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Sky Harbor's Taxi Plan Relies on Start-Ups - But One Experienced Cab Company Could End Up in the Driver's Seat

Nine years ago, when the city of Phoenix last issued a request for proposals for taxicab service at Sky Harbor airport, it chose three experienced companies: AAA, Discount, and Allstate.

This year, it's selecting a one-week-old start-up — and a firm based out of a UPS store.

That sounds crazy, I know, but I'm not exaggerating. The city, which tightly regulates which cab companies can pick up passengers at Sky Harbor, issued a new request for proposals, or RFP, on August 4. But when it announced its recommended providers later that month, two of the three companies on the list weren't just upstarts. They were infants.

One, Visum Investments, incorporated eight months earlier. More shockingly, the other company, Apache Taxi, did so on July 30, just five short days before the RFP process commenced.

Apache was started by the same guys who own a limo company, Magic Limo, in Tempe. At least Apache has a small office, even if it's on the site of a used tire shop. And, yes, you can order a cab from its brand-spankin'-new Web site, provided you're willing to do so five hours in advance of your trip.

But Visum? I couldn't find a Web site, or even a phone number, for Visum, so I drove to its corporate office. Imagine my surprise when I found myself in an Arcadia strip mall. The "Suite 21-598" on Visum's corporate record is actually mailbox #598 at the UPS Store there, wedged between a Pei Wei and a Pita Jungle. Believe me, there were no taxis idling in the Pei Wei parking lot.

So how does a company like Visum end up on the short list for one of the most important contracts the city will issue this year?

The answer is twofold.

First, I think Phoenix's aviation staff botched the RFP process. It chose companies based on how much they were willing to pay, not the quality of their service — making it easy for completely untested companies to win. (More on that in a minute.)

But the bigger problem may not be the process. It's the evidence suggesting that a group of businessmen may have taken advantage of the city's carelessness. At minimum, there are serious questions about whether bidders may have worked together, even while supposedly competing.

At this point, I can't fully connect the dots. I requested public records on the RFP process two weeks ago, but even though the City Council may sign off on contracts as early as next week, I have yet to get a single page of information. (Thanks, guys!) What I know comes from corporate filings, property records, and the testimony of eyewitnesses.

And what I know is enough to raise some serious questions. I worry that if the city doesn't at least pause to address them, it's setting itself up for trouble.

The city contracts with cab companies at the airport for good reason: You can't just have a free-for-all with every hack in town lining up to take passengers. Nor can you just assume the right number of taxis would line up without some control at the top.

But with the way this process is shaking out, the city is going with two companies without track records, much less a tested business model. That may result in a virtual monopoly for the third company on its list of winners, AAA Cab. And that's problematic: It would force any driver who wants to work the airport to sign up with AAA. At that point, the company has little incentive to provide good benefits or a living wage to its drivers.

As one driver told a Phoenix City Council subcommittee, "You get a company that has 120 cars at the airport, you work for them and you lose your job — what else you got?"


Forget about that "company" operating out of a UPS box, Visum Investments, for a moment. And forget about that now-three-month-old start-up at Bob's Tire Corral, Apache Taxi.

Let's focus instead on who really stands to gain from the two company's selection. Let's talk about AAA Cab.

Along with rival Discount Cab, AAA is the big game in town. Even if you think you've never called AAA for a taxi, you probably have: AAA also does business as Yellow Cab, Checker Cab, and Fiesta Cab.

And AAA stands to win big-time if the city goes with its current list of cab providers.

Here's why: Currently, the city allows 180 cabs to be licensed for airport service. Since 2000, those cabs have been evenly allotted to Discount, AAA, and Allstate.

Under the request for proposals issued in August, the city indicated it would choose up to three bidders. But it didn't require that each bidder handle one-third of the contract. A company submitting a proposal could choose to put as few as 20 cabs into play.

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Sarah Fenske
Contact: Sarah Fenske