The Greater Orlando Aviation Authority put Howard Gumbs out of business in 1991, destroying his seven-year-old shuttle service and forcing Gumbs into poverty. "I almost lost my wife; no money was coming in," Gumbs says.
Until then, Gumbs had offered cheap transportation from Orlando International Airport to Kissimmee and points along U.S. Highway 192 in a 15-passenger van. Many of Gumbs' customers bought their shuttle passes as part of a package from their travel agents, he says. Gumbs paid the airport high fees for the privilege of working there.
But Paul Mears Jr. didn't like Gumbs ... or the dozens of other small operators scratching out their livelihoods in a similar manner. And so the rules were changed to give Mears most of their business.
Today, airport officials roll their eyes when Gumbs is mentioned. Men like Gumbs break the rules by aggressively soliciting passengers and giving Orlando a bad image, they say. The airport must be concerned with quality of service, they say. Creating exclusive, competitively bid contracts guarantees that, they say.
Yet competition is lacking. Mears has been the sole bidder for every large-scale taxi and shuttle contract the airport has filled for the past 14 years. Indeed, an examination of both taxi permits and airport contracts over that period suggests the rules are written and enforced in a way that enriches Mears' companies at the expense of all others.
With 950 vehicles, Mears Transportation Group is the largest ground transportation provider in Central Florida. His fleets serve more than 70 percent of the key livery passengers departing the airport, and hold a hammerlock on most of the area's major tourist hotels.
Yet few outside a corps of local drivers realize that Paul Mears Jr. -- who owns Yellow, Checker and City cabs, Airport Limousine Service and several other, more specialized companies -- staked his $50-million-per-year transportation fortune first on impoverishing his workers, then on destroying his rivals, then on shafting the airport. Gumbs was one of dozens pushed out by changes that consolidated Mears' grip on the airport franchise.
Those drivers -- many of them former Mears employees -- now represent the most serious challenge to Mears hegemony.
$5 an hour
$5 an hour
On May 12, about a hundred cab drivers piled into the Orlando City Council chambers for a public hearing on the city's proposal to issue a new block of taxi permits, required of every driver before he or she can go into business. The drivers stomped their feet, shouted insults and shrugged off the admonitions of Mayor Glenda Hood like smartass delinquents.
It was like a Jerry Springer show. Only it mattered.
Philip Glidden got the biggest cheer. "I represent an organization of drivers we tentatively call the Sun Cooperative of Florida," he announced, adding that the independent drivers were taking the unusual step of banding together "`s`o they don't have to share most of their earnings with an exploitative taxicab company."
"Exploitative" is a relatively new word in the local taxi business.
Paul Mears Sr. started City Cab in 1939 with three cars, and rose to prominence in the '40s and '50s as he bought up rivals. By the 1970s he had 200 taxis and the broad respect of local leaders and riders alike. He was known as a fair man, paying decent wages for a hard day's driving.
One of his four sons, Paul Jr. graduated from Vanderbilt University with a degree in history and joined the family business in 1969. A few years later, in 1976, he revolutionized it.
"First thing he did was, he fired everybody and hired them back as independent contractors," says Ed Thurman, the key architect of the drivers' co-op and a former Mears driver who has fought the company for most of this decade. "That was the beginning of the end."
As independent contractors, the drivers were required to lease their vehicles from Mears, buy their gas from Mears and get dispatched by Mears. They get to keep the money they collect. But they get no health benefits, no retirement plan and, according to their contract, no worker's compensation. Mears insurance covers everyone who could conceivably be injured in or by a Mears vehicle -- except the driver.
The change proved immediately lucrative. According to an audit performed by Ernst & Ernst in 1977, the new system saved Mears 13 percent in expenses while increasing revenues nearly 5 percent in the first eight months.
The 200 drivers organized a union and worked with regulators to try to rein in Mears' power. Mears responded by raising the lease on his taxis, triggering a strike. The drivers took their complaints to the National Labor Relations Board, claiming back wages of $1.5 million on the theory that, because they did not control the conditions under which they worked, they were not truly "independent contractors." Then Ronald Reagan was elected president and the idea of labor rights was overthrown in favor of "global competitiveness." The workers settled their suit 10 years later for $480,000.
