Shuttle Countdown

Mom-and-pop van operators are fuming over a proposed overhaul of shuttle service at Los Angeles International Airport that they say will put many of them out of business and lead to higher fares for passengers traveling to and from LAX.

The flap centers around an effort to thin the crowd of shared-ride van companies competing at LAX to just four full-service firms. Currently 38 shuttle operators vie for customers at the world’s third-busiest airport.

Airport officials say the streamlining plan will ease traffic congestion and improve air quality by removing hundreds of unneeded vans from the terminal loops. It’s also an attempt to boost standards for a local industry littered with undercapitalized companies whose aggressive tactics and dilapidated vehicles have sent many former shuttle riders running for their cars.

“Almost anyone with a van has been able to get a license and come out here and start picking up passengers,” said LAX spokeswoman Cora Jackson-Fossett. “We’re trying to make the situation more manageable.”

However, some van operators suspect that the switch from open competition to an exclusive concession arrangement is aimed at raising revenue for the airport rather than improving passenger service.

They argue that the four coveted contracts, which would require operators to own at least 50 vans and pay LAX a guaranteed minimum of $1 million annually, are stacked in favor of the largest firms. More than half of the van companies currently serving LAX have fleets of 10 or fewer vehicles.

If approved later this year by the Airport Commission, the new system would spell the end of the small operator and lead to higher prices for the traveling public, predicts Yuri Darwish, owner of Los Angeles-based Quick Trip Shuttle.

“With less competition, the price always goes up,” said Darwish, whose company operates three vans. “The public is going to pay.”

That remains to be seen, of course, in what is the latest skirmish in the shuttle van wars that have raged at LAX for more than 15 years.

Unlike other major airports, which limit the number of passenger van shuttles serving their facilities, LAX has effectively welcomed anyone who could get state Public Utilities Commission approval after ground transportation was deregulated in the early 1980s.

Van shuttles operate much like taxis by offering door-to-door service. Yet they’re cheaper than cabs because passengers typically share the ride with others headed for the airport from the same part of town.

The most recognized firm in the region is SuperShuttle Inc., the Phoenix-based behemoth whose four Southern California franchises operate 213 of the approximately 600 vans registered to do business at LAX. Still, the local industry has attracted dozens of independent entrepreneurs, many of them immigrants who have built a livelihood with a few vans and plenty of hustle.

“When I first got into this business [in 1988], I remember the taxi fare [from LAX] to Anaheim was $74,” said Iranian-born Homy Nazemzadeh, owner of Shuttle One, a Los Angeles firm that operates 15 vans. Nazemzadeh charges $25 for an individual and $9 for each additional person in a party going to Anaheim. “The public was thrilled to have an alternative.”

Through the years, however, stiff competition and thin profit margins have led to fisticuffs, traffic snarls and near kidnappings at the curb as shuttle drivers battle to lure passengers. In 1995, LAX officials finally put a lid on the market with a moratorium preventing additional shuttle vehicles from entering the fray.

Periodic inspections have turned up firms operating without insurance or using vehicles so poorly maintained that they posed a safety hazard. A 1993 study by The Times revealed that half of the 40 van companies operating at LAX at that time were under investigation by the PUC for such infractions.

Consumer complaints about lousy service and predatory tactics have grown along with the number of competitors. This may explain why only about 4% of the 60 million people who traveled to and from LAX last year used van shuttles at a time when the airport has come under pressure to reduce air pollution and make a dent in the 60,000 vehicles that circle the main terminal each day.

“We have to look out for the passengers . . . and reduce some of the traffic,” said Jackson-Fossett. “That’s what is motivating the changes.”

Those proposed changes come from recommendations in a 1995 study which concluded that the existing shared-ride van program simply does not function very well. Thus, the airport is looking to replace the current system of freewheeling competition with a concession arrangement, under which a limited number of companies would pay big bucks for the right to operate at LAX, much like restaurants, newsstands and other stores in the terminals do now.

