Sunday, August 18, 2002

New owner consolidates much of area taxi service

Cincinnati is 19th city for Coach USA

By James Pilcher,
The Cincinnati Enquirer

        Tristate taxi drivers won't be wearing suits and ties any time soon, but the region's cab industry is definitely going corporate.

        The nation's largest taxi company has made a strong move into the Cincinnati market, buying five local companies for an undisclosed amount and sinking at least $6 million into new cars and new facilities, including a computerized dispatch center.

[photo] John Hill is an executive with Greater Cincinnati Transportation Co. It runs Yellow-Checker Cab, Checker Cab and Checker Limo.
(Glenn Hartong photo)
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        The new venture, which began in January, is already the city's largest taxi service.

        And officials with the Greater Cincinnati Transportation Co., a subsidiary of Houston-based Coach USA, are planning a major expansion into Northern Kentucky.

        “We can grow this organically and create new demand with the product we offer,” says Frank Genovese, president of Yellow Cab Service Corp., the taxi subsidiary of Coach USA, which operates similar companies in 18 other cities. “We think this is a ripe market.”

        Coach USA is in turn a subsidiary of Scotland-based Stagecoach Group plc., which reported approximately $2.8 billion in revenues worldwide in 2001, but lost approximately $531 million on the year.

        Local Coach USA officials dispute charges by area competitors that the corporate background has hurt customer service and alienated local drivers by charging them more to lease cabs or permits.

        They also deny trying to take over the entire market, which local industry veterans say is worth as much as $10 million annually, including Northern Kentucky. That equates into approximately 5,000 taxi rides a day for the entire area, including airport traffic, compared with about 12,000 cab trips daily in Houston, where Coach USA entered the taxi market and now operates more than 1,500 cabs.

   Cincinnati: $2.60 for the first 1/8th of a mile, and 20 cents each additional 1/8th of a mile
   Northern Kentucky: $2.60 for the first 1/7th of a mile, and 20 cents each additional 1/7th of a mile.
   In addition, riders can be charged a flat rate of $24 from the Cincinnati/Northern Kentucky International Airport to downtown Cincinnati, although cabs leaving from Cincinnati to the airport must charge the standard rate.
        “You can think of this like King Kong with the hands of a surgeon,” says Bill Baird, a former co-owner of Skyline Taxi, one of the companies bought out by Coach USA. He's now a manager at Greater Cincinnati Transportation — which operates under the names Yellow Checker and Checker Cabs. “Most of the people here are from Cincinnati, and it's not like they have brought in anybody other than senior management from the outside.

        “And this company will raise the bar and make other people step up, which can only be good for the customer.”

Costs and benefits

        As in most cities, taxi rates here are set by individual municipalities, meaning every cab driver must charge the same as another.

        That means no one owner can start charging more if it controls most of the market. Greater Cincinnati Transportation controls 230 of Cincinnati's 540 total taxi permits, according to the Cincinnati Police Department, which oversees the taxi industry. The next nearest competitor has 82 permits. Greater Cincinnati Transportation also has 31 permits in Northern Kentucky.

        So company officials say they will have to create new business to increase profits, especially because they say their costs are higher than other cab companies.

        They are trying to improve customer service to make area residents look at taxis in a new light.

        “When you looked around when we first got here at the standards of some of the other companies, it was almost scary,” says John Hill, general manager and executive vice president of Greater Cincinnati Transportation and veteran of three other startups. “The taxi industry was really going downhill in the city. We offer something different, ... and we think we can bring new folks in that perhaps may not have thought about taxis as an alternative.”

        The company has installed a computerized dispatch system that relies on global positioning technology. Mr. Hill says the system has cut response times from 22 minutes to about 11 minutes. In addition, it gives all drivers the same opportunity for trips, and can tell where each cab is at any time.

        The company has also brought in an entire new fleet of cars equipped with credit-card swipe machines, and is about to move into a renovated building that includes a maintenance garage worthy of a new-car dealership.

        Soon, customers will be able to book a cab reservation online, as is the case with Coach USA cabs in other cities.

        And the efforts appear to be paying off. Mr. Hill says that business is up 20 percent so far this year over what it was at the individual five companies.

        “We're not looking to use our size in the market to let standards fall so we can make more money; it's exactly the opposite,” Mr. Hill says. “We're trying to bring everyone up to our standards.”

        Drivers acknowledge that the company charges more than other local cab owners to lease either a cab or a license or both (drivers are considered independent contractors, and they keep whatever they might make above their lease fees). But one veteran driver says that the difference in the cabs and in the service makes it worth it.

        “This is a great deal — if you show up, you'll make money because the computer all but guarantees you trips,” says Michael Brosmore of Covington, who drives a white Checker cab and is one of a few drivers who carries a license on both sides of the river. “I don't want to sound Pollyannaish, but I've not found a downside to this.”

Northern Kentucky battle

        Yet the attitude that the company will help raise cab standards has created a potential showdown with its biggest competitor over the Northern Kentucky market and what many see as lucrative airport traffic.

        Bill McCoy, co-owner and president of Roselawn-based Towne Taxi, says that soon after he applied for 82 permits with the state, Greater Cincinnati officials filed an objection.

        Soon after that, Greater Cincinnati applied for approximately 250 Kentucky permits of its own. Neither company's application has yet been approved or denied.

        “They're trying to bigfoot the entire area,” says Mr. McCoy, who says that his business has actually increased 20 percent because some drivers and customers have switched over from Yellow Checker or Checker cabs.

        He says Greater Cincinnati Transportation is charging drivers too much or that the company had lost the personal touch with riders.

        Mr. McCoy also says that Coach USA approached him about selling last year, but that he refused, saying the price was not high enough, although he declines to discuss the amount offered.

        Mr. Baird, who also will not disclose what Coach USA paid for his former company, defends objecting to Mr. McCoy's application by saying that such objections are “a time-honored practice” and that his company had an obligation to make sure certain standards were being met.

        “Greater Cincinnati is in the car business, not the people business,” says Mr. McCoy, who operates 82 cabs locally and who has been in the local taxi industry for 28 years.

        Mr. Hill denies this, saying that all his drivers are veterans of previous local companies. He also says that serving the customer is what will make or break the local effort.

        “We wouldn't be here if we didn't think that this city is ready for this,” Mr. Hill says. “And you can already see the difference if you look around here.”


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