Thurman often claims Mears drivers earn only $50 per shift ($300 per week) after expenses, calling it "the new sharecropper mentality." Mears says his drivers net $700 to $1,000 per week, an amount endorsed by other taxi companies and that, if true, would put those drivers in the top third of the local per-capita income bracket. But "they won't tell you that," Mears says, acknowledging that cash transactions make it easy for drivers to cheat on income taxes.
An Orlando Weekly analysis of Mears' "certification of fees" for the 1994-95 budget year -- the last for which fares were reported to the airport -- shows that a Mears driver working six days a week and making 20 percent in tips netted an actual average $401.80 per week, or about $5.58 an hour.
The question of income is central to the upheaval. If drivers can't make a decent living working for Mears, then they look for ways around the law. They open their own business and drive outside of the city of Orlando in Orange County ... where taxi service is unregulated -- or in Osceola County, which is lightly regulated. They try to get fares any way they can while playing cat-and-mouse at the terminal with airport security. They may become "gypsy" cabs, ripping folks off and creating a problem for Central Florida's public image ... and, in the process, giving airport officials and corporate clients even more reason to rely on Mears exclusively.
Today Central Florida's livery system, lauded by Mears and his allies in government as a model of efficiency and value, is in fact a bizarre hybrid of government control of the market and ruthless corporate dominance that benefits Mears above all. The May 12 meeting -- and the underlying question of how to distribute new Orlando taxi permits -- is the latest skirmish in what has become a 20-year war to break the Mears monopoly.
"You realize that this is all about the airport," says Paul Mears Jr. "This is all about creating a new class of driver-owned business, and they're all going to go out and get in line at the airport." He says this with the tone of regret one might employ in discussing a relative hooked on crack.
By contrast, Mears portrays himself as an altruistic fellow -- proprietor of the only local taxi company that serves both tourists and local residents. Mears portrays his cabs' presence in non-tourist areas as a loss leader, claiming to lease to his drivers the cars he restricts to these "underserved" areas for about half what the plum airport cars lease for. "Some `leases` are less than the cost of operating the vehicle," Mears says. "I'm the only company that doesn't put every car I'm permitted to have at the airport."
Under city rules, a permitted company can put three-fourths of its cars at the airport; in fact, as one who holds 59 percent of the city's 352 taxi permits, Mears is the only operator who can afford to short his quota. His franchise gives him tremendous leverage and economies of scale his rivals cannot match.
To control his drivers, Mears relies on a patchwork of regulations and jurisdictional zones encompassing the airport, the counties, the city, and several of Mears' companies. It seems complicated only until you realize that the inefficiency works to Mears' advantage.
Any driver with a city permit can pick up passengers at the airport. Most of that traffic then flows toward hotels in and around Disney and Universal Studios. In a normal situation, those drivers then would carry passengers from the hotels back to the airport. Not here.
Disney lies outside of the city of Orlando. And on Disney property, only Mears' Checker cabs are allowed to line up at the hotel taxi stands. Everyone else -- including Mears' Yellow and City cabs -- are banished. Mears pays the hotel companies for this right.
But Checker cabs do not have permits to operate in the city. That means Checkers drivers can drop off passengers at the airport, but cannot pick up passengers there. Thus, they are forced to return to the hotels empty -- a policy that Thurman says leads to "maximum deadhead driving."
Spending half of one's miles driving an empty cab is unusual, especially in a tourist area. San Francisco cabbies run their meters about 80 percent of their miles. In New York City it's more.
Mears drivers say they lease his cabs for $500 to $625 a week; they must pay that lease whether they collect fares or not. The more cabs Mears operates, the more money Mears makes -- even if his drivers' income drops.
But that's not why he set up the system that way, Mears says.
"If you let every cab driver any place he wanted any time, they would all be at the airport all the time," he explains. "So in order to ensure service all over the community, we've broken the fleet into six or seven components. You've got to cause vehicles to have to return to a home base area, or you won't get service in the home base area."
He writes the rules
In 1981 Rachel Pellino, fed up with the city's refusal to let her expand her six-year-old, Orange County-based Town & Country taxi business into Orlando, complained to two U.S. Justice Department officials. "When they left they said, ‘You'll hear from us,'" she says. "I thought, ‘Right.' But I did."
