Rob Perez

Raising Cane

By Rob Perez

Airport taxi contract
raises concerns

If the complaints are true, the state is about to award a four-year contract for the Honolulu Airport taxi dispatching service that will do little to improve a poor system and possibly make it worse.

And even if the complaints aren't on the mark, enough criticisms and questions are being voiced about the process to make one wonder whether the state Department of Transportation is giving sufficient consideration to the interests of taxpayers and airport taxi users, whose first impressions of Hawaii often come via a cab ride.

Take the basic method of payment by the successful bidder: The department is proposing that the winning company pay the state based on the number of cab trips from the airport each month.

Yet the state doesn't have a system in place to independently verify that number. Instead, it will rely on the taxi concessionaire to give the state the information -- basically an "honors" system for determining payments totaling hundreds of thousands of dollars over the life of the contract.

As unsettling as that sounds, it actually could be an improvement over the current method.

SIDA of Hawaii Inc., the current vendor, is supposed to pay the state a guaranteed fee each month for managing the airport taxi operation, regardless of the number of trips. The company, in turn, charges each cabbie a fee of $400 monthly or $4 per trip.

But the guarantees have been anything but that, partly because of sluggish demand for airport cabs in recent years. As of Dec. 1, SIDA owed the state $682,000 in delinquent fees and charges, according to a DOT document. That amount is nearly half the total the company was supposed to pay over the four years of the contract, which expires at the end of January.

Critics also question how diligent the state will be in enforcing a new agreement, given its less-than-stellar record with the existing one.

"They don't really know what they're doing, and they don't really care to know," said Darcianne Evans, vice president of Charley's Taxi.

The current contract prohibits SIDA from giving favored treatment to its drivers. Under state regulations, any qualified taxi driver, no matter what company he or she represents, can service the airport. All are supposed to be treated fairly and equitably.

Yet a state judge ruled in 2001 that SIDA had violated the contract by favoring its drivers in several ways, including letting them cut in front of non-SIDA drivers waiting their turns in a taxi line for curbside customers.

The ruling came in a lawsuit that a group of independent drivers filed against SIDA in 1998 after complaining repeatedly but unsuccessfully to department officials and the governor's office about the favoritism, said Thinh Nguyen, president of the Honolulu Cabbies Association and one of the plaintiffs.

"Many, many times we complained and got nowhere," Nguyen said.

Edwin Matsumoto, SIDA's chief executive, disputed the court findings.

"There was no favoritism at all," he said.

Matsumoto noted that the plaintiffs were awarded only $3 in damages.

Given the controversies that have erupted over the airport contract in the past (drivers once went on a hunger strike to protest planned changes), it's no surprise that the awarding of the next one is drawing so much criticism, mostly from cab companies.

But even a state-appointed business advocacy panel has weighed in, asking the department to postpone bidding (sealed bids are due Jan. 8) until the new administration of Gov. Linda Lingle can review the matter.

The Small Business Regulatory Review Board is especially concerned about the "honors" system payment proposal.

"It just doesn't make sense the way they're setting it up," said Sidney Quintal, a review board member.

State transportation officials did not respond to verbal and written requests for comment.

Numerous questions have been raised about the way the state has structured the bidding requirements and the short turnaround time -- far less than four years ago -- that bidders have to submit documents. The changes seem designed to eliminate most prospective bidders and favor one or two, several taxi companies say.

"Something is wrong," said Howard Higa, president of The Cab, Oahu's largest taxi company based on number of cabs. "Something just doesn't seem kosher."

One of the changes allows bus companies to bid for the first time, Higa said.

That raises the possibility that Roberts Hawaii, the company that runs the airport shuttle-bus service to Waikiki, could get the taxi management contract, giving them control of curbside transportation at the airport, taxi companies say.

The danger of that arrangement, they say, is that Roberts would have a financial incentive to steer business to its company-owned shuttles and away from the cab drivers, typically independent contractors who own the taxis but pay a fee to affiliate with a specific company.

"There would be a huge conflict of interest," said Bob Alfred, owner of Star Taxi.

The transportation department, in a document sent to prospective bidders only a few days ago, denied a conflict would exist, saying the shuttle and taxi services essentially are alternative, not competing, ones. It also said the bid specifications favor no prospective bidder and none would receive special treatment.

Roberts, already Hawaii's largest tourism transportation company, also said it doesn't believe there would be a conflict if it wins the contract.

"We will have the opportunity to make money whichever form of transportation the visitor uses, as long as we provide solid, dependable service," said Roberts spokeswoman Sam Shenkus.

Having Roberts handle both, she added, would provide consistency and more organization, efficiency and friendliness to the solicitation of customers.

"This will be different from the current system, where visitors are often besieged by multiple solicitors upon leaving the baggage claim area," Shenkus said.

Other concerns are being raised about the requirement that the winning bidder keep track of and give to the department such information as the number of passengers per cab ride and their destinations. Such a requirement not only would be a bureaucratic nightmare but may violate customer privacy rights, critics say.

"No place have I ever seen this done in the whole world," said Dale Evans, president of Charley's Taxi.

Some cab companies, particularly competitors of SIDA, also question whether the new contract will improve quality of service, which they say is lacking because of old cars, long waits by customers and other issues.

But SIDA's Matsumoto said the service has been repeatedly lauded by customers and airport officials, and the company's four decades of running the airport dispatching has resulted in a quality system.

"After 40 years, we know what we're doing," he said.

SIDA may not be able to build on that record. The state documents provided last week to prospective bidders said SIDA was not eligible to bid on the new contract.

No matter who bids, some industry officials believe the state is taking the wrong approach to the dispatching operation.

They believe the state or a company not connected with a ground transportation provider should manage the airport taxi operation, eliminating the problem of favoritism.

The state thus far has not heeded that advice.

But given all the questions being raised about the state's handling of the next contract, the state should postpone the bidding to let the new administration conduct a review.

If that ultimately results in a better system and better service to customers, the state -- and taxpayers -- will benefit.

Star-Bulletin columnist Rob Perez writes on issues
and events affecting Hawaii. Fax 529-4750, or write to
Honolulu Star-Bulletin, 500 Ala Moana Blvd., No. 7-210,
Honolulu 96813. He can also be reached
by e-mail at:

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