LAX has put out bids seeking four primary shuttle firms, which would have to meet stiff new requirements dictating fleet size, vehicle type and employee training, among other things.

In exchange for a $1-million minimum annual payment to LAX, the chosen firms would be assigned permanent curb space at the airport and be given sole access to the coveted “free call” passengers--those folks exiting the airport who haven’t bothered to make shuttle reservations. Those walk-up customers make up a significant chunk of shuttle riders leaving LAX.

Airport officials also would allow two additional, limited levels of shuttle service. An unspecified number of “long-distance” carriers would be allowed to pick up passengers bound for outlying communities.

All other companies now licensed to do business at LAX could pick up only those passengers who have made reservations with their firms. That would effectively shut them out of the coveted walk-up business that has been the bread and butter of many small operators.

The proposed changes have shuttle owners such as Ruben Diaz petrified about his future--and convinced that LAX is trying to boot small operators like him while cashing in with fat concession fees.

The airport now charges each van company a fee based on the number of loops it makes around the airport each day. Last year LAX collected $2.7 million in such fees. Under the planned concession system, the minimum guarantees alone would boost that figure to $4 million.

“‘I’m 65 years old and I’m going to lose my business if this thing goes through,” said Diaz, owner of 3R Express Shuttle in Torrance. “This is all being done to benefit SuperShuttle.”

David versus Goliath has been a familiar refrain among small companies ever since SuperShuttle burst upon the scene in the mid-1980s and grew into the dominant van operation LAX.

The four Southern California SuperShuttle franchises carried 1.1 million passengers in 1996, 44% of all LAX shuttle riders that year, and SuperShuttle is a sure bet to win one of the four full-service slots being proposed.

That’s no coincidence, says Gene Hauck, president of SuperShuttle Los Angeles, who says the public’s preference for SuperShuttle has little to do with the company’s size and everything to do with its professionalism and service.

Hauck says SuperShuttle has spent years building a costly reservation system that focuses as much on bringing passengers to the airport as it does bringing them home, while many smaller companies have survived by simply hanging around the airport trolling for customers.

He says poor service by shoestring operators has alienated a huge segment of potential riders, bringing down the load of the average shared-ride van at LAX to a mere 2.6 passengers. He argues that LAX is simply catching up with other major airports in limiting the number of shuttles and imposing higher standards to serve the traveling public.

“Unfettered competition has resulted in such poor load factors that everyone is struggling,” Hauck said. “As it exists now, the system is absolutely dysfunctional.”

Airport officials insist they are not trying to put anyone out of business. They say they’ve encouraged small companies to band together to compete for full-service contracts.

Three such consortiums have submitted bids to LAX, along with SuperShuttle and Sun Valley-based Prime Time Shuttle, another big operator. LAX ground transportation officials will recommend up to four concessionaires to the Airport Commission, which will decide this spring whether to proceed with the new arrangement.

It would appear that at least a couple of the small shuttle groups have a shot at winning contracts. Even so, Maria Abdullahi, owner of Los Angeles-based Coast Shuttle and a member of one of the consortiums, is skeptical of the long-term staying power of groups made up of former competitors. Abdullahi says one of her prospective future partners recently attempted to steal away one of her long-time customers.

“It’s like a forced marriage. It won’t last,” Abdullahi said. “What the airport is proposing is too difficult.”

Small van companies fear that SuperShuttle and Prime Time will eventually have the LAX market all to themselves. Such a quasi-monopoly would only mean higher fares for the public, they claim.

LAX officials argue just the opposite, pointing out that higher load factors would mean higher profitability for the concessionaires, whose fare increases would be limited under the three-year contracts. They add that small operators who do not win one of the full-service contracts would still be able to flourish if they built up their reserved passenger base.

But Shuttle One’s Nazemzadeh says the days are numbered for the mom-and-pop shuttle operations.

“The airport welcomed us when they were trying to build this industry,” he said. “Now they want us out.

“Ultimately, the traveling public is going to lose.”