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October 2, 2014

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Tourism & Gaming:

Long ride to Bellagio sparked taxicab long-haul battle

Nevada Taxicab Authority Administrator Gordon Walker tells a story about a cab customer who was really taken for a ride a few years ago.

The customer got in a cab at McCarran International Airport and asked to be taken to Bellagio, telling the driver he had never been to Las Vegas.

Leaving the airport, the cab drove through the airport tunnel, then east on Interstate 215 to the Pecos Road exit and west on St. Rose Parkway past M Resort. Then, it got on Interstate 15 north toward the Strip and Bellagio.

The customer probably paid more than four times the $15 it should have cost.

And the customer who was taken for a ride was none other than Walker, who had just been appointed to his Taxicab Authority position and wanted to see if some of the tales about cabdriver long-hauling were true. It’s no wonder that Walker wants to do something about the illegal practice that gives the taxi industry a black eye.

Walker and his staff unveiled a potential solution last week in a workshop attended by about a dozen cab company managers, their attorneys, and a dozen cabdrivers and their unions representatives. The plan: Set a flat rate of $20 to transport to any resort destination on the Strip.

The best thing about the flat rate is that long-hauling to the Strip no longer would be an issue. It wouldn’t matter whether a driver took a customer through the airport tunnel or even to M Resort, it still would cost the same amount. A motivated driver, I would think, would want to get the customer delivered as quickly as possible to pick up the next fare.

At first glance, the $20 proposal looks like a bad deal for consumers. Taxicab Authority stat man Kelly Kuzik unveiled a chart that shows how much it should cost to take a cab from McCarran to every major Strip resort under the current meter system, with and without “wait time,” that added cost assessed when a cab is stopped or slowed in heavy traffic.

Even with $2 worth of “wait time” — about four minutes’ worth of stopping for traffic lights or slogging through traffic jams — the cost to go to every single Strip property is under $20 with the current mileage rate.

Here’s a breakout of the cost, using a trip to Wynn Las Vegas as an example: The initial “drop,” the cost of hiring the cab, is $3.30. The “airport fee,” the cost to anyone going to or from McCarran, is $1.80. Based on the distance of 4.06 miles from McCarran to Wynn, the meter cost would be $9.74 — a total of $14.84. Add an extra $2 for wait time and the cost is $16.84.

Only cab trips to the South Point, Silverton and Palace Station, none of which are on the Strip, and every downtown Las Vegas property cost more than $20 to get to by cab, according to Kuzik’s calculations. But Walker’s proposal only addressed trips to Strip resorts, so those $20-plus destinations aren’t a part of the consideration.

Taxi companies that operate in Clark County have a reputation for doing everything they can to squeeze out more revenue, so it was somewhat surprising when an executive with Yellow Checker Star, the largest of the local companies, said that 90 percent of the industry is opposed to the flat rate, preferring instead to keep the metered rates and finding other ways to address the long-haul problem.

Jonathan Schwartz, a director for Yellow Checker Star, said he was in Cleveland when a proposal for flat rates was introduced, and he said the plan failed. It went down, he said, because companies and regulators couldn’t agree on rates that would be profitable for the cab companies and drivers avoided serving customers on short routes that paid less.

Schwartz told Walker at the workshop that his company warns drivers not to long-haul, and if a driver is caught he gets a warning letter in his employee file and must reimburse the passenger for the excessive charges. A second offense results in a three-day suspension and reimbursement of the excessive charges. A third offense results in termination.

Walker, incidentally, is considering a $500 fine against drivers who long-haul and a $1,000 fine for a second incident.

Some drivers attending the workshop offered some explanations about why they long-haul, other than the obvious opportunity to make a little extra money at the expense of a tourist who has money in his pockets when he comes to town and may not know the area well enough — or is too drunk — to realize that he or she is being driven the long way.

