OCT. LCT: Financial success in this industry depends on how much information you gather and what you do with it.
One day after LCT reported on possible merger-partnership discussions between Carey International and Lyft, industry leaders alternately hoped it wouldn’t come about while recoiling at the mere suggestion.
An apparently misfired email from Carey CEO Gary Kessler detailing steps toward a partnership is being viewed as a betrayal to the chauffeured transportation industry. Leaders have spent much money and time trying to get legislators and regulators state-by-state to require transportation network companies (TNCs) to follow the same safety, insurance, and licensing rules as limousine and taxicab services.
Lyft, the second largest TNC behind Uber, has fought any measures that would ensure a fair regulatory environment among all ground transportation providers. Lyft competes with Uber X, the lower tier of the Uber ride-hail service known for a rash of media headlines about bad driver behavior.
In fact, Carey International, the second largest chauffeured transportation company in the U.S., was working on a common technology platform with the other members of the limousine industry’s “Big 3” — Dav El / BostonCoach Chauffeured Transportation Network and Empire CLS Worldwide Chauffeured Services — that would combine on-demand service with duty-of-care.
“This is an extraordinarily serous issue if it comes to fruition,” said Dav El / BostonCoach CEO Scott Solombrino, also a longtime board director of the National Limousine Association. “Lyft will use the Carey brand to gain credibility in the marketplace with corporations. We don’t think they will meet any different standard on duty of care, which is very disturbing. This is an example of corporate greed taking precedence over public safety.”
NLA Swings Hard
Solombrino’s fellow board director, NLA President Gary Buffo, emailed a strident statement to LCT Magazine on behalf of the trade group’s 1,700-plus members: “I am deeply disturbed to learn Carey International is considering a partnership with Lyft. The NLA, in conjunction with the TLPA (Taxi Limousine & Paratransit Association), has been working tirelessly over the past three years to ensure TNCs operate in compliance with all laws and regulations. These rogue organizations have fought tooth and nail against the most basic safety and labor standards in place in regions all across the globe.”
Buffo and NLA leaders called on Carey executives to disavow any attempt at a deal, and join with them to use driver fingerprint-based background checks for all ground transportation providers.
“We believe Carey is being used as a shill in an attempt to legitimize the deceitful practices of these degenerate organizations,” Buffo wrote. “The safety of both our clients and employees will always outweigh any economic benefit in the marketplace.”
Solombrino said he is appalled Carey’s investors put money ahead of protecting the safety of their customer base, which extends deep into corporate America through its network of company operations and franchisees nationwide.
“Carey has been an integral part of the chauffeured transportation system and their participation with Lyft, a company that has spent millions of dollars avoiding necessary regulations in every state in the country, is a terrible precedent,” Solombrino told LCT. “Clearly this decision was made with one thing in mind, and that’s corporate greed.”
Labor & Driver Concerns
Aside from pointing out the safety deficiencies of TNCs, the NLA has succeeded in pushing the W-2 employee business model for chauffeured transportation companies, which ensures more quality control, training and performance among chauffeurs and drivers. The regulatory and legislative victories with the Department of Labor have helped set a higher standard in the limousine industry as more services embrace the W-2 employee model over the independent contractor one.
“I would also like to point out Lyft pays its drivers as independent contractors, and organizations such as NLA have lobbied heavily at the DOL to resolve this misclassification of their workforce,” Solombrino said. “Every day Lyft drivers are denied overtime, workman’s comp coverage, Obamacare, and the right to unionize, that in itself blatantly violates the Fair Labor Standards Act. It’s appalling the Carey corporation would associate itself with this type of organization.”
Empire CLS CEO David Seelinger cautioned the companies have not publicized any formal agreements and a partnership is not necessarily a foregone conclusion.
“If it is true, and I emphasize that because I don’t think anyone knows factually they are going to sign a deal — maybe it appears to be exploratory at this point — but if this is true, I would be disappointed at the fact Lyft and many TNCs operate illegally in multiple states across the country,” Seelinger told LCT. “I can’t get my arms around seeing how Carey benefits from this. I think people in the travel industry are very concerned with duty of care. I think Carey has said the same. If that’s the case, then you’re potentially getting in bed with a company that continues to operate illegally in many cities.”
