LAX Shuttle Regulations Putting Drivers in a Pinch : Airport: Operators say rules have slashed their earnings and that new restrictions will kill many smaller firms.

On his third loop around Los Angeles International Airport, the only thing Todd McDade had even come close to picking up was a $98 ticket for blocking a crosswalk. Everyone at the curb had made reservations on other shuttle vans, and McDade was forbidden to woo them with offers of a lower price or faster service.

At his last stop on that final loop, the Airport Flyer shuttle van driver found a woman on her way to Redondo Beach, a $9 fare. Less a $3 airport fee and $1 for gas, McDade netted $5--after spending two hours waiting to get into the airport and half an hour on the drive.

Deduct his company’s share of the revenue and, even with a healthy tip, McDade made less in an entire afternoon than if he’d spent just one hour pushing a broom.

These are not good days for airport shuttle van drivers--or their companies. And, some small companies complain, new airport regulations expected to take effect in August probably will make things worse.

Not long ago, anyone with a van and a “passenger stage corporation” certificate from the state could earn $300 a day shuttling people between the airport and their homes or offices.

The promise of high wages at low overhead started to sour when bruising competition led to complaints that van drivers were snarling traffic, assaulting rivals and virtually kidnaping customers from curbs. Industry infighting defied self-regulation, so airport officials stepped in.

But drivers complain that airport regulations have halved their pay and given an advantage to politically well-connected industry leader SuperShuttle. And, they add, the tighter new rules will kill many of the 32 companies in business, leading to higher fares and lower shuttle use at a time when the airport is eagerly seeking to reduce traffic. Of particular concern is the crackdown on van drivers who target passengers without reservations.

“They have created more problems--and worse problems--than the original problem,” said Richard O. Waterman, a driver with Airway Shuttle.

“They’re going to put out of business 30 companies,” said Ruben Diaz, owner of 3R Express in Torrance. As with many other small shuttle firms, 3R was begun by an entrepreneur of modest means who drained his savings and mortgaged his house to open shop.

“I have only five lousy vans,” Diaz said. “I’m doing all that I can, but how can I use a slingshot to fight a cannon?”

Airport officials are unsympathetic, saying that the existing situation is financially crippling most companies, including SuperShuttle, while delivering bad service. They contend that small firms can survive the new rules if they improve service and learn to market themselves.

“People here say big companies have the advantage,” said Joseph R. Clair, manager of LAX airport landside operations, “but we know that if they’re willing to mine the territory, they can get a pot of gold.”

Rivalries among the shuttle companies have come to a boil because of the new rules, with different firms filing lawsuits, complaining to regulators, photographing competitors as they allegedly violate regulations--even using employees to spy on competing executives--in an effort to bend the rules their way or otherwise gain advantage.

The infighting has gotten so bad that William R. Schulte of the state Public Utilities Commission said the commission will soon reconsider how it regulates the industry.

PUC special investigator Larry McNeely said it will seek a moratorium on new vans at LAX to ease the competitive frenzy. It also will recommend mandatory safety inspections of vans, which are not checked by authorities, and reconsideration of rules requiring van companies to have their shuttles driven by employees rather than by independent subcontractors.

Other problems are strictly the province of the Los Angeles Airport Commission. For example, the commission charges shuttle vans a fee each time they drive around the central terminal area--$1 for each of the first three loops, $10 apiece after that. Smaller companies say that this favors big companies with elaborate reservation systems. Reservations let companies pick up more passengers per loop.

In March, for example, SuperShuttle reported carrying 53.4% of all van riders at LAX, but paid only 26.3% of all airport fees from van companies. In contrast, the 27 smallest shuttle companies combined carried 16.5% of the riders and paid 42% of the fees.

Clair said the airport tried to assess companies based on the number of passengers carried, but van companies often under-reported passenger totals and the airport lacked enough people to verify passenger counts. Besides, he added, the current system encourages companies to develop reservation systems, even if smaller companies have to form cooperatives to do so.

Reservations help the airport achieve several goals: less congestion and pollution, less haggling at curbs and faster pickups. Clair said vans are not working at their potential. A 1987 study found that only 2.2% of air passengers used shuttle vans to go to LAX--one-third as many as those who took taxis.

However, high-minded regulations are problematic in a young industry full of entrepreneurs. Systems range from cookie-cutter corporate efficiency at SuperShuttle to two-van hustle at Alberto Transport. Such diversity means that most new rules give an advantage to some companies at the expense of others.

For example, vans seeking to pick up passengers at the airport have to wait, often for hours, in a holding lot north of the airport. A van can bypass the wait if it has a reservation to pick up a passenger at a certain terminal. This system favors those firms, such as SuperShuttle and Prime Time, with large and expensive reservation networks.

“At busy times, it’s not unusual for them to send in nothing but SuperShuttle, SuperShuttle, SuperShuttle--for 20 minutes, nothing but SuperShuttle,” said Maurice V. Alfi, a driver for All-American Shuttle. “It’s not fair.”

Angry drivers beat the system. Some pay people to pose as riders with reservations. Others ignore legitimate reservations once inside the airport, forcing stranded customers to call again--and let another driver from the same company jump the line. Workers who enforce rules said some drivers offer them bribes of cash, candy or cigarettes.

Clair dismissed the criticism, saying that the problem is chiefly because of aggressive start-up companies that rely on picking up customers without reservations, a practice that has reduced average van ridership to 1.7 passengers.

On his recommendation, the five-member Airport Commission, appointed by Mayor Tom Bradley, took three actions in December and January:

* It limited the number of vans that target customers without reservations, and will ban them outright in August. Small firms said this will put them out of business before they can develop a customer base large enough to support an elaborate reservation system.