At the time, the city allowed only Mears to operate inside the city limits, a boundary that included the lucrative passenger runs from the airport. Pellino had gone to the city asking for a permit to drive her cabs in the city, too. The city told her they had no permits to give; in fact, no permitting system existed.
The Justice Department inquiry into the matter may have been only informal; no official recommendations followed. But the next year, the city abandoned Mears' monopoly and initiated a system that made taxi permits available, for a fee, on a first-come, first-served basis. The number of permits -- one per car -- dictated how many taxis a company could operate in Orlando. Any driver still could drop off their passengers at the airport or elsewhere. But without a city permit, they could pick up their fares only in the unregulated environment beyond the city limits.
Significantly, a city permit did not guarantee access to the airport. Instead, the airport developed a concession system, demanding bids from taxi owners for the right to pick up passengers there.
On the night before the first permits went on sale, Pellino camped her blue taxi van at City Hall as if waiting for concert tickets. At 8 a.m. the next morning she and the others marched into the lobby. "At the time I could only afford to get eight `permits`," she says. "Mears was first in line. He got 140 or so."
Mears had more going for him than mere permits under the regime of Mayor Bill Frederick. With the advent of the permit system, the city created a board to police the process; Paul Mears Jr. was its most prominent member. The Mears group also was handed responsibility by the city for inspecting all taxis for safety -- for a nominal fee.
About 15 different vendors secured permits on that first day. But within a few years almost all had sold or gone out of business.
It's hardly coincidence that the surviving companies -- Mears, Town & Country and White Rose Taxi, which bought out some of the losers and grew into Ashtin Leasing, currently the city's second largest -- also had secured airport service contracts.
Those contracts, called "concessions," were awarded on a three-tiered system -- consisting of "primary," "independent" and "minority" contracts -- and granted by the aviation authority, a governmental body that operates the airport separate from the city and county. Bidders for each of those contracts had to pledge at least 8 percent of their gross fares to the airport for the right to do business there. But in order to be considered, they also had to have a minimum number of vehicles with city permits.
Since that system was begun in 1982, Mears has been the sole bidder for every "primary" contract.
His concession agreement gave Mears 75 percent of all taxi trips, guaranteed. That percentage was enforced with a new system of "traffic lights," which were programmed to signal a Mears taxi to advance from the waiting lineup of drivers 75 percent of the time.
But more important was that, by securing the primary concession, Mears also won the right to control the taxi "starters" -- those individuals who call up a cab for each potential passenger in baggage-claim area. The starters, dressed in Mears yellow, are not allowed to solicit passengers or steer anyone to a particular brand of cab. And yet, the "competing" companies never seemed to get all the prime fares to which they felt entitled.
In April 1986, Pellino's lawyer claimed in a letter to the airport brass that Mears-employed starters gave Mears drivers the more lucrative, longer-distance runs and doled out mostly shorter trips to their competitors. The lawyer, James Neduchal, asked that the airport hire independent starters.
Airport officials called a meeting of the taxi company officers; not surprisingly, Mears dictated the result. Nothing changed. "Please inform me if these guidelines provided by the ‘primary' taxi concessionaire `Mears` meets the approval of your client or if additional discussion is needed," the airport's manager of contracts, Tom Wilke, wrote in a May 12, 1986, letter to Neduchal. A hand-written notation on the bottom of the letter says, "No further response from Town & Country has been forthcoming."
"He writes the rules," Pellino says of Mears. "I got so disgusted, so fed up, I don't even do anything about it any more."
The story of Mears' special status does not end with his taxi fleet. To dominate the local industry, Mears had to find a way to capture more of the bodies landing at the airport. He had to make new rules.
In March 1983, Mears bought the airport's primary shuttle service from struggling A-1 Bus Lines, becoming the first business to control two separate airport concessions. Until then it was one to a customer, please. This rule had been so stringently enforced that Pellino and her ex-husband, former Prestige Limousine owner Alex Maldon, were made to sign affidavits attesting to their business separation before Town & Country could get a taxi concession. Pellino noted the double standard but said nothing. "I just felt that being a woman, I didn't stand a chance," she says.
