In a big city, it’s easy to get off a plane at an airport, grab your luggage, and get out and hail a cab or call an Uber. The same can’t be said for Traverse City. Although Cherry Capital Airport (TVC) had a record summer of visitors, the airport is also facing a ground transportation crisis that has made it difficult for these visitors to get around the city. And according to airport manager Kevin Klein, the long list of factors contributing to the problem means there is no quick fix.
The biggest problem is how much the local taxi industry has shrunk in recent years. It’s not just a local problem either: Klein says “Michigan as a whole has seen a reduction of more than 40% in the number of taxi companies,” due to questions of commercial viability. According to the Passenger Transportation Coalition (PTC), a statewide group seeking legislative reform to address these sustainability issues, Michigan has lost “over 100 transportation companies and over 1,000 vehicles.”
Dan White, owner of Traverse City-based Dan’s Airport Transportation, says the biggest problem facing taxi, limousine, shuttle and charter bus companies is commercial insurance.
“My insurance premiums were $ 375 per month two years ago,” White said. The teleprinter, whose activity is classified as limousine service. “They went to $ 525 a month last year. And then in May, when I was renewing my annual contracts every year, it was going to be $ 1,000 per month. And it’s just not affordable. It is not a high profit margin business, especially in the winter. So between the virus, the closures, and the tripling of commercial insurance, which is why half of the local taxi companies are gone. “
The big local victim was Cherry Capital Cab, which closed its doors even before the pandemic struck. In June 2019, Doug Dornbos – the owner of Cherry Capital Cab – posted on Facebook that he was immediately shutting down the business. “Our fleet insurance was due to be renewed at midnight last night, but when all of our options were counted we were faced with an insurmountable increase in insurance prices,” he wrote. “We didn’t think it was financially possible to continue, so we officially closed our doors at midnight last night.”
In general, Michigan has the highest auto insurance rates in the country. These costs are due in part to the state’s no-fault insurance law, which requires drivers to purchase expensive Injury Protection Coverage (PIP). Passenger carriers are also required to have PIP insurance, and if a passenger does not have their own coverage – or is not named on a PIP policy held by a parent or other relative – this can leave insurers responsible for huge medical costs in the event of an accident.
“And so, commercial insurance companies are trying to avoid Michigan, because of the high costs of PIP,” White explains. “If I have the accident with you in my car, and I’m a taxi driver and you’re injured, my insurer could pay you $ 20 million in medical bills over 20 years. The PIP has always been unlimited in Michigan, where in most states it is capped at $ 500,000. “
The PTC is pushing for a legislative change that would remove passenger car rental companies from the order of priority that determines who pays for PIP benefits. “This would immediately relieve insurance companies of immense liability,” the coalition said.
But the shortage of taxis is not the only problem. Klein says Uber, Lyft and other ridesharing services have yet to take root in Traverse City like they have in large metropolitan areas. Rides can be found during peak hours in summer, but are more difficult to find late at night, early in the morning, or during low season. And several carpool drivers have said they’ve moved to the more predictable and lucrative Door Dash or GrubHub.
Another factor this summer has been the nationwide shortage of rental cars. “All the car rental companies have sold their cars to be able to survive the pandemic,” says Klein. “When things started to open up again, they went to order new cars, but the automakers all had a computer chip. [supply chain] problems. So that delayed the arrival of cars on the market all over the United States, including for us. “
These factors create a perfect storm for local airport transportation. Klein says he sometimes sees passengers from New York or Dallas expecting “an abundance of taxis on the curb ahead.” These visitors must then scramble to find transportation to their hotels or Airbnbs.
In other situations, passengers arriving late at night or leaving early in the morning learn the hard way that most of the locally available ground transportation options – from BATA to hotel shuttles – don’t operate until 6 a.m. or after midnight.
So what is the solution ? One solution for TVC is to let visitors know that they need to plan their transportation in advance.
The airport also worked closely with BATA this summer to increase adoption of BATA’s Link-On-Demand service among airport customers. Link-On-Demand is BATA’s answer to Uber and Lyft – an on-demand pickup service that users can book through web, mobile, or phone. The rides are available from 6 a.m. to 10:30 p.m. on weekdays and until 11:30 p.m. on weekends.
Since the start of the year, BATA has provided some 500 trips to and from the airport, between Link-On-Demand and its regular Village Loop Route 14 bus service, which includes stops at the airport.
And then there’s the new approach Dan’s Airport Service took after White’s insurance bill tripled. He calls it a “moving car business model”. The strategy allows residents to drive to the airport and park their cars in a short-term parking lot. White and an associate then go to the airport, pick up the car, and drive it back to the client’s home. Alternatively, White can pick up a car, drive it to the airport, and leave it in a short-term parking lot so someone arriving at TVC can drive home. The advantage is that White does not have to pay for fleet insurance. The downside is that the service is heavily oriented towards local customers and does not solve the problem of transporting visitors.
For his part, Klein is convinced that the market will find a way to solve the problem of ground transportation. Already, he says the rental car shortage has largely abated for TVC. New trends are also on the horizon – such as Turo.com, which has been billed as “Airbnb for cars” – that could bring new options to the table.
“It’s one of those topics that I think will always be cyclical,” Klein concludes. “I’ve seen it throughout my career for the past 25 years in airports: sometimes you have an abundance of ground transportation; other times it goes down. Right now we’re in a downward cycle for transportation, for various insurance reasons, the number of people available to drive, and more. But I think that will change and things will get better. Hopefully, as the laws change and the insurance requirements change, you will also see the market change.