Drivers say they’re under pressure to produce ever-increasing amounts of revenue. They’re encouraged to eat lunch in their cars so they don’t waste time getting to the next customer. They’re urged to get in line to get the next fare as quickly as possible. But some drivers view long-hauling a customer as an easy shortcut to increasing the revenue stream.

How often does long-hauling occur? Taxicab Authority officials said they received 836 long-hauling complaints and issued more than 200 citations to drivers last year. They estimate 5.6 million trips from the airport to Strip resorts occurred during that time, so it appears that only a small percentage of customers are cheated.

But some critics say the practice is even more rampant because customers who have been cheated are more interested in getting to their destination than wading through the red tape and don’t want to spend their time here filling out the complaint paperwork.

In addition to considering stiffer penalties for drivers caught long-hauling, Walker, who has a small enforcement staff, said the Taxicab Authority is working on a computerized flagging system that would prevent drivers caught long-hauling at one company from getting licensed for a job at another company.

So what happens next? Although industry leaders say setting a flat rate is a bad idea, it remains to be seen whether the Taxicab Authority concurs. Two board members sat in on the workshop so they heard both sides of the debate. Although the Cleveland flat-rate plan may have failed, it appears that cab companies could make even more money than they do under the $20 plan.

Walker said it’s possible that he could tweak the $20 proposal to include more zones. Zone systems work in taxi, bus and subway lines in cities worldwide. There’s no reason why it couldn’t work here.

If new information emerges and it’s determined that a flat rate or a zoned fee system won’t work in Las Vegas — maybe “wait time” is a bigger part of the revenue picture than anticipated — the authority can still get tougher on the issue.

Instead of a three-strikes-and-your-out disciplinary action, how about zero tolerance? If it’s proven that a driver has long-hauled a customer, fire the driver with no second chances. Fine the cab company as well.

A zero-tolerance policy on long-hauling would help rid the industry of one of its big problems and assure the public that the regulators, not the industry, are running things at the Taxicab Authority.

Pay dispute

Longtime Las Vegas gaming executive Glenn Christenson resigned as a member of the board of Carl Icahn’s Tropicana Entertainment recently, and Christenson said it was over compensation.

Tropicana Entertainment owns the Tropicana-branded property in Atlantic City and four Nevada casinos, two each in Laughlin and Lake Tahoe. It also owns casinos in Indiana, Louisiana and Mississippi and a separate Icahn company owns the dormant Fontainebleau on the Strip’s north end.

None is affiliated with the Tropicana at Tropicana Avenue and the Strip.

Christenson said he has the greatest respect for Icahn, but they didn’t see eye to eye over how much he should have been paid. Icahn asked Christenson to join the board about a year ago, and he expected he had be paid about the same amount as any similarly sized casino company.

“I had a general idea of how much I thought it would be,” Christenson said, “but I also understand it’s a little different in today’s environment.”

Christenson, who was licensed in Nevada when he was the chief financial officer with Station Casinos, was quickly licensed in the five states that Tropicana operated. But when it came to compensation, Icahn and Christenson were apart by six figures. The pay at issue hasn’t been disclosed.

Before Christenson joined the board, a Securities and Exchange Commission filing indicated nonemployee members of Tropicana Entertainment’s board were paid $37,500 a quarter — $150,000 a year.

“I felt that to be effective in my responsibilities to the board I needed to give it the time it required and we just weren’t on the same page on compensation so I resigned,” Christenson said.

Hot in Reno

Hot August Nights, a 23-year-old classic-car festival that draws about 800,000 people to Reno every summer, is in the midst of a heated argument.

Organizers of the event, which provides a $350 million economic boost to Northern Nevada, planned to offer a sister event in Long Beach, Calif., next year, but representatives of the Reno City Council worried that the California version would cut into the number of car fans who come to Reno.

Hot August Nights Director Bruce Walter said the second venue is being tried to keep the festival financially strong.

This year’s event starts July 29 at Lake Tahoe and runs through Aug. 8. A variety of car displays and entertainment are scheduled at several Northern Nevada resorts.

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