Fair or Foul, Mineta San Jose International Airport Takes Cutfrom Off-Site Lots

December 4, 2003

Fair or Foul, Airport Takes Cut from Off-Site Lots
San Jose Mercury News, CA

Outside Red Rocket Parking on Reed Street in Santa Clara, in the shadow of the 
Mineta San Jose International Airport, sits -- yes -- a 40-foot-long red 
rocket, crafted by a metal shop from a piece of junk.

The rocket isn't going anywhere. It wasn't meant to go anywhere. And you might 
say its inert quality describes the relationship between Red Rocket and airport 
officials.

Because of an unpaid bill for a permit to transport customers to and from the 
airport, Red Rocket's red shuttle sits retired and dusty at one end of the 
700-car lot. So the parking operator is now paying for customers to take cabs.

The situation might be laughable but for this: The struggle underscores the 
stranglehold that the city has on parking at the airport.

No hero

Red Rocket is hardly a hero in this story. A company vice president, Lisa 
Frazier, concedes that it has made mistakes in calculating its bill. ``In all 
honesty, we're not perfect,'' she says.

The city says that since Red Rocket started business in August 2002, it 
underpaid, and sometimes ignored, the fees it owed for a ``ground 
transportation permit'' to take customers to the airport. Frazier blames the 
confusion of a new business.

After two hearings, including one before the airport commission, the city 
revoked Red Rocket's permit on Nov. 17. It says the company owes roughly 
$25,000 in unpaid fees, audit charges and penalties.

``It's pretty straightforward,'' says Assistant City Attorney Kevin Fisher. 
``We weren't getting correct reports, and they weren't paying their fees.''

But wait. Let's ask the naive question. Why should an off-site parking operator 
pay any money to the airport in the first place? In San Jose, the fee for an 
off-site operator is not piddling: It's 8 percent of gross revenue, plus a 
75-cent per-trip fee.

By comparison, Oakland and San Francisco airports do not charge a percentage of 
revenue, though they have per-trip fees of $2 and $2.25, respectively. 
Sacramento doesn't charge.

Airport officials cite two reasons. First, the shuttles use airport facilities, 
thus contributing to congestion. Second, the airport delivers passengers that 
let the off-site lots profit.

We can safely dispose of the first reason. The fees don't apply to individual 
drivers, who create the majority of congestion. And in evaluating the second, 
you have to remember that the airport runs its own parking lots. Red Rocket 
charges $8.50 a day. The airport charges $15.

So is all this designed to squelch competition from a lower-priced rival? The 
city says no, and its strongest argument is that the other off-site parking 
operators pay their fees for running shuttles.

Follow the money

It's hard to look at this situation, however, without concluding that money is 
at the heart of the problem. The airport enforces the law because it brings in 
cash.

In essence, it's a monopolist, taking a piece of the action even if the action 
is off-site.

Without a permit, Red Rocket is fighting the tide. As a test, I used the 
service Wednesday morning. I paid $4 to park for an hour, and Red Rocket paid 
roughly $20 in cab fees to take me to and from Terminal C.

I liked the lot very much: For a bit extra, it offers car washes, tire 
rotations, even a shoeshine. But that's the kind of business model that 
Internet companies made infamous.

Red Rocket's Frazier says she's eager to make a deal with the city. Red Rocket 
has already paid $5,000. ``We're not looking to thumb our nose at the city,'' 
she says. ``That's not the point.''

Fair enough. For the rest of us, though, it might be just the point. Without 
Red Rocket, nobody would look at just how large those fees are -- and whether 
they serve to prop up the airport's own expensive parking. In the meantime, the 
Santa Clara lot's service is quicker and better than anything the city offers. 
Let's hope they don't reach a deal quite yet. I like the cabs.

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