The Port of Seattle began preparing for a new on-demand taxi/for-hire contract over one year ago by inviting more than 30 stakeholders -including owners and drivers of taxis, flat-rate for-hires, limousines, shuttles, Transportation Network Companies (TNCs) and others- in the region’s ground transportation industry to provide input on operations at Seattle-Tacoma International Airport. The Port’s process included seven meetings held by an independent facilitator and a formal, independent study on best management practices at 15 peer airports. The Commission invited public comment throughout this process and heard testimony on the ground transportation industry, concerns about equitable access to airport trips and other driver/owner issues beginning in July 2015.
The stakeholder feedback and peer airport insights led to a Request for Proposals (RFP) that made improvements in equity and fairness over the last contract in 2010. For example, strong demands for equitable access to airport passengers led the Port to expand for-hire options. And the Port of Seattle increased traveler choice and customer service, strengthened environmental commitment, and allowed for the introduction of new technologies. The Port’s specific goals of the RFP process included:
- ensuring quality service for the public,
- minimizing environmental impacts,
- expanding choices for travelers,
- expanding opportunities for small businesses,
- creating stable revenue to support airport operations, and
- ensuring effective management and accountability.
In Addendum 5 to the RFP, the Port provided data on the recently implemented TNC pilot. The Addendum asked proposers if they would like to revise the financial proposal provided in the original RFP and to detail information on fees charged to owners/drivers as well as estimated net income based on an outbound trip fare of $42.00. The Port used these answers to assess whether the current process supports quality, family wage jobs and small-business opportunities and thus whether to proceed with an award under the RFP.
The proposers offered no objections to the release details from Addendum 5 and the Port is publishing those documents today. Additional details on the RFP process with links below.
Community Engagement, Industry Study and Integrating TNC’s
In May 2015, several months before the end of the existing contract, the Port proposed extending the Puget Sound Dispatch contract for one year, giving taxi service companies more time to understand the potential impact of TNC’s on their business. A number of taxi service companies rejected that recommendation and requested that the Port move ahead with the original timeline for competitive proposals.
On January 29, 2016, the Port put forward the on-demand proposal process while a separate pilot program was developed for TNC’s. The Port hosted a well-attended conference for potential proposers on February 10. All questions related to the RFP response were due on February 12 and responses were posted the week of February 15. Proposals were due on March 1, 2016.
In March 2016, the Port began its innovative one-year pilot program to offer app-based “rideshare” services for travelers while meeting the Port’s high environmental standards to reduce greenhouse gases. This first-of-its-kind program requires TNC’s to attain environmental standards equivalent to the current on-demand taxi provider through the use of high mileage vehicles, ride pooling and deadhead reduction.
On June 22, the Port issued Addendum 5 to the RFP—an extra step that allowed responders to amend their financial proposals based on the early data reflecting introduction of TNC’s and their effects to the on-demand providers. Three of the five respondents reduced their financial proposal to the Port. However, the outcome of the evaluation of the RFP, accounting for the amended financial proposals and corresponding updated scoring for that section of the RFP, did not change.
Competitive Proposal Winner
On July 11, the Port announced that Eastside For Hire (ESFH), a small business comprised of 21 minority, driver-owner individuals based in south King County, won the competitive proposal process. ESFH provides management, advocacy, technological support, and dispatching services to over 1,000 licensed for-hire and taxi vehicle owners and operators, the majority of whom are Small Business Enterprises. ESFH will hire Standard Parking (SP+), a company with vast experience at other airports, to run the day-to-day curbside operations. Negotiations with ESFH are on-going, and the Port expects to finalize the binding concession agreement in the near future.
Proposal Details
- Five-year contract (three years, with two one-year options), includes a minimum guarantee of $22.5 million to the Port, over the five year contract period. Based on the projected trip volume over the five-year contract period, revenue is estimated to exceed $36 million over the five year period. (Note: Sea-Tac has been the fastest growing airport in the U.S. for the past two years and traffic is up nearly 10% through July).
- Per trip fees will start at $7, increasing to $9 in year five.
- Expands the 100% green fleet (45+MPG) to a minimum 300 total vehicles with an additional 50 wheelchair vehicles (not required to be green, as they are not readily available).
- Contract requires a balance between metered and for-hire services to match customer demand, providing a new on-demand option for travelers
- Provider must meet service requirement of no more than a five minute wait time for customers at any time ($50 fine for each wait time violation).
- ESFH will utilize an existing contract with Uber to help reduce deadheading to match inbound trips with outbound trips, and a contract with Alaska Airlines to allow passengers to collect MileagePlan miles.
- ESFH will introduce a feedback mechanism called BusBuzz that allows customers to text comments using their smartphone.
- Detailed electronic reporting (proposed near real-time) to assist with Port tracking mechanisms.
Adequate Compensation and a Voice for Drivers
The Port agrees compensation is critical to support its goals to provide quality jobs for the region and respects the rights of workers to organize if they choose. The Port took the extra step to request respondents to disclose all estimated fees and charges to owners/drivers and to estimate hourly income for drivers. It is significant to note, the airport is a highly lucrative location from which to provide taxi and for-hire service in the region and driver income is higher for airport trips versus the rest of the region.
- The proposals received estimated driver expenses between 41- 43 percent of revenue per shift.
- Responses estimated drivers will have take-home income, before tips but after expenses, of approximately $15 - $22+/hour.
- The winning proposal estimates that drivers can significantly increase compensation by reducing deadheading and increasing off-airport trip opportunities.
- ESFH has committed to offering priority to existing taxi operators with Puget Sound Dispatch/Yellow Cab as part of taxi service with the new contract.
How is the Port fee established?
The concession fees payable under the contract are determined through an open market proposal process. Fees are not set by the Port; rather businesses make their financial proposals based on the market and what their business model will support. In this case, financial proposals were required on a per trip based for easier accountability and tracking. Revenues to the Port go to the general airport fund which supports airport projects and maintenance of facilities.
Timeline
The transition for ESFH to take over for the current contractor, Puget Sound Dispatch/Yellow Cab, is targeted for October 1. There will be no effect to travelers as the same pickup location will be used; however, flat-rate for-hire options will now be available in addition to the traditional metered taxi.
Why have only one taxi provider?
One contract provider allows the Port to ensure requirements including customer service, minimum wait times, training, background checks, vehicle cleanliness and green fleet environmental standards. In the past, when all taxi companies were allowed to serve the airport, issues included price gouging, short-haul refusals, poor treatment of passengers, and fights at taxicab stands at the airport. Without the on-demand system, the Port could not require operators to meet minimum standards of customer service and accountability.