Mears rechristened the shuttle service Airport Limousine, offering trips to the major attractions and downtown on a per-head basis. The company grew explosively. By 1986 Mears reported revenues of more than $2.3 million and a 20 percent annual growth rate. And the ride was just beginning.
The airport demanded 10 percent of the gross receipts generated by outbound fares in exchange for allowing Mears to operate the service. But Mears found a loophole that, over the next decade, would save him thousands on his airport fee.
By 1987 Airport Limo boasted a promotional budget of $250,000. In his bid that year to continue the service Mears played up the altruistic angle, claiming that his cost "benefits not only our company but also our community." But $175,000 of that $250,000 actually was paid to travel agents as commission to sell the shuttle service along with tour packages. Mears deducted that expense from his gross, in effect converting gross revenues into lesser "net" revenues and leaving the airport -- and the passengers, who saved little off the posted fares -- to pay for his marketing.
It took airport watchdogs more than five years to catch on.
"We found Airport Limousine Service was incorrectly reporting the fares for the out-bound leg of round-trip tickets," Jean Wilson, then manager of internal audits for the airport, wrote to then airport director Norman Glass in a February 1993 memo. The loss to the airport over a two-year period: $166,292. Compounded with interest, Mears' tactic cost the airport an estimated $197,724.
Mears was presented with a bill; despite the recommendations of airport staff members, he settled for just $18,071. And as with the starters' controversy, he designed his own solution, drafting a new pricing form that lets him continue his practice today.
Wilke now says he can't recall details of the meeting, but says the deal was routine. "I think in the end that everybody agreed with him ... that he had the right interpretation," Wilke says.
Mears also has one other advantage forbidden by contract, but ignored by airport authorities.
In the name of "overflow," Mears is allowed to put shuttle passengers into taxis when the shuttles are full. But on slow days, when there aren't enough passengers to economically fill the shuttles, Mears uses the cabs in their place -- a violation of his airport agreement. In that manner, he saves money that rivals might spend running near-empty buses, making it unlikely that any shuttle operator could ever outbid him for the work.
Wilke, who as director of airport concessions and real estate is responsible for making sure the bidding is fair and the airport gets its due, was unaware of Mears' practice. "I guess we'd have to look into that issue," he said.
A bad trip
A bad trip
Today Airport Limousine is key to Mears empire because, with his heavy marketing, he earns more per-passenger with the buses than with his cabs. But not every passenger walks away pleased.
"A perfect and expensive Walt Disney World vacation was utterly ruined" by Mears' shuttle, Myra Reisman wrote in a letter to Disney guest relations.
Reisman landed at the Orlando airport with her three children on Nov. 8, 1991, and took a $35 taxi trip to the Port Orleans resort. For the return trip, the hotel desk steered Reisman to Mears. Reisman was "horrified" to find not a cab, but a 48-passenger bus.
The bill was $41 -- $6 more than the taxi ride.
Then the bus stopped at other hotels, taking two hours to deliver Reisman to the airport. She nearly missed her plane. "When I arrived in New York City I realized I had broken out in hives from all of the stress," Reisman wrote.
When Reisman told a Disney employee her tale, "she said she had to recommend Mears shuttle first because that is what supervisors tell the Walt Disney World hotel staff to do," Reisman wrote. "No one with full information about Mears transportation vs. a private taxi would ever use Mears."
Reisman's experience might be written off as ancient history if it weren't still standard operating procedure.
On Feb. 28, Kelly McConnell of St. Clair Shores, Mich., flew into Orlando with her 8-year-old daughter. She says Mears operators had quoted her a price of $25 to the Kissimmee Best Western over the phone before she left home. But when she arrived, Mears' shuttle booth staff at first said they don't even go to her hotel. Then they quoted her a price of $38.
She abandoned the shuttle and found a cab. Her cost: $25. The return trip, via Thurman's Osceola Van Service, was $20, she says.
Indeed, taxi drivers have long claimed the Mears shuttle is a bad deal for anyone who is not traveling alone. And an Orlando Weekly analysis of the 1996-97 shuttle reports shows that, even at the wholesale, "discounted" price of shuttle tickets sold through travel agents, the average fee collected on all Mears tickets was about $11 per trip. That's $2 more than minority shuttle concessionaire Transtar.
