Small taxi operator denied Strip certification

Wednesday, Nov. 24, 2004 | 11:05 a.m.

One of Southern Nevada's smallest taxi operators has been denied certification to serve the lucrative Las Vegas Strip market.

The Nevada Taxicab Authority rejected a request from Deluxe Taxicab Co., Henderson, to increase its geographic reach and allow the company to pick up customers north of Sunset Road. The proposal also would have saved fuel and given the company's drivers an opportunity to serve more customers and potentially make more money.

The board voted 3-2 against certification, citing concerns about the company's ability to meet minimum certification standards, but the debate was clouded by testimony of opposition from larger cab companies that would have had to compete with Deluxe on the Strip.

Deluxe currently is certified by the state to operate south of Sunset, including all of Boulder City.

According to regulations governing Deluxe's certificate, the company is allowed to pick up passengers south of Sunset and deliver them to any location in Clark County, but can't pick up passengers north of Sunset -- at the airport or along the Strip. As a result, Deluxe drivers must "deadhead" mileage, running their cabs empty on the return run to the service area.

Las Vegas attorney Robert Winner, who represented Deluxe, said one of the reasons Deluxe applied for permission to pick up fares on the Strip is that it is trying to increase revenue to help pay for the unprofitable cab committed to Boulder City, a requirement of its certificate.

"We spend about half our time burning gas," Winner said. "We run about 50 percent deadhead miles."

Most cab companies, he said, run between 25 percent and 40 percent deadheaded.

According to Taxicab Authority statistics, Deluxe had, by far, the fewest number of trips in October among 16 Clark County cab companies, 12,550 for the month, a 2.3 percent decline from the same month a year ago. The busiest company, Checker, had 264,315 trips for the month and the average number of trips by the 16 companies for the month was 143,035.

Deluxe also ranked last in average trips per shift, 13.8, down 15.1 percent from October 2003, and last in revenue per medallion, $8,000, down 13.9 percent from last year. The $8,000 figure is about half the average monthly revenue per medallion among Clark County cabs.

The Taxicab Authority board rejected Deluxe's request, citing concerns about whether the company had the means to serve a larger geographic area and whether it met an equity capital standard established for all certificate holders.

Under state regulations, each taxi certificate holder must maintain an investment of not less than 20 percent equity capital in its operations and include proof of that investment in its annual report filed to the authority.

Richard Land, chairman of the Taxicab Authority, said the company "raised doubts about its capital reserves" in its presentation and that was the key to the vote of opposition.

"He (Deluxe owner Rick Flavin) raised a lot of doubts in his presentation, but the company's doing a decent job," Land said. "He's not going to appeal (the decision), but given more time, the company should be able to get its finances in order and reapply."

Winner said that's exactly what the company plans to do.

"We were surprised and disappointed," Winner said. "By statute, we'll have to wait to reapply. But we'll be back."

Among the key points Deluxe made in its presentation was the wasting of fuel as a result of deadheading and the fact that because drivers could make more money elsewhere, it was difficult for the company keep experienced employees on the payroll.

Land said the deadheading issue wasn't even considered in the decision to reject certification. Instead, he said, most of the testimony from rival companies that can comment as intervenors centered around Deluxe's financial capabilities. Land said small cab companies supported the Deluxe application while large competitors "nitpicked against the guy and jumped him on his inability to explain his balance sheet."