The Port Authority of New York and New Jersey (Port) is one of the last major airport authorities in the United States without a ground transportation permit and access fee system in place for taxicabs, for-hire vehicles or Transportation Network Companies (TNCs) at any of its three major airports: Newark, LaGuardia and John F. Kennedy. There are many reasons this has not happened, which include rumors (or legends) of well-connected taxi owners in Elizabeth, N.J., lobbyists pushing back, and the Port simply never getting around to it, either because they did not need the money, or the political hassle of dealing with driver protests, or both.
Before 9/11, there was a shortage of taxicabs and high demand for air travel, so it made sense not to scare away taxicabs by imposing fees to access the airports to pick-up and drop-off passengers. Also, the growth of TNCs in the last decade has led parking revenue to decline or stagnate at airports across the U.S., including the Port. Initially, TNCs were sent cease and desist letters, and banned from airports for duty of care issues and failure to meet regulatory or permit requirements, but then, many airport officials corralled the golden geese. Not only do 130 airports in North America now offer TNC service, but many charge access fees and bring in millions of dollars in revenue from contracting for premium curb space access and well-placed advertising privileges.
Then all of that changed for New York and New Jersey a few years ago in spring 2017, when Port staff attended a conference of the Airport Ground Transportation Association (AGTA) that I usually speak at. Staff took copious notes during a presentation by a San Francisco International Airport (SFO) official who talked about many millions of dollars in permit revenue and administrative fines TNCs were generating for SFO. The Port has been looking for new revenue sources for years. The agency is self-funding – meaning it does not rely on taxes or funding from the states of New York or New Jersey. To fund itself, the Port says that it “work[s] very aggressively to generate revenue from businesses that use our facilities,” which includes passengers and for-hire vehicles that want to access the terminals. It has “long been understood that the agency must supplement its revenue – by making use of its legal authority to collect tolls, fares, and fees from individual users of its facilities.”
The Port staff, upon returning home, started holding many individual meetings with various limousine and app-based companies, with a draft privilege permit that was called a “work in progress,” where staff was suggesting companies individually get back to them with what they can afford to pay, and what their requests and concerns were. Despite the existence of many limousine and black car trade groups, Port staff went to all of the TNCs and premium luxury limousine companies directly. This divide and conquer strategy led to many complaints from the industry about the process, the timing, and whether an access fee was wise given many other fees and increased travel costs.
The inconveniences for all ground transportation created by the construction at LaGuardia airport, which involved many industry and passenger complaints, also happened shortly thereafter and may have impacted the decision to wait until things calmed down; including allowing the Port to show it had new and improved roads, services, parking, and amenities to justify the fees they planned to charge. The reconstruction project also allowed the Port to test whether new pick-up areas and curb space reassignments could work from a traffic flow standpoint. So the decision was made to delay consideration of this initiative until, conveniently, after the 2018 gubernatorial election, as it would also have been highly unpopular with passengers. It thereafter became a watch and wait strategy for the right timing, and it was well known in the industry and in Port circles that it would be a done deal that the fees would come at some point. What we didn’t know was: how much and when?!
As promised and predicted many times over the last few years, it finally happened. The timing of discussing the fees, however, at first appeared to come at a time when increasing the cost of taxi and FHV fares would be controversial. Business in the traditional for-hire (limo, black car and livery) and taxicab industries is declining due to the unprecedented growth of Uber and Lyft – with suicides being committed by medallion owners and other for-hire drivers as a result of lost income and medallion investments – and the implementation of the first-ever congestion pricing fees in Manhattan’s Central Business District. The protests led by taxi and for-hire driver groups, and harsh criticism, did not deter the Port from moving forward with finally implementing Airport access fees. In fact, much of the doom and gloom that was predicted in response to the congestion fees that began in early 2019 did not come to pass, although there was some limited grumbling and ridership loss. This may have prompted the Port to take up the access fee issue despite the hostile political and business climate.
In any event, the Port, this time, instead of taking a divide and conquer strategy, engaged in a more open process. The agency met with stakeholders and held many public hearings to gather comments and information before making policy decisions.
The Port’s Final & Approved Access Fee Plan
On September 26, 2019, the Port Authority Board approved the access fees at the agency’s Airports as part of a package of toll and fare hikes. Starting October 3, 2020, all for-hire vehicles – including app-based services like Uber and Lyft – will be charged $2.50 for each pick-up and drop-off, pooled FHVs will be charged $1.25 for each pick-up and drop-off, and taxis will be charged an initial fee of $1.25 for pick-ups only, increasing to $1.75 per taxi pick-up beginning on October 1, 2022.
The compromise that was reached, to the Port’s credit, was a reduction in fees to be charged to all groups, less fees for taxicabs (given the hardships the industry experienced), treating all for-hire vehicles equally, and, of course, phasing in the fees for taxis over time. The approved plan scaled back the Airport access fees from $4 for each FHV passenger pick-up and drop-off and $4 for each taxi pick-up that was originally proposed back in June. The approved plan also added a discount for pooled FHV rides and reduced the cost for FHVs and taxis to account for the current industry conditions for taxis and FHVs. According to the fee schedule, “[p]ooled FHV rides are where two or more paying parties share a single pre-arranged FHV ride and pay separately.” All of these changes were made following comments that the Port received during the public comment period.
The Port’s Driver Experience Improvement Plan
Kudos go to the Port for announcing that it will make improvements to the Airport taxi dispatch systems, traffic management, and facilities and amenities at the hold-lots for drivers. The near- and long-term improvements include upgrading and replacing temporary restroom and break facilities with permanent structures, enhancing cellular service, making healthier options available at the holding lot cafeterias. These improvements for drivers are part of the “Driver Experience Improvement Plan” that the Port Authority Board also adopted via resolution on September 26th.
