Henderson firm succumbs to post-Sept. 11 slowdown

Wednesday, April 3, 2002 | 11:05 a.m.

Certified Airline Passenger Services, a Henderson company devastated by new government policies ordered after the Sept. 11 terrorist attacks, is giving up on its two-year-old passenger check-in and baggage delivery business and is liquidating the company.

And Mark Brennan, chief operating officer for CAPS, said a sister company, American Baggage Co., which delivers baggage from incoming flights to local resorts, mostly from charters, may be spun off into an independent operation.

"The CAPS board met and made the difficult decision that it is not in the best interests of its shareholders to operate in a state of limbo as the Federal Aviation Administration, the new Transportation Security Administration and McCarran (International Airport) rewrote the rules," he said.

The move officially puts a total of 125 people out of work, but most employees had left the company months ago when it was apparent CAPS was going to have difficulty rebounding from the shut-down.

CAPS moved out of its offices at 2275 Corporate Circle Drive last week and moved records into ABC's office on East Patrick Lane, near South Pecos Road.

CAPS laid off 70 employees in the month after the attacks. The company was shut down by the Federal Aviation Administration because increased security measures initiated at the nation's airports prohibited the company from checking in airline passengers and taking custody of their luggage from remote locations around the city.

Brennan explained that his company, which was certified by the FAA to deliver bags to McCarran, had been told on numerous occasions that it was on the verge of being allowed to resume operations months after the attacks. But every time executives got close to a start-up, a new regulation would be imposed that would thwart operations.

When CAPS was operating, it had check-in counters at 13 resorts and the Alamo car rental agency and had contracts with 10 airlines to check in passengers and take baggage for people getting on flights at McCarran. Since Sept. 11 two of those airlines have ceased operations.

The CAPS service cost $6 a passenger and the company said 2001 was its best year -- until September.

In the month of August the company had 20,000 customers and gross revenues of $4 million, he said. And in the first 10 days of September, the company was on track to beat August's sales by 29 percent.

"We had double-digit, month-over-month growth since January (2001)," Brennan said.

Then, when four planes were hijacked and three of them were crashed into the World Trade Center and the Pentagon, the FAA grounded planes and restricted access to airports. A new agency, the TSA, was formed to handle aviation security issues and it went about writing new regulations defining security procedures and aircraft access.

Each CAPS hotel partner would have had to be recertified for service to be restarted, Brennan said.

Brennan said the board concurred that it was too risky to reopen the business in stages with two or three hotels and airlines at a time.

"We had to open with critical mass," Brennan said. "No matter how we sliced and diced the numbers, the best information we had was that we wouldn't be able to break even until 12 months from now."

CAPS founder Jerome Snyder has served as chairman of the company's board of directors. Other board members include Rex Jarrett, co-founder of ABC; Viggo Butler, chairman of United Airport Ltd., a company specializing in the privatization of airports; former McCarran aviation director Robert Broadbent, chairman of Broadbent Consulting, which is building the Las Vegas monorail system; and retired Rear Adm. Cathal "Irish" Flynn, an aviation security expert.

The company had been praised by the regulators for helping to reduce congestion at the airport. CAPS had proposals to implement similar off-airport baggage check-in programs in Los Angeles, San Francisco, Chicago, Dallas-Fort Worth, Miami and Orlando, Fla.

ABC, founded in 1972, has operated as a group travel and charter airlines division of CAPS. Most of the sister company's work involves transporting the bags of charter passengers to hotels and did not involve the stringent security regulations imposed on CAPS. The company has transported 15 million pieces of luggage since it was founded.

Brennan, who has founded a handful of small companies in the high-tech, retail and real estate sectors, said he still spends about 25 percent of his time dealing with the CAPS liquidation. He now serves as chief executive officer of Mobility, a company founded by Snyder that buys, develops and sells businesses.