Vans Cruise Fast Lane to Success in Rush to Airport

Each year about this time, SuperShuttle International’s reservation takers, dispatchers and van drivers start getting ready for Halloween. With its arrival, they gather in an employee lounge decorated with paper pumpkins, skeletons and streamers of colored crepe paper. Later, the drivers--disguised as goblins, witches and vampires--haunt the freeways, shuttling passengers to and from Los Angeles International Airport in their blue-and-gold vans.

The hundreds of taxi drivers and bus operators who compete for passengers with SuperShuttle probably find the ghoulish costumes ironic. Unheard of a decade ago, van services such as SuperShuttle now spirit away thousands of passengers who used to rely on taxis and airport buses.

Transportation experts say travelers like the van services--there are more than 400 in California--because they offer a compromise between a taxi, which is faster but costs more, and a bus, which is less expensive but slower. The vans appeal especially to business travelers, “who are used to getting where they want quickly but don’t want to pay through the nose,” says Andy Olszewski, a traffic planner with the Southern California Assn. of Governments.

In just a few years, the vans have made their presence felt not only on the freeways--where they are a common sight--but on the meters and in the fare boxes of their competitors. Cab companies charge that vans have raided the downtown hotels, their traditional bread-and-butter business, and bus companies maintain that the vans pirate passengers waiting for buses.

“It has to stop,” declares Donald Boyles, president of Airport Service, the Anaheim company that operates the Airport Bus.

According to Boyles, bus ridership has dropped 48% since 1982, and vans are threatening to put him out of business. If so, he predicted, consumers will suffer. “What will they do when a big convention comes to town?” he asked. “They can’t fill the streets with 10,000 vans.”

Boyles isn’t the only one grumbling. The subject of vans triggers squabbles between city and state regulators. The Los Angeles Department of Transportation says the 1,068 taxi drivers it licenses can’t make a decent living because vans licensed by the state swipe cab customers, especially downtown.

“For the outlying areas--San Bernardino, Riverside, Ventura--we don’t protest,” says Jack Reynolds, who licenses cabs for the city. “But we’re very concerned that in the Valley, Westside and downtown, vans are robbing taxi clients.”

Van operators don’t shed many tears over the plight of their competitors, whom SuperShuttle President Mitchell Rouse dismisses as jealous. “The public is voting with their dollars--millions of them,” he says.

Travelers do seem to like the new service. Though the vans, taxis and bus companies continually trade heated charges at regulatory hearings, “we receive very few consumer complaints about van companies,” says Mark Gottlieb, a transportation engineer with the state Public Utilities Commission, which regulates van and bus service within California. “They are providing a service the public wants.”

The van explosion began in 1981 when the PUC opened up a market then dominated by cabs and buses. Today about 60 van companies in Los Angeles and Orange counties serve LAX, compared to just two in 1971. Vans now shuttle 5% of the 33 million travelers who use LAX each year, up from practically none a few years ago.

Spurred by Deregulation

Before 1981, the PUC was stingy about licensing new airport bus or van companies. “If there was a bus line that already served the area, the commission would say no,” recalls PUC spokeswoman Carole Kretzer.

But the commission adjusted its thinking as federal officials continued deregulating transportation between the states. Vahak Petrosian, a PUC transportation regulator, said the commission signaled a change in philosophy in 1981 when it allowed the Trailways bus company to operate along Greyhound routes.

“The commission decided that monopoly service was not in the public interest,” he said. New companies were quick to note the change and rushed in--especially with the 1984 Olympics promising to draw legions of tourists to Los Angeles.

Though the fleets of the new van companies range in size from one or two vehicles to more than 100, they all operate in pretty much the same way: Vans pick up passengers by appointment at their homes or businesses, very much as taxis do; but, unlike taxis, vans may make one or two other stops to pick up additional passengers along the way. (From the airport, no appointment is needed to ride a van.)

The notion of vans as hybrids derived from taxis and buses is reflected in their fares: One bus company charges $8.50 between Pasadena and LAX, while a cab charges about $40 and one shuttle service $17.

The two largest van companies measure their success in the millions of dollars. SuperShuttle expects to take in more than $30 million this year. Airport Transportation, a 16-year-old van company in Santa Ana and SuperShuttle’s chief rival, expects to gross $12 million. Together, the two companies transport 7,000 people to and from LAX daily.

Rivals Bitter

But those who operate taxi and bus companies aren’t impressed by their rivals’ success. “They are stealing our customers,” charges Reginald Charlson, president of Great American Stageline. He says vans sometimes cruise bus stops and “steal” passengers before his bus arrives. “I’d say we lost 5% of our western San Fernando Valley customers because of those vans just in this last year.”