Seelinger, also vice president of Advocates for Fairness in Transportation (AFT), is troubled with how Lyft, Uber and TNCs adamantly resist fingerprint background checks, which would better screen out criminal drivers. “All these TNCs are in desperate need of drivers, not chauffeurs,” he said. “Because they need these people so bad to fulfill on-demand requests from their customer base, they don’t want to do fingerprinting. I don’t believe Lyft, who by the way has institutional investors who expect a return on their money, is going to push the issue because they don’t want Lyft to miss a beat. Their philosophy and Uber’s is they are above the law. The law does not apply to them. I have a big problem with that. It disturbs me greatly.”
If indeed Carey aligns with Lyft, then Empire CLS and Dav El / BostonCoach will still pursue a technology platform, which Solombrino disclosed in the July issue of LCT Magazine. “I thought Carey, Dav El and myself were working toward that goal and obviously I may be wrong,” Seelinger said. “We will still work toward that goal. Even though we are competitors, we are working together for the common good of the industry, involving others and using all of our resources to find a way to offer on-demand or near-demand technology in the limousine industry with qualified licensed chauffeurs. There is no one at Lyft or Uber who is a chauffeur.”
Some industry leaders greeted the possible deal with many questions and also held out hope for a more positive outcome. A Carey-Lyft deal could potentially pull Lyft into the higher operational standards of Carey, one of the nation’s oldest and most prestigious chauffeured transportation services.
“If this is a move for Lyft to move for compliance and the level playing field with a common sense regulatory framework, then this is positive,” said Michael Fogarty, CEO of Tristar Worldwide Chauffeur Services for the Americas, and a former TLPA President. “If it’s a move by Lyft to get a duty-of-care stamp of approval without licensing, insurance, and background checks, then it’s not a good move for the industry. This is kind of a wait-and-see approach for me.”
Music Express CEO Cheryl Berkman, who leads and helps fund AFT, said absent any further details on what type of arrangement Carey and Lyft either have or are discussing, she has plenty of questions.
“The limousine industry has fought so long and hard for a few years now to have TNCs legalized, so I’m curious to see how Carey and Lyft meld together as far as the legalities of running a livery company,” Berkman told LCT. “Will they be employee-based? Carey was an independent operator company and sued many times. How will that work? Is Carey going independent operator again? I don’t know what the dynamics would be. Does Lyft become an elite livery service, or is Carey going to become basically a hail-a-ride service? Those are two different worlds. Does that mean Lyft will abide all the rules and regulations the livery industry abides by? Are chauffeurs employees and background checked and drug tested? That will be interesting.”
Social Media Furies
As expected, news of the Cary-Lyft correspondence went viral and blew up on social media forums, with most commenters shocked, puzzled, and/or outraged at any possible linkage. Responses ranged from terse one-word obscenities to thoughtful statements on the competition, technology and changes wracking the ground transportation sector. A handful of operators saw the possible arrangement in a more beneficial light:
Chicago operator Sal Milazzo wrote, “There is so much more to this than a stray email reads. Gary [Kessler] is a smart guy, and will always research options for his company that may be beneficial. I'm pretty certain Lyft needs Carey more than the other way around. This is a good sign for our industry, not a bad one. In addition, we shouldn't be looking at Gary as backstabbing, but possibly taking a lead role in wrestling our concerns.”
Orlando, Fla. operator Sami Elotmani commented, “As big players are getting squeezed at the margins, one of them reaching for the punch bowl was bound to happen, and it was just a matter of time. Gary [Kessler] was smart enough to keep his options open and hopefully he made a deal that doesn't screw the industry over too badly... I do disagree with the point that Lyft needs our industry more than our industry needs Lyft. Engaging in a $500 million partnership with GM and getting Alibaba funding does not smell of desperation.”
Related Topics: BostonCoach, business partnerships, Carey International, Cheryl Berkman, Dav El Chauffeured Transportation, David Seelinger, EmpireCLS, Gary Buffo, Gary Kessler, Lyft, Michael Fogarty, Music Express, National Limousine Association, Scott Solombrino, TNCs, Tristar Worldwide Chauffeur Services
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