance, payroll taxes, or worker’s compensation insurance.”
Bob Dunn, regional vice president of TIB/MBI Insurance Brokers in Garden City, NY, says a typical one- to three-car operator doing business in New York City pays about $3,500 per vehicle for $1 million in coverage. Operators with larger fleets pay a little less. According to Dunn, cheaper premiums have become available in recent years, but an insurance company’s reputation and how long it stays in business is an issue. “We have companies coming into the New York market offering 30 percent and 40 percent discounts,” he says. “I am very leery of them. All of the costs associated with auto claims, such as repair and hospital claims, have gone up. I don’t see how the premiums can go down that much.”
Worker’s compensation insurance in New York City is about $7.75 per $100 of payroll. “A company can also be hit with an assessment based on claims paid, which can substantially increase its outlay for worker’s compensation,” says Dunn.
Dizengoff says the latest New York City crisis involving a threat to unionize the major companies is deceiving. “Union organizers make everyone believe that the owners are making unbelievable profits,” he says. “That is the farthest thing from the truth. Union cards have been signed in a few New York City limousine companies, but none have actually unionized. It’s just another way to aggravate company owners.”
The city has hundreds of thousands of transplanted New Yorkers. It also has a bureaucratic Catch-22 situation that is reminiscent of New York City.
The Miami International Airport (MIA) has issued no new permits for airport limousine companies since the late 1970s. A loophole in the current regulations allows companies that provide transportation for eight passengers or less to do business at the airport. Limousine companies that have stretches that accommodate more than eight passengers or minibuses can receive a passenger motor carrier (PMC) permit. Most Miami limousine companies have the proper permits for larger vehicles, but technically operate their smaller vehicles illegally. The resulting confusion is considerable.
Dean Isenberg, president of City Limousine Co. in North Miami Beach, says the permit situation is frustrating. “We receive expensive tickets and are embarrassed in front of our customers,” says Isenberg. “How can our local government charge us a ton of money for permits and parking fees and then tell us half of our fleet is not legal.”
The regulations also impact the vehicle purchases made by local operators. “It forces us to buy all larger limousines,” says Isenberg. “When a client requests a six-passenger limousine, we have to send a 120- inch stretch at no additional cost.”
MIA is also one of the most expensive airports in the country for chauffeured transportation operators. A simple sedan pickup costs at least $6 in short-term parking.
Additionally, each chauffeured transportation vehicle must be equipped with an electronic gate reader that bills the limousine company an additional $2.50 for each entry into the airport for drop off or pickup. Hence, a basic sedan pickup costs a minimum of $8.50 with no curbside or preferred airport parking.
Albert Perera, president of Royal Limousine in Miami, was so frustrated by the difficulty of picking up clients at MIA that he began using two chauffeurs for each airport pickup during prime-time hours.
“We send one chauffeur to the gate and he uses the cellphone to call the other chauffeur,” says Perera. “We will then send a car to the terminal. Otherwise, we are not properly serving our clients.”
In fact, Perera has used the airport problem, and his two-chauffeur system, as a marketing tool building his company from one vehicle in 1987 to a current fleet of 27.
The high cost of insurance and the propensity of Miami residents to sue small business people also negatively impact chauffeured transportation operators. According to Perera, insurance premiums are $3,000 for $1 million worth of coverage for a Town Car base unit. Isenberg’s premiums are more than $4,000 per vehicle.
“I am also convinced that the many people who are new to Miami view a lawsuit against a small business as an opportunity to gain financially,” says Perera. Additionally, Florida worker’s compensation premiums cost $8.33 per $100 of payroll.
Both company owners cite a chronic shortage of chauffeur candidates as another major problem.
San Francisco, CA
One of the most beautiful cities in the world is also one of the most expensive in which to operate a chauffeured transportation service. USA Today recently reported that San Francisco has surpassed Tokyo as the most expensive real estate market in the world. Every cost associated with a limousine company, including auto repairs, insurance, and office/garage rental, are higher in the Bay Area than anywhere in the world. By comparison, limousine rental rates are not significantly higher.
Dave Hartson, president of Park Avenue Limousine in Dublin, CA, pays an insurance premium of $4,800 per Town Car for $2 million in coverage. Furthermore, California is an extreme pro-employee state with the highest worker’s compensation rates in the nation. Hartson pays 10 percent of payroll for coverage.
Oddly, it is not difficult to get into the limousine business in California. “All you need is $500 and you can obtain a PUC license,” says Hartson.
According to Hartson, who is president of the California Limousine Association, the San Francisco area is rife with one-car operators. “They immediately undercut their pricing because all they do is drive,” he says. “They are not affected by worker’s compensation. The mortality rate is high for these operators because they work so cheaply. They kill the fair price structure for our industry.”