The Driver Experience Improvement Plan also calls for increasing the Port’s efforts to combat illegal passenger pick-ups by educating customers about the dangers of illegal drivers and the safety and ease of a legitimate Airport pick-up. The Port also plans to ramp up enforcement by adding extra enforcement officers, including undercover and specially-trained hack officers, and coordinating enforcement efforts with District Attorneys and other relevant agencies, like the New York City Taxi and Limousine Commission (“TLC”). The Port also wants to rebuild trust with the services and drivers who serve the Airport and plans to do so by establishing regular and suitably high-level communications channels with Port staff.
The Plan to Implement & Enforce the Access Fees – A Work in Progress
While most industry leaders have accepted the new fees and compromise, there is still some doubt about the impacts of the fees, implementation and enforcement concerns, and other issues swirling about. With respect to implementation of the payment of the fees, the Port has indicated payment will be similar to the collection of the congestion surcharge or MTA taxes, where bases or licensed companies will be tracked using technology, but may be required to pay periodically after receiving invoices, estimates or some other payment notice – as opposed to using costly transponders to gain access to the airports used around the U.S.
Regarding enforcement, the Port indicated it will be enforcing the fees by denying companies entry to the airport via law enforcement checks for delinquent companies, though there will be challenges in doing so given how drivers work for multiple companies and apps, and many taxicab companies in New Jersey do not have GPS app technology or credit card payment systems. The Port also indicated it will be issuing permits to companies, to help with collection of the fees and accountability.
While there are several software companies being considered, and a bid will likely be held to geo-fence and track all vehicles coming onto Port airport premises, the scope and exact details have not yet been worked out. The Port is meeting with interested stakeholders and is seriously noting input and making policy decisions, so now is the time for the industry to be heard.
Does the Port’s Access Fee Plan Violate the Federal R.I.D.E Act of 2002?
Some in the limousine industry, especially in New Jersey, have raised the issue of whether the Real Interstate Driver’s Equity Act of 2002 (RIDE Act) prohibits the Port from charging fees at all for interstate trips. The RIDE Act, 49 U.S.C. § 14501(d), is a federal law that prohibits a state from requiring an out-of-state car service obtain a license or pay a fee “on account of the fact that a motor vehicle is providing pre-arranged ground transportation service.” Essentially, the law bars states or localities from requiring a license or fee to provide pre-arranged ground transportation interstate.
It does not appear that the RIDE Act has been used to challenge airport ground transportation fees, at least not successfully. On its face, one might contend the law does not seem to prohibit a state or airport authority from requiring FHVs obtain a permit or pay a fee for access to, or use of, an airport terminal as part of an interstate trip. The RIDE Act was enacted to address the problem of car services being regulated by multiple jurisdictions while operating in interstate commerce. Congress clearly intended to prevent states from requiring car services “purchase additional permits from a local government in order to provide round trip service” between two states. The intent was not to prevent out-of-state FHVs from being charged any fees if a trip takes them into another state, such as crossing tolls or on-street parking meters.
Airport terminal access fees possibly fall within an exemption in the RIDE Act that allows airport operators to “contract to provide preferential access or facilities to one or more providers of pre-arranged ground transportation service.” While some might argue that an access fee is not necessarily a contract, the Senate Report simply states that the RIDE Act does “not prohibit airport, train, or bus terminal operators from providing preferential access or facilities to one or more transportation provider” without mention of contracts. It could very well be that the Port intends to issue privilege permits to all taxi and FHV companies in a manner that would allow the access fee implementation to look like a contract and not a license. Certainly, the draft privilege permits disseminated to companies in the past had the look and feel of a contract.
In the past, Congress attempted, unsuccessfully, to pass legislation amending the RIDE Act to prevent the airports from imposing “unreasonable” transportation terminal fees. The Prevention of Unreasonable Fees Act (PUFA) would have allowed airports and other transportation terminals to charge “reasonable fees” to cover the costs of “ancillary services,” including restrooms, and vending machines, information monitor access for arrivals/departures, and other facilities “necessary, appropriate, desirable, or useful to the business of providing pre-arranged ground transportation service.” Even if PUFA had passed, it seems like for-hire vehicles would be in the same position they are now, facing access fees that will be used to cover the costs of ground transportation management at the Airports.
Where Do We Go From Here?! Some Historical Lessons & Guidance
In sum, industry stakeholders should be thankful that the Port, while not giving them the result they all wanted (no fees), listened and made changes to apply the rules with thoughtful consideration for the macro-challenges being faced outside the airports. So, while the Port is off to a good start on reducing the fees, more reasonable timing and equitable considerations, the dawn of a new era has begun. Just like the first time taxicab fares started being regulated, the politics and business implications of the impact of airport access fees on other policy decisions made by the TLC and private business decisions are here to stay, and will become more complicated over time.
It is rare in the history that when tolls or fees are imposed they are ever reduced or removed. The only recent historical example was in the summer of 1997 (an election year) when then-New York City Mayor Rudy Giuliani removed the fee for the Staten Island ferry, after the borough voted overwhelmingly for him in the first election. In 1911, New York City Mayor William J. Gaynor removed the tolls on the East River bridges, never to return until our recent discussions decades later as part of congestion pricing, MOVE-NYand Fix NYC. Now, there will be constant oversight exerted by the Port on the industry and passengers as an extra revenue source, just like the Metropolitan Transportation Authority (MTA) has been doing for years with the MTA tax on taxicabs. Industry stakeholders and drivers will always be looking over their shoulders and cringing whenever fees are raised in the future – as they will most certainly go up-and-up-and-up, over time – as history has shown.