What Yellow Cab wants, Yellow Cab usually gets

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City Council is set to reward a major Houston political player (Yellow Cab company) tomorrow, as the long-delayed shared-ride airport shuttle contract is scheduled again to come to a vote (items 40a and 40b on the agenda).

To recap previous posts, the shared-ride shuttle concept is designed as alternative transportation between airports and homes/businesses. The cost will be less than taxis, because vans will transport multiple users at any given time. For several years now, there has been such a van service between airports and a handful of fixed locations (mainly hotels), and the market has supported more than one company. At DFW, four companies offer shared-ride shuttle service.

Here’s where it gets interesting.

Initially, a consultant who studied this issue for the city thought that multiple companies should be invited to participate in the new shared-ride shuttle program.

Somewhere along the way, however, the city’s airport director Richard Vacar decided that the market would only support one such participant. Unsurprisingly, the sole participant selected was a subsidiary of Yellow Cab company. (Vacar has previously arranged city business to Yellow Cab’s benefit, although that’s complete coincidence we’re sure).

A small firestorm ensued over the matter, but then Councilman Jarvis Johnson noticed something interesting about the contract language: Not only would Yellow Cab receive the monopoly on shared-ride shuttle service to homes/businesses, but the existing paid shuttle service that runs to/from airports and hotels would be scrapped! In other words, Yellow Cab would be receiving the new shared-ride shuttle business, and Yellow Cab’s competitor (Texans Shuttle) in the existing shared-ride airport-hotel shuttle business would be forced out of business!

Mayor White had this to say about that “glitch” in the contract, as it was reported at the time:

The five-year contract between the city and a SuperShuttle franchise run by Yellow Cab was scrapped because it would have prohibited vans that transport passengers directly between airports and hotels from continuing to operate at Houston airports.

That stipulation was not included in the city’s original request for shared-ride shuttle proposals.

“It was never our intention in this process that it would eliminate another type of service,” White said.

But, again, what weight should the mayor’s opinion have, when the city’s airport director (and seeming Yellow Cab booster) wants things a certain way:

Richard Vacar, the city’s airport director, said allowing hotel-to-airport vans to continue to operate would decrease SuperShuttle’s odds for success.

SuperShuttle is, of course, the Yellow Cab subsidiary, and it’s apparently very important to give Yellow Cab what it wants.

It must be, because, as Alexis Grant reports today, the contract being voted on tomorrow gives Yellow Cab/SuperShuttle the exclusive right to provide shared-ride shuttle service AND phases out the shared-ride shuttle service between the airports and hotels (provided now by Texans Shuttle). It looks like that earlier “glitch” really wasn’t a glitch after all.

What a sweet deal for Yellow Cab, which gets the new business, protects its taxi business, AND kicks a competitor out of business, all by the fiat of Richard Vacar and enablers on City Council.

And which Councilmember has been most involved in this anti-competitive, stinky activity?

None other than the same Councilmember who was telling us last week that markets require that dogs (with their dander and shedding and ticks and fleas) be allowed in restaurants:

[Transportation Committee Chair Michael] Berry compared the shared-ride market to that of WiFi: the bigger the service area, the more difficult it becomes to provide quality service to outlying areas.

That logic seemed contradictory to several council members, who figured a larger service area would require more vans and thus more companies.

“Basically what you’re telling me is monopoly is better than competition,” said Councilman M.J. Khan.

Yes, Councilmember Khan, that is indeed what our alleged pro-market councilmember is trying to tell you.

Yellow Cab is a business and political heavyweight in this town, and it’s difficult for Councilmembers to say no to them (and their donations).

Nonetheless, that’s exactly what Council needs to do with this shameful effort to hand over a new monopoly to Yellow Cab while effectively putting one of their competitors (that lacks political clout) out of business.

That stinks. Houston deserves better from its leaders, especially the self-described market-friendly ones.

UPDATE (09-14-2006): The Chronicle‘s Alexis Grant reports that Council approved the contract, which effectively rewards Yellow Cab (in more ways than one) and puts Texans Shuttle out of business. Four councilmembers voted against the shameful deal: Jarvis Johnson, Ada Edwards, Anne Clutterbuck and Peter Brown. Cheers to them. Boos to the rest of Council and to Richard Vacar.

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Kevin Whited
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Kevin Whited is co-founder and publisher of blogHOUSTON. Follow him on twitter: @PubliusTX