In 1998, the San Francisco Airport enacted new rules that require limousine companies to post a six month bond that would be equal to the amount of access fees a company estimates it will pay over that time period. Area operators were so incensed by this rule that the Northern California Livery Group (NCLG) was formed.
Gary Buffo, NCLG president, says the group was formed in direct response to the airport situation. “We believe we are all being treated unfairly,” says Buffo. “We are working toward change, but we are currently extremely unhappy with the airport.”
Los Angeles, CA
Los Angeles has a long connection with the limousine industry. The community understands limousines and the entertainment industry has long rented chauffeured transportation vehicles. Images of limousines lined up in front of the Academy Awards helped link glamour with the stretch limousine.
Mike Seropian, president of MLS Limousine in Los Angeles, says the entertainment business is still a solid anchor for his business. “The movie studios are using us more than ever,” he says. “They consider chauffeured transportation a necessity, not a luxury.”
But the negatives in Los Angeles outweigh the positives. First, a survey of three of the area’s largest limousine services reveals major problems with accounts receivable, particularly when dealing with the entertainment industry. “I love the studios, but it is a constant struggle getting paid — even in 60 or 90 days,” says Dave Dinwiddie, president of Avalon Transportation in Los Angeles and New York.
Second, it’s impossible to get around in the city. Dispatching limousines and estimating arrival times is next to impossible. Diamond lanes, EZ Pass, and even private roads ease the congestion in Southern California. However, a “car culture” and the almost total absence of public transportation mean gridlock.
Problems also exist at Los Angeles International Airport (LAX). The airport allows no curbside pickup. There is a holding area for limousine parking, but it’s at least 10 minutes from the terminals due to congestion. The larger companies are forced to use gate greeters in order to accommodate their clients.
“We use a large staff of meet- and- greet personnel because we have to do this to properly serve our clients,” says Cheryl Berkman, executive vice president of Music Express in Los Angeles, San Francisco, and New York. “I think LAX management has been very receptive and cooperative with the limousine industry. However, the airport has just been overwhelmed by vehicle traffic, which makes it a very tough place to do business.”
Finally, like San Francisco, auto insurance rates, worker’s compensation, and the propensity of Californians to sue small business owners are all negative factors that operators have to address in Los Angeles.
Pennsylvania is one of the most heavily regulated states in the country. The state has 332 licensed companies compared to almost 800 in neighboring New Jersey. However, the legal companies are forced to pay 1 percent of their state fares in tariffs.
The turnpike is the single most expensive toll road in the country. Continuing long-term construction projects on 1-76 and 1-95 are a nightmare for dispatchers and chauffeurs in the area. Worker’s compensation rates are among the highest in the country, approaching or even surpassing California in some instances.
The nation’s fifth-largest city still contains one of the worst airports in the country for limousine companies. There is no preferred parking for limousine operators. Short-term parking is used and chauffeurs are forced to escort clients across islands of traffic. Airport police are unnecessarily aggressive and can be rude to even fully licensed operators. Parking tickets carry stiff penalties and traffic court is so backed up that operators simply pay rather than waste a day in court.
The economy in the Philadelphia/South Jersey area is improving with a new convention center, $500 million in airport improvements, and an “Avenue of the Arts” that will rival New York City. But high state taxes, a 4.3 percent city wage tax in Philadelphia, and high auto insurance still make Philadelphia difficult on chauffeured transportation operators.
What Makes a City Livery Friendly?
In March of 1998, LCT rated the best and worst airports in America. The debate was spirited and some of our choices proved controversial. This article goes beyond the airport and examines the entire city and business climate of a community.
Certain parameters make a city a more attractive place to own a chauffeured transportation company and include the following:
- A strong local economy. When business is conducted in a city, executives travel and chauffeured transportation companies maintain a strong corporate base. Without customers, all other factors are irrelevant.
- An appropriate level of regulation for the chauffeured transportation industry. New York, Pennsylvania, and California operators complain of overregulation by their state’s public utility commissions. However, states such as New Jersey, Virginia, and Massachusetts have almost no regulations, which present other problems for operators.
- Reasonable costs for local permits.
- Honoring the “Home Rule” for suburban companies. If a company is fully licensed in its suburban town, the major city it works in should not require separate licensing.
- A well-managed airport that imposes reasonable fees, allows access to passengers, regularly meets with the local chauffeured transportation operator’s association, and gives limousine companies preferred access to their clients.
- Worker’s compensation regulations that properly classify chauffeured transportation companies.
- Manageable major roads and highways that will allow chauffeured transportation operators to estimate the time various trips will take.
- A city and state enforcement operation that will target unlicensed operators at the airport and downtown.
- Reasonable auto insurance rates. Insurance rates that are below $2,500 per vehicle for at least $1 million in coverage is desirable.
- A strong local labor pool. A city must have a good pool of eligible employees for a chauffeured transportation operator to function.