City Favors More Taxi Companies : Deregulation: Two firms have a virtual monopoly in the city. The council endorses a plan to open the market to other companies.

Accepting the findings of a staff report that the city’s monopolistic taxi system makes cab drivers a “captive work force” and may have failed to serve certain neighborhoods, the City Council narrowly voted this week to deregulate the taxicab business.

Despite objections from the Chamber of Commerce and the two taxicab companies that have exclusive rights in the city, the council voted 4 to 2 to tentatively approve an ordinance that will make it easier for other cab companies to obtain operating permits in the city.

The ordinance, which must return to the council for a second vote, would eliminate a requirement that a company applying for an operating permit show that there is a definite need for more taxicabs.

Council members Kathryn Nack and William Thomson dissented, and Vice Mayor Rick Cole was outside the council chamber when the vote was taken.

Municipal Services Administrator M. Kabirr Faal told the council that deregulation is necessary to break two taxi companies’ virtual stranglehold on the business. The companies, Babaeian Transportation Co. and Century Transit Systems, are owned by brothers Masood and Mahmood Babaeian. They are also the only cab services in Glendale and Burbank.

Babaeian Transportation Co. and Century Transit Systems operate cabs in Pasadena under four different names--Checker Cab, Pasadena Taxi, Yellow Cab and Red Top Cab. Taxi drivers pay the companies for dispatch service, insurance and other expenses.

Such an exclusive taxicab business “has created a ‘driver held hostage’ market” in which drivers doing business in the city are forced to pay those companies, Faal wrote in a report to the council.

Faal said Pasadena’s hotels and other developments would provide plenty of business for an open taxicab market. He added that Northwest Pasadena may be under-served by the existing companies, and increased competition would ensure that taxis will respond to calls from that part of the city. A Babaeian Transportation Co. representative, however, denied that his drivers had refused to serve the Northwest.

Neil Barker, a lawyer for both companies, said they already are losing business because of stiff competition from limousine services and Dial-a-Ride vans. Adding more taxis would make their companies unprofitable.

“You’re looking at tinkering with markets,” Barker told the council. “You’re looking at deregulation. There’s going to be a lot of cutthroat competition.”