McCarran cuts number of limousine, shuttle companies serving airport

Airport managers, citing lower passenger volume than in the past, will trim the number of companies serving the airport from six to four, a move prompting some operators to express concern about declining service.

Last week, the airport sent out a request for proposals that would cover a new contract to start May 1, two months before the new Terminal 3 opens. Airport managers had previously said they wanted to trim the pack, but the request for proposal offered the first details of their plan.

"With the moving of traffic … and how it is distributed among the two terminals, we don’t believe six will be successful," Clark County Aviation Director Randall Walker said in March, as the county was considering dropping one operator that had defaulted several times on its concession fee.

Last year, Walker proposed reducing the number of operators to five, but commissioners then opted for six. However, commissioners approved the four-firm plan without objection in April.

Walker has long favored generally limiting the number of concessions to what the airport’s data show can remain profitable. This has meant, for example, leaving some retail shops vacant rather than filling them all and letting the market decides who survives.

The impetus for changing the limo and shuttle count came from three years of declining passenger counts, which hit the limos and shuttles as well as many other concessionaires. Total limo and shuttle revenues last year dropped 2.8 percent to $41.4 million, the lowest level since 2007, after carrying 6.4 million people to and from their flights.

Some of the current limo operators contend that the new limit is too tight.

"With four companies, it’s going to be a challenge to provide the service that the public should expect," said Charles Horky, president of CLS Transportation, the company that had defaulted but later caught up.

Alan Waxler, co-owner of AWG Ambassador, which operates under the Ambassador and Ritz brands, said four would be too few, though six is too many.

"I think five might be a comfortable number," he said.

The contract covers only companies that now work from the west side of Terminal 1’s baggage claim area and haul passengers for hire. Shuttle vans or complimentary limos tied to a particular hotel use a different area and are not covered by the service limit.

The airport’s experience with CLS, which missed concession fee payments several times in the past three years, underscores one complication from the downturn. The late rents triggered a process of formally establishing defaults and drawing on a letter of credit that all the companies must post with the airport. Walker said it "wasn’t worth maintaining this company with all the administrative burden we have."

However, commissioners gave CLS, which would have had to lay off 280 employees, a second chance after it caught up in payments. The company has been current ever since.

Other operators have paid their bills on time, Walker said.

Also, operating expenses are expected to be higher when the new terminal opens because limo operators will have to serve two locations. Airport management estimates that more than 30 percent of the limo trade will shift to Terminal 3.

The price for an airport slot is expected to rise, too, said Kimberly Rushton, the attorney who represents the Livery Operators Association of Las Vegas.

Bidders must specify a minimum annual amount they will pay for airport access. The top four bidders will get a slot, and the bid amounts determine the order that the companies follow in choosing the doors where they will set up their ticket sellers. The door choice is critical because annual revenues at the six Terminal 1 doors range from $3.7 million to $9.5 million.

If a limo operator’s revenues exceed its minimum bid, the operator instead pays 10 percent of gross revenues.

With fewer bidders and the airport expecting to remain at least financially even, Rushton said minimum bids would likely rise. That would also require the operators to tie up more money in letters of credit designed to cover at least three months’ of fees in the event of default.

However, both Horky and Waxler said they remained profitable at the airport even as traffic sank and the minimum ran higher than the 10 percent.

Several other concessionaires at the airport were offered relief on their minimums when their financial results deteriorated. Rather than cut the limo and shuttle minimums, Walker offered to let operators out of their contracts with no early termination penalties, but none of them accepted.

Contact reporter Tim O’Reiley at toreiley@reviewjournal.com or 702-387-5290.