COVENTRY CONNECTIONS PRESIDENT HANIF PATNI SAYS THE NEW AIRPORT TAXI DEAL IS FAIR,
Passengers, drivers and the authority are all winners, Hanif Patni writes.
The new arrangement for taxis at the Ottawa International Airport has led to claims that taxi drivers are being treated unfairly. What’s really happening is the normalization of a business arrangement that has long been lopsided and inefficient.
For 22 years, a limited number of taxis had exclusive rights to pick up at the airport. Taxi owners paid a flat fee of $345 a month per taxi to pick up an unlimited number of passengers. That was the cheapest rate of any major airport in the country, by far.
That rock-bottom rate was a great deal for the 150 taxis that serviced the airport. The high-volume airport can generate between $9,000 and $10,000 in fares per month for one cab. The old arrangement wasn’t such a good deal for passengers, because there weren’t enough cabs to meet peak demand. It wasn’t fair to the rest of the city’s taxi drivers, either.
The terms of the old contract created a significant inefficiency in the operation of Ottawa’s taxi fleet. Airport cabs could pick up at the airport, but they had to return from their destination empty. All the other cabs could drop someone at the airport but couldn’t pick up any passengers, even if dozens of customers were waiting in line.
This odd arrangement worked fine for the airport taxi drivers, but it didn’t serve anyone else. Why would we want cabs to run empty half the time and drive away when they can see passengers waiting for a ride?
The biggest loser in the old arrangement was the airport itself. The numbers tell the story. The airport generates about 450,000 passenger pickups a year, resulting in taxi fares of approximately $17 million. For granting exclusive access to all that business, the old contract gave the airport only $50,000 a year.
When its contract with West-Way Taxi expired in 2014, the airport authority set a goal of getting a return that would be about the average of what other Canadian airports receive in their taxi deals.
When no taxi companies expressed an interest in taking over the airport contract, the airport authority asked Coventry Connections to manage the airport taxis. The new arrangement made sure that all the players were properly compensated for what they provide.
The airport itself will now receive about $1,350,000 a year, which represents about eight per cent of the revenues the airport taxi business generates. Coventry Connections will receive $675,000 a year for managing the taxi fleet, maintaining an office at the airport and organizing the taxi pickups. Taxi drivers will still receive approximately 88 per cent of the total revenue generated by airport trips.
What the airport authority is doing is normal business practice. Whether it’s a taxi, a rental-car company or a fastfood restaurant, all pay for the privilege of doing business on airport property. The same principle applies across the city, where taxis pay fees to pick up at the train station, the bus station and major downtown hotels.
The big change that will benefit drivers and passengers is that now any cab can pick up at the airport if the driver pays a fee of about $4.50 a trip. That means more cabs will be available at peak hours and all drivers can get a share of the lucrative airport business.
Drivers are already servicing the airport under the new $4.50-per-ride model, but those that don’t want to pay the fee don’t have to pick up passengers at the airport. The former airport drivers can choose to pick up passengers anywhere else in the city, something they couldn’t do before.
The new deal provides more competition in the taxi industry. Any licensed city taxi can now serve the airport. Where once passengers had to make do with just 150 taxis, now 500 taxis are available. That’s a significant modernization of an old business model that was a sweetheart deal for a few drivers but just didn’t work for anyone else.