Magazine for the professional limousine, charter and tour industry.
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26 LIMOUSINE, CHARTER & TOUR JANUARY 2017 WWW.LCTMAG.COM MONEY: RATES TNC Pricing Pressures Force Operators To Rethink Charges Many operators are backing off extra charges for early morning service, overtime caused by flight delays, and many surcharges previously considered normal and reasonable. By Jim A. Luff, LCT contributing editor F or decades, operators have tacked on multiple surcharges with such creative terms as STC, airport tax, fuel surcharge, early morning pickup fees, etc. They basically gouged clients instead of simply charg- ing enough on every run to cover the expenses of running a ground transpor- tation company efficiently. Clients paid it because they had no alternative if they wanted chauffeured transportation. Pricing In The Past Operators have always struggled with various pricing issues, and mostly dis- agree on how to charge for various ser- vices. Some operators use a "transfer fee" or "flat rate" to move a client from the airport to a hotel. These brief rides are generally under one hour and in many markets can be less than 20 minutes. This method always raises the question of how to charge the client for any delays. Do you convert the ride to an hourly charge or levy a wait-time charge if the flight arrives late? If you charge a wait time, how much is it? Mike Denning, owner of Elegant Lim- ousines in Palm Beach, Fla., says they include information about wait-time in their client contracts so they don't sur- prise a client who forces a chauffeur to wait, although not at fault. In a Septem- ber 2011 post on an online industry fo- rum, Denning said, "It is not our fault the plane was kept on the tarmac and it's not the client's fault either. So, to be fair, we should split it down the middle and ex- plain this to our client.' That might have flown in 2011, but not so much six years later as we enter 2017. Today's clients are also less likely to ac- cept miscellaneous charges such as STC (Surface Transportation Charge). This nifty little fee could include airport taxes, PUC taxes, or anything else an operator might want to throw in for an extra buck. Such expenses should have been included in the pricing structure before TNCs came around and introduced simpler pricing structures. Pricing For The Future One of the changes we can expect is the elimination of garage-to-garage based fees. Corporate travelers being picked up or dropped off in smaller markets may accept a nominal "travel fee" for coming to get them and take them to a larger city, but the concept of charging from the time you leave your garage until the time you get back for local inner-city trips is no longer acceptable. Why would they pay you to drive to the pickup location and back to your garage when TNCs don't? Cancellation fees are another charge that needs to be tweaked. Carey Inter- national charges $75 if you don't cancel within a specified window of time, and most operators will charge the com-