At that price -- which still doesn't include the commission the travel agent earned and probably charged the passenger -- three people could almost always share a cab more cheaply.
Driven to court
By the late 1980s Mears' dominance over airport ground transportation had borne unintended consequences. Unable to make a living driving for the taxi services, many drivers bought their own Lincoln Town Cars and established "luxury limousine" services catering to airport arrivals. They cut into both Mears' walk-up shuttle base and his taxi business -- often by tipping sky caps illegally to send them business, sometimes by offering cut-rate fares. They infuriated Mears, who by 1989 was paying the airport more than $800,000 per year for the right to operate his "primary" and shuttle concessions.
To halt the interlopers, the airport hired an investigative company, Interpose, to document undesirable solicitation methods. And when Interpose delivered a 30-page report to city and airport officials that September, they vowed to crack down. Then independents pointed out that Interpose worked as Mears' own quality-control agent. Because of the conflict, the airport never officially accepted the Interpose report, Mears says.
But airport officials still forced the burgeoning Town Car business into the shuttle contract, recasting it as a "multi-service transportation" concession and raising the fee from 10 percent to 11.5 percent. The airport further decreed that anyone bidding on the primary concession had to have at least 60 vehicles.
Mears found himself, as always, the only vendor able to meet the bid specifications.
On Dec. 4, 1994, 27 taxi drivers sued Mears and the aviation authority for $30 million, claiming violations of the Sherman Anti-Trust Act and a conspiracy between the airport's executives and Mears to lock out competition. The drivers, calling themselves the Association of Independent Airport Transportation Drivers and with Gumbs as president, demanded an end to favoritism of Mears and a contract for luxury limousine and sedan service.
The suit was similar to one filed and dismissed four years earlier in the same court. But this time the drivers retained St. Louis civil-rights attorney Eric Vickers.
Anti-trust was not his forte.
Vickers eventually filed a motion to remove the airport as a defendant. That crippled the case against Mears, since the plaintiffs had to detail the connections between Mears' interests and the airport's actions. Gumbs and 14 other drivers tried to undo Vickers' motion. The drivers were no longer united.
Vickers withdrew. The drivers continued, until a judge ruled against every one of their claims.
Why did Vickers let the airport off the hook?
In a legal filing, Vickers says his motion was merely a tactical move that would have allowed the drivers to refile their complaint against the airport later. The sensible thing was to focus on Mears and then go back to the airport later, he wrote.
The drivers tell a different story. They see a conspiracy, and say they were duped by an airport official -- William Jennings, who, like many of the aggrieved drivers, is African-American. It was Jennings who, they say, suggested Vickers to them. "`Jennings` said something like, ‘I'm sick of this `unfair treatment`. I know a good lawyer,'" says Kenneth Corely, who argued the drivers' case in court. "We said, ‘We don't want any lawyer in Central Florida.' `Jennings` said, ‘This guy's a black man, he's from St. Louis and he's good.'"
Jennings, now assistant director of airports, denies it.
An ethics complaint by Gumbs against Vickers was found by the Florida Bar to have "probable cause" for a disciplinary hearing. Then the bar realized that Vickers resides in Missouri and sent the complaint there, where it has not yet been ruled on.
Stop and go
Stop and go
The legal motion that let the airport out of the suit cited the airport authority's creation of a Ground Transportation Committee. It promised remedies including an end to the concession system in favor of a traditional "first-in, first-out" system, in which whoever was sitting at the head of the line would advance to pick up the next available fare.
It never happened.
It never happened.
Instead, airport officials, at Mears behest, created a system that merely pretends fairness. Now Mears gets the advantages of his primary concession without the hassle of bidding for it.
The genesis of the change was not the independents' lawsuit, but airport auditors' belated realization that, under the "independent contractor" system, they had no available records of gross taxi fares on which to base fees the airport could collect.
It also derived from Robert Gaye's desire to be like Mears; noting Mears' taxi/shuttle shuffle, Gaye, who won the minority contract for the airport shuttle system in 1990, threatened to sue Orlando for taxi permits of his own. The city responded with a lottery that gave away two unprecedented blocks of 20 permits each. Al Sharp won one block. Gaye won the other.