* It banned private contractors from driving vans. Prime Time, the airport’s second-largest shuttle company, said this snuffed out its experiment in streamlining its management and boosting ridership by leasing vans to drivers who worked for themselves.

* It required companies to use only those vans registered in their name. This banned another innovative management system in which Hollywood-based Airport Flyer let independent drivers use their own vans under its name and use its reservation system.

“The rules are changing out of necessity,” Clair said. “Nobody wanted to impose a bunch of rules. But we got complaints (about drivers) . . . who don’t have the public interest at heart.”

Drivers disagree. Ron Behrman, who has worked as an independent contractor and now drives for Airport Flyer, said market forces compel independent drivers to provide better service to curry repeat business with frequent fliers and their firms.

“They (airport officials) keep on figuring out new ways to cut our throats, to get us out of here and let SuperShuttle take over,” he said.

SuperShuttle, based in Westchester, cited the new rules when it sued Prime Time and Airport Flyer in March, seeking a court order to essentially shut down both firms. However, it received a narrow order prohibiting only a few Airport Flyer vans from operating. SuperShuttle failed to appear at a hearing on its complaint against Prime Time.

Clair flatly denied that the new rules were intended to benefit anyone except shuttle riders.

“SuperShuttle does not control the rules written here,” he said. “The rules are written to improve the system and the operation of the airport.”

Instead of resenting SuperShuttle, he said, “they should be thinking of dragging themselves up to SuperShuttle’s level.”

Riders, however, seem generally pleased with the performance of small companies.

“I don’t have any problem with it,” said Arnold Malcolm, a Beverly Hills physician, as he prepared to board a van recently. “You sometimes have to wait 15 minutes for a particular shuttle, but it’s not bad.”

One man, an official of the state college system, was frustrated by SuperShuttle because it has stranded him on the curb. The man, who asked not to be identified because he did not want it to appear that the state was criticizing a particular company, said three SuperShuttle vans had passed him by.

“I had a confirmed reservation on SuperShuttle,” he said. “But each time they have had a different story (for not taking him). I must say, my frustration level is very high.”

John F. Goss, SuperShuttle’s chief operating officer and spokesman, was traveling in Texas and Arizona, where SuperShuttle also operates, and could not be reached for comment.

In the past, Goss and Chief Executive Officer Mitchell S. Rouse have said SuperShuttle needs round-trip customers to spread out the cost of its reservation system. But smaller operators with weak reservation systems can charge lower fares and woo away SuperShuttle passengers as they leave the airport.

Statistics support that charge. In March, SuperShuttle told the airport that it took 46,433 people to LAX, but took out only 37,899, a loss of 18%. Conversely, many small operators with weak reservation systems reported driving away up to six or eight times as many customers as they took in.

Competitors discounted the complaint. They said SuperShuttle takes more people to LAX because of name recognition, a decided advantage when passengers have to summon a van to their homes. But convenience and price are more important than name recognition at the airport, where vans are stacked up at the curb.

Instead of forcing companies to compete in reservations--an area where SuperShuttle, Prime Time and a few other companies have an advantage--drivers for smaller outfits want the airport to consider regulations that don’t threaten competition.

“They’re going to force the industry out of business,” said Waterman, the Airway Shuttle driver. “It’s a good product. It won’t be easy to kill. But they will kill it with the system they’re proposing.”

Shuttle Showdown at LAX

THE VAN PLAN: HOW IT WORKS

Shuttle vans at Los Angeles International Airport are allowed to pick up passengers only at pedestrian islands and only while parked in the outer roadway. Regulations are enforced by curbside Customer Service Representatives, who also assign passenger without reservations to vans headed in their direction.

If a van is not picking up a passenger with a reservation, it must wait in the holding lost at the edge of the airport. Drivers say that, depending on traffic, the wait can be several hours long.

A. * Every two minutes, two “free call” vans may pull up to islands, but must stay behind a red line on the sidewalk; passengers without reservations are told to wait there.

* While waiting, the van cannot block crosswalks or the transition roads. But if there are no passengers without reservations, the van cannot stop.

If a van is picking up a passenger with a reservation, it does not need to wait in the holding lot.

B. * Once Customer Service Representatives confirm the reserved passenger is waiting, the van drives to the terminal where it can pull around the line of waiting “free call” vans and stop on the “reservation” side of the red line.

* It may also pick up passengers from other “free call” areas at other islands.

Drivers say the system can be manipulated:

* A van can pick up a reserved passenger at one terminal, then stop at the “reserved” curbs elsewhere, effectively cutting in front of the line of competitors.

* Separate vans or several vans can be sent in for each reservation, avoiding a long wait in the holding lot. The passengers are later consolidated in one van.

* Customer Service Representatives may be persuaded to “steer” free-call passengers to certain companies.

LARGEST FLEETS

Currently, more than 30 shuttle fleets serve LAX; here is a look at the five largest. The other firms operate a total of 347 other vans. L.A. Top Shuttle: 36 Coast Shuttle: 40 Amtrans Airport Shuttle: 50 Prime Time: 92 Super Shuttle: 239

NUMBER OF VAN LOOPS

Shuttle vans pay airport fees based on the number of times they loop LAX (below, for March, 1991), not on the number of passengers. Small firms say this is unfair.

Company Company loops % of total SuperShuttle 25,150 26.3% Prime Time 10,110 10.6% Amtrans Airport Shuttle 7,333 7.6% Airport Flyer 7,208 7.6% LA Xpress 5,621 5.9% All Other 40,094 42.0% Total trips 95,516 100.0%

Source: Los Angeles Department of Airports, companies