by Matthew W. Daus, Esq.
History of Ground Transportation Access Fees
Airports rely on several different revenue streams to fund their operations. When one stream declines, airports often explore other ways to address the shortfall. One way that airports raise revenue is to charge access fees or to issue special permits or authority to operate ground transportation services on airport premises.
The fees also justify the provision of operational amenities such as curb space access, holding lots and other pick-up privileges for taxicabs and for-hire vehicles (FHVs) including liveries, limousines, black cars.
Airport access fee policies have been around for at least 25 years. As far back as 1992, Indianapolis International Airport was charging a $5 fee for curbside access to address declines in air travel revenue.1 There are many reasons for decreases in airport parking revenue which can be attributed to reduced car ownership and the growth of Transportation Network Companies (TNCs), such as Uber and Lyft.
Airport access fees cost travelers more than $183 million at the 50 largest airports in the United States in 2015.2 The charges at the airports are not always uniform for taxicabs and different types of FHVs. For example, San Francisco International Airport charges a $5 per taxi ride pickup fee, but only a $3.85 pick-up fee for TNCs. At Washington D.C.’s Reagan Airport, taxicabs pay a $3 pick-up fee, while TNCs pay $4.3
As TNCs become more popular, airports are accepting lucrative financial deals on permit arrangements to provide curbside space, advertising and/or holding lots to TNCs. In October 2015, O’Hare International Airport and Midway Airport in Chicago contracted with Uber, Lyft and Sidecar for approximately $15 million in the hopes that the TNCs would generate around $48 million for the airports collectively. 4
Seattle-Tacoma International Airport has a special holding lot for TNCs, and in September 2015, the airport contracted with Eastside for Hire (“Eastside”) for $22.5 million.5 Eastside, a self-dubbed “e-cab” transportation provider, took the contract from longtime taxi operator Yellow Cabs, and was subsequently paid $500,000 by Uber to include the TNC on their e-hailing app.6
Reagan National Airport and Dulles International Airport both have special holding lots that allow TNCs to idle when they are not engaged in a pre-arranged ride.7,8
The NY & NJ Port Authority currently does not charge an access fee for use of its airports, but started having discussions about implementing access fees in 2015.9 The Port Authority is proposing the access fee to pay for upgrades to help it manage traffic10and to pay for infrastructure improvements.11
Although the Port Authority raised the issue of access fees in 2015, and many times before over the years, it has not instituted them. It is one of the few airports that do not charge such fees, but that may change shortly. The Port Authority has recently been meeting with select for-hire vehicle companies and trade or industry organizations to discuss a proposed privilege permit.12
The Port Authority has indicated that the permit would not go into effect until 201813at the earliest, and that public notice would be provided before the access fees are charged..
After its initial meetings in mid to late 2016, the Port Authority started distributing what it has described as a “final” privilege permit. Among some of the provisions in the “final” privilege permit14are:
The Port Authority had asked certain FHV companies to complete the permit application and pay the initial fee to be allowed to advertise at the airports, although it has not yet started to charge access fees. Lyft has publicly praised the access fee agreement stating it will guarantee that it can access the airports and serve riders.15
This permit will now permit well financed NYC FHV companies like Uber and Lyft to advertise at the airport which may provide a competitive edge, especially if the permit fee does not require the pass through of fees to passengers.
TNCs like Uber and Lyft, which have a competitive edge in almost every U.S. city and state due to less stringent or less costly regulations than taxis or FHVs, are licensed the same as other FHV companies in NYC. However, Uber and Lyft may be able to able to open their deep pockets to subsidize passenger fees or pay for curbside access and holding areas at Port Authority airports to gain a significant advantage over other FHV companies and taxicabs in NYC and New Jersey.
Lyft’s enthusiasm for the agreement seems to be the exception. Elected officials and industry groups have objected to the new fee. New York City Public Advocate Letitia James sent a letter to Governors Andrew Cuomo (New York, Democrat) and Chris Christie (New Jersey, Republican) urging them to oppose it.16
The Port Authority of NY and NJ is governed by a unique bi-state compact which allows for the sharing of appointments. The New York Taxi Workers Alliance, a taxicab drivers’ organization, is opposing the permit fee because of its potential impact on struggling taxi drivers. Uber called the fee “excessive” and stated it was looking forward to an extensive public review process.17
Unlike other cities where Uber and Lyft appear united in interest in obtaining special permits and airport privileges in exchange for significant fees, in NYC, Uber seems to be opposing the permit in order to prevent Lyft from gaining a market share.
In NYC Uber dominates the FHV market, with over 50,000 affiliated vehicles, and the ability to stage on the service road outside JFK International Airport to accept rides at the present time. Lyft has not been able to gain the same traction as Uber in the NYC market yet, and the privilege permit may be the opportunity this company is waiting for to gain market share.
Around the country, elected officials, working with ground transportation providers, have tried to stop the access fees through several methods including legislation prohibiting the fees. There has also been litigation where ground transportation providers have sued to attempt to stop access fees. However, airports have prevailed in those cases.18
Airports are typically independent quasi-governmental entities that have wide discretion and latitude to engage in franchise agreements and permit systems or access fees for all types of ground transportation. Airport authorities only need to provide a “rational basis” or any logical or consistent non arbitrary reason to enact permit fees, distribute parking and curb privileges and allow advertising. However, these must be upheld in the courts.
This project may take some time to implement as there are many moving parts. Also, the fact that both 2017 and 2018 are election years in NJ and NY may politically complicate the speed of this process. It is never popular to charge tolls, fees or raise fares on passengers and potential voters. With mounting opposition, the Port Authority proposal may very well look different if and when it is implemented.