Airport staff originally had proposed the first-in, first-out system. Mears didn't like it. He backed a compromise: Using the existing system of traffic lights that calls forth cabs, the new plan would summon cabs and parcel passengers based upon the percentage of city permits a cab company controlled.
After three out of Mears' four competitors endorsed the idea, the airport authority agreed. So airport staff devised the current system. It reduced Mears from 70 percent to 59 percent, increased Ashtin from 20 to 23 percent, and reduced Town & Country from 10 percent to 6 percent, while giving the two newcomers 6 percent each. (Rather than charge concession fees, the airport now takes in a per-trip fee of $2.50 for all departing taxis; Mears collects another $1 for providing the starter corps.)
Naturally, the light system in practice buttresses Mears' lock on the taxi trade while relegating smaller companies to a bare-knuckle fight for the remaining riders.
From 1995 to 1997, Mears' airport market share dropped 18.6 percent. But he gained about 11,000 trips under the new system. Ashtin Leasing did even better, gaining 31,000 trips and 12.5 percent in market share. But Ashtin's growth came at the expense of Town & Country, which lost 4,800 trips and 43 percent of its market share. In fact, Pellino's company got only 3.6 percent of the trips departing the airport -- just over half of what it's entitled to.
Pellino still defends the light system. "I'd rather see the light system there than not," she says. "We'd lose even more" without it.
Until recently, tourist hotels outside the city in Orange County were the independent driver's last refuge. But over the past several years, drivers say, Mears has bought the rights to serve nearly all of them, pushing the independents (and formerly hotel-based companies like Town & Country) further to the margins.
Independent drivers complained to County Commissioner Mary Johnson about the Wild West atmosphere developing along the tourist strips, with drivers bribing doormen, doormen demanding the bribes, passengers victimized. They asked for regulation.
Johnson agreed, and convened a task force. Although the drivers' chief complaint was Mears' contracts with the hotels, she quelled any notion of regulating them. "I said government can't tell them what to do on private property," Johnson says. That left her with the comparatively simple matter of designing a permitting process, a safety inspection, and maybe an office to which aggrieved riders could complain.
But for two years now, the task force has looked for ways around Mears' objections with no solution. Foiled in the county, the independent drivers organized to demand the additional city permits instead. The City Council has since directed its staff to create a regulatory framework that would recognize the drivers' cooperative in any future permitting process.
Mears naturally wants to kill it.
"Central Florida is widely viewed as having one of the best transportation systems in the country," he said at the City Hall hearing in May. "We now propose to change that, in the name of creating opportunity. We don't think that's in the best interest of the operators, or the community.
"If we do want to create opportunity, let's do that -- let's deregulate the industry!"
But Mears' deregulation stance is a bluff. He knows he would lose in a deregulated market; his response is to destroy the system completely. In the same vein this past June, the city's staff circulated a draft proposal to distribute not the 54 new permits that were expected, but 150.
The tripling of available new permits solves the argument about who gets what; everyone gets something. But most drivers will, as Mears says, line up at the airport, lowering the income of all and causing more of the problems that plague the region now. Among others, those include a high turnover rate among drivers who usually know only how to find the major hotels but not much else.
As the city moves toward an "open entry" system, Mears will try to make the bureaucrats see his side. He has ponied up at least $8,300 since 1990 to the campaigns of Mayor Hood and outgoing County Chairman Linda Chapin. And since 1995, according to campaign finance records, Mears, his family, his corporations and corporate officers have donated more than $99,000 to state-level candidates and parties — including more than $60,000 to the Republican Party of Florida.
Their elective offices automatically place both Hood and Chapin on the aviation authority board, which signs off on all airport contracts. While no direct quid-pro-quo is evident, Mears' cash donations amplify his voice; none of the other livery companies are significant political contributors.
In the past decade, Mears laments, the taxi permitting process has begun to change from one in which he was allowed to marshal evidence and display expertise, to one, like the public hearing, in which "everybody gets five minutes to say what's on their mind."
Alas, Central Florida's taxi baron sees hope. "The process might be a little less scientific than it once was," Mears says. "But I think we've been able to have some influence."
Edward Ericson Jr. is Orlando Weekly's news editor.