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Metro Cab stirs up local drivers

Smaller companies could lose business i f the "Wal-Mart of taxis" comes in.

By JANET ZINK
Published November 20, 2006

TAMPA - Tim Fasano has been driving a taxi for United Cab in Hillsborough County since 1995.

What keeps him working, he said, is the county's tight regulation of the taxi industry, which allows a limited number of new cab permits each year.

"Whenever you have a free market, competition is good. But in this particular case, I don't know how much it would help anyone," Fasano said. "There isn't enough business out there right now to support all these fleets."

But there's a major fight brewing that could change the direction of taxi service in Hillsborough County.

Metro Cab, one of Florida's largest taxi cab operators, wants to offer service in the county.

John Trevena, an attorney for Metro Cab, described the company as the "Wal-Mart of taxis." Huge financial resources, new vehicles, large garages and a GPS dispatching system allow the company to offer high-quality service at a reasonable price, he said.

The county's cab operators said letting this giant into the market will crush the little guys.

"The taxi cab business is, by nature, being the service business ... usually handled best by local people. They have a tendency to know what's best for the community and not turn into this giant machine that wants to take everything over and push everyone out," said George Valle, owner of Executive Taxi in Tampa.

Already, Valle said, two cab companies dominate Hillsborough - Yellow Cab of Tampa and United.

Valle said he and other cab and limousine executives in Hillsborough worked for years to increase the number of permits available each year to give smaller operators a chance to grow more quickly.

Based on a calculation of keeping the number of cabs in the county to one per 2,000 residents, about 12 new permits usually became available annually. This year, with a new formula of one cab per 1,900 residents, 47 are available.

The battle for those 47 permits has turned ugly.

Metro Cab applied for 40 of them. Sixteen other cab companies also applied for permits, bringing the total number of applications to 160.

After a public hearing on Metro Cab's applications, Seth Mills, an attorney for Yellow Cab, filed a formal complaint with the county.

Mills accused Greg Cox, director of Hillsborough's Public Transportation Commission, which regulates the taxi industry, of favoring Metro Cab. Mills also asked that county officials direct Cox not to speak to the hearing officer or public transportation commissioners.

Cox said he has shown no bias. All he did was advise Metro Cab on its permit application, which he said he does for anyone filing for permits.

"If I'm biased, I'm biased toward all applications," Cox said.

Trevena, representing Metro Cab, said Mills' claims are a desperate attempt to prevent his client from breaking the "current monopoly" on taxi cab service.

Under the system used to award permits, which includes drawing names out of a hat until all 47 permits have been distributed, Metro Cab isn't likely to get more than four permits, Cox said.

But that's enough to get a foot in the door and then do what Metro Cab likes to do - buy up smaller companies and eventually take over the market, Trevena said.

"They are an acquisition company," Trevena said.

Metro Cab entered the Pinellas County market by buying Clearwater Yellow Cab in 2004, he said.

Cullen Meathe, a multimillionaire from Gross Pointe, Mich., owns Metro Cars, a conglomerate of companies that offers service in Michigan and Florida. The company offers cab service in Pinellas, Sarasota, Manatee, Polk, Lee and Collier counties, as well as Jacksonville and Palm Beach.

Meathe's push to enter Hillsborough County worries Yellow Cab and Gulf Coast Transportation, which operates United. The two hold 490 of the county's 566 cab permits.

They have filed formal objections to Metro Cab's application for permits. At a public hearing in October, Mills, the attorney for Yellow Cab, testified that his client and Gulf Coast could probably handle the competition.

"But the guys who have one, two, five, 10 cabs, they're the ones who are going to get squeezed out," Mills said.

Hearing officer Paul Marino on Nov. 3 recommended denying Metro Cab permits until the company could provide additional information on finances and market research.

Trevena said the documentation will be in place before the matter goes to the Public Transportation Commission on Dec. 13 for a final decision.

"Once that information is provided, there would be no legal reason to deny the permits," Trevena said.

If they are denied, Trevena said, Metro Cab might challenge the constitutionality of the county's regulations.

"I don't see how you can restrict free trade in the manner in which it's being restricted," he said. "What they've done in Hillsborough is so unbelievable. It's a county-supported monopoly. How is that fair? How is that free trade? How can you allow competition in that kind of environment, where they have locked in certain providers and made it impenetrable for someone to get in the market?"

Cox said he's not sure deregulation of the taxi industry is good for consumers. Seattle tried it in the 1980s.

"It went for about eight, 10 years before they concluded they had to reregulate because they had so many problems with the industry that they didn't expect," he said. "They instantly created hundreds of more taxi cabs. They all started hurting for revenues because there wasn't any demand."

Strapped for cash, the cab companies began cutting corners. Vehicles fell into disrepair.

Seattle reregulated.

"They're still trying to recover from that," Cox said.

Valle, who operates three cabs in Tampa, said he doesn't feel strongly either way about deregulation.

But he does feel strongly about Metro Cab entering a regulated market. Just the fact that the company has entered the fray means he's likely to get fewer than the five permits for which he applied.

Already, the smaller companies have a hard enough time competing against Yellow Cab and United, which hold the bulk of the permits and control airport business.

"Small companies just don't want to see something worse than what we already have," Valle said. "If they're going to regulate the market, they should keep people like Metro from coming in."

Janet Zink can be reached at (813) 226-3401 or jzink@sptimes.com.

[Last modified November 20, 2006, 06:53:54]