AVIS WEDRIVEU: Industry Sustains Major Setback In New York

Posted on October 14, 2009 by LCT Staff - Also by this author - About the author

NEW YORK — New York City Taxi and Limousine Commissioner Matthew Daus ruled last week that the controversial Avis WeDriveU chauffeured business model is not subject to the TLC’s regulatory oversight, allowing it to continue competing with chauffeured transportation and black car companies in New York.

In a letter addressed to Avis and Wayne Baden, attorney for the Black Car Assistance Corporation, Daus explained that the TLC has “concluded that neither Avis nor the service [WeDriveU] are subject to regulation by the New York City Taxi and Limousine Commission.”

This ruling in effect allows Avis to operate in New York City under the model where Avis supplies the rental vehicle for a client while its WeDriveU entity provides the chauffeur. Daus’ decision follows a ruling this year by the New York/New Jersey Port Authority that Avis/WeDriveU violates its contracts with the NY/NJ area airports and ports. This means that while Avis can still operate in New York City, it cannot service the major airports and ports that serve the metro region.

Although the ruling by the TLC will allow Avis to operate in New York City legally, it is unlikely that it will be able to effectively compete with operators who can provide total transportation packages and arrangements for groups that have both inbound and outbound flights and/or cruises connected to the airports and ports. Sergio Sanchez, president of the Luxury Based Operators Association (LBOA), said, “We totally disagree with the decision and reasons. It is our belief that the TLC is wrong in its decision and [we are] determined to have this resolved and reversed in the best interest of our industry, whether it be by legislation or court action.”

According to the Commissioner’s letter, the TLC based its decision on the following rationales:

Avis is only providing a rental car and not a driver, and the services of the driver are not included in the Avis rental contract.

Any Avis rental car customer desiring to obtain the services of a driver must arrange for, contract for, and pay for such service separately and apart from the customer’s rental of cars from Avis. Among other things, Avis’s insurance requirements for additional drivers for its rental car customers are the same whether the customer plans to have another person (such as a colleague) drive the car or plans to procure a driver form WeDriveU.

Avis does not set rates or contract terms for the arrangement between Avis’s vehicle rental customer and the WeDriveU service. Among other things, the use of the driver service need not match the time of the vehicle rental in duration.

Avis does not act as a base because it does not “dispatch” in the sense of prearranging destinations with a customer setting the fare for those destinations and conveying the destination and fare information to the driver. Rather, the customer provides trip directions directly to the driver. In addition, Avis’s rental fee does not depend on the destination or length of the chauffeured trip, as the fare for a dispatched, for-hire trip typically would. Instead, it depends on the length of time the customer controls the car and the total mileage driven (regardless of who does the driving).

This ruling by the NYC TLC has a longer reach than just the New York City operators, as many cities nationwide look to New York before setting their own rules. Additionally, Daus is now the president of the International Association of Transportation Regulators which includes regulators from across the globe.

Source: Linda Jagiela, LCT Magazine

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