Transportation Network Companies at San Francisco … · 2020-04-08 · San Francisco International...

September 2017

Transportation Network Companies at San Francisco International Airport


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Introduction San Francisco International Airport (SFO) was the first airport in California and one of the first in the country to develop permit agreements with Transportation Network Companies (TNCs). SFO announced agreements with Sidecar, Lyft, and UberX in October 2014, followed by Wingz in November 2014. These announcements represented a significant milestone in an evolution that began nearly two years earlier, when the Airport learned that TNCs were operating on Airport roadways. This evolution continues to this day, with the ongoing evaluation of TNC operations at SFO. This white paper describes the development of TNC policies at SFO, the Airport’s operating permit, initial findings, and ongoing considerations for TNCs at SFO. Discovery and Denial In 2012, SFO became aware that new businesses were operating on Airport roadways without permits. These businesses, which included UberX, Lyft, Sidecar, and InstantCab, were services that allowed customers to use a smartphone app to request a ride from a non-commercial driver, with payment exchanged through the company’s app. Because these were commercial transactions being performed at the Airport by non-permitted ground transportation operations, these businesses were in violation of Airport Rules and Regulations, California Public Utilities Commission (CPUC) regulations, and the California Penal Code. Following verification of operations through curbside observation, the Airport issued cease and desist letters to these companies. These letters generated limited dialog with some of the companies, but operations continued. As a result, the Airport followed up with enforcement efforts against these companies. Because many drivers claimed they did not know this activity was illegal, enforcement officers issued written warnings and developed a database of enforcement statistics by company. When applicable, officers also issued citations to drivers for California Vehicle Code violations, such as being unable to produce evidence of insurance or driving with a suspended license. Acceptance and Permit Development On December 20, 2012, the CPUC began to address regulatory concerns by opening a proceeding to evaluate these new business models, initially calling them “new online-enabled transportation services.” Airport staff engaged in the proceedings, providing briefings on the impact of TNCs on Airport operations. On September 19, 2013, the CPUC issued Decision 13-09-045, which defined these companies as “Transportation Network Companies,” found that they are charter-party carriers subject to CPUC’s jurisdiction, and adopted rules and regulations applicable to TNCs. The CPUC issued its first TNC permit on February 25, 2014. With the regulatory framework in place for legal TNC operations, the next step for the Airport was to issue a commercial ground transportation operating permit specific to TNCs. Development of the permit was already underway by a team assembled by the Airport. Represented on this team were the Airport’s Operations, Legal, Policy, Information Technology, and Finance departments, as well as the San Francisco Police Department (SFPD) and the City Controller’s Office. As with any new operating mode, considerations in developing a permit for TNCs included the limited curb space and staging areas at the Airport, equity with other commercial ground transportation operators, and the need for data about TNC operations. However, TNCs presented additional challenges: unlike traditional


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commercial ground transportation modes, TNCs rely on drivers using their personal vehicles, CPUC regulations allow removable rather than permanent trade dress, TNCs rely on a large and fluctuating pool of vehicles and drivers, and one driver can operate on behalf of multiple companies simultaneously (or no company at all if on a personal trip). For these reasons, many of the traditional tools for commercial vehicle management, such as vehicle decals and transponders, aren’t appropriate for TNCs. The TNC permit development process was therefore more complex than for a traditional ground transportation mode. In developing the TNC permit, the Airport team focused on the following goals:

▪ Incorporating new business models into existing structures ▪ Maintaining safety & security ▪ Meeting new and shifting customer expectations ▪ Maintaining a fair and competitive system for all stakeholders ▪ Maintaining consistent enforcement ▪ Managing curbside congestion ▪ Managing accountability and liability

To facilitate an understanding of their respective positions, the Airport initiated discussions with the TNCs to discuss the TNCs’ operating models and the Airport’s basic ground transportation permit requirements. On November 15, 2013, Airport staff held a meeting with prospective TNCs to present the Airport’s proposed TNC operating permit requirements and solicit feedback. Over the next several months, Airport staff held follow-