Los Angeles Checker Cab’s general manager, Eric Friland, complains that vans whisk so many passengers from LAX to such distant destinations as Pasadena and Anaheim that cab drivers get stuck with less-profitable short hauls. This means that cab drivers must work harder to earn the same income--now about $18,000 yearly, he says.

Kretzer says the PUC’s intent is not to drive buses and taxis out of business. “The commission wants to give consumers as many transportation choices as possible,” she says. “The vans perform a function that taxis and buses don’t.”

Kretzer’s colleague, Petrosian, points out that a van permit isn’t a license to mint money. Though more than 4,000 permits have been issued to vans and limousines since 1981, only about 1,000 remain active, many companies apparently having quit the business.

“The costs are tremendous,” says Lawrence Robertson, owner of Airport Transportation. “It costs $13,000 a day just to open my doors.” Skyrocketing insurance costs make it difficult for anyone to enter the business today without investing thousands of dollars at the outset, he says.

“If you can’t fill the vans, you’re out of business,” he maintains.

Similar Story Elsewhere

Los Angeles isn’t the only city grappling with a flood of vans. Atlanta, Chicago, New York, Philadelphia and San Francisco are among major airport cities reporting an increasing number of travelers using airport vans that promise door-to-door service at rates less than taxi fares.

Ray Mundy, a transportation professor at the University of Tennessee, says vans flourish near airports that have a high “hassle factor”--meaning heavy traffic congestion or costly or inadequate parking facilities. “Generally, if the taxi service is poor and the bus is inconvenient, vans will do well,” says Mundy, who is executive director of the Airport Ground Transportation Assn., a trade group representing airport vans, buses and taxis.

Alfred Lagosse, executive vice president of the International Taxi Cab Assn., an industry group based in Kensington, Md., concurs. “Van services do best where taxis are not doing a good job,” he says. “Maybe to some extent, they’ve earned the problem.”

Mundy says competition among vans, taxis and buses is especially fierce in California, where rules governing vans are looser. In many states, door-to-door airport vans may only pick up passengers who have arranged for the service in advance--normally by a day. But California regulators operate under “a liberal interpretation of what constitutes advance notice,” he says, explaining: “If a customer calls from the airport or hails a van from the curb in California, that constitutes advance notice.”

More than any other van company, SuperShuttle has taken advantage of the way the PUC interprets the rules. Rouse, whose family owns Wilmington Cab Co., says he started SuperShuttle in 1983, just before the Olympics, because he thought that “public transportation in this city was pretty much in a shambles.” Cab service was unreliable, he says, and airport buses dropped passengers off at scheduled stops that weren’t always near where passengers wanted to go.

Rouse launched SuperShuttle as a 10-van service shuttling between South Bay communities and the airport. Now the company operates 170 vans all over Los Angeles, another 51 in San Francisco and 35 in Phoenix. Earlier this year, Rouse paid $600,000 for 24-hour Airport Express, a leading Orange County competitor. He is now seeking to clone SuperShuttle’s success at airports in the East and Southeast. It now is triple the size of Airport Transportation, the next largest van company.

Rouse attributes this growth to the careful development of SuperShuttle’s image: Drivers wear black pants and tie and may be fired if they fail to wear the uniform, and the vans are washed twice daily.

The battle for customers has resulted in regulatory hearings--from which almost everyone has emerged a bit bruised.

Last year, for example, the PUC fined SuperShuttle $15,000 for such violations as leasing its vans to drivers, operating outside its authorized area and selling discount tickets through travel agents. The commission is currently hearing similar complaints filed against SuperShuttle by a bus company serving San Francisco International Airport.

Nonetheless, the PUC has consistently acted to encourage van competition. At the same time that it fined SuperShuttle last year, it broadened the company’s operating authority by allowing it to pick up passengers at hotels that Airport Bus had served exclusively.

Not All Are Upset

SuperShuttle has since expanded its reach with tie-ins with airlines and corporations similar to those long common in the car rental business. In San Francisco, Levi Strauss and Bank of America buy SuperShuttle coupons to issue to traveling employees. And passengers on America West and PSA get a free one-way trip on SuperShuttle for each van ticket they buy themselves.

Nor are all van competitors upset. One cab industry executive says competitive pressure has led to better service. Frank Filosa, president of United Independent Taxi in Los Angeles, says his cab drivers now accept five major credit cards for payment, to lure business customers who might otherwise turn to vans.

“We were hurt initially,” says Filosa. “But I would say in the last half-year, we’ve learned to compete very effectively.”

In addition, some drivers have installed cellular phones for use by passengers. United Independent cab driver Vdalmir Shzarts, for example, has had a phone in his taxi for four months and says it has generated new business for him. One businesswoman from San Francisco rode with him for a day in Los Angeles recently, running up a $400 fare and a $200 phone bill, he says.

“I have my own customers,” Shzarts says. “I don’t need to work the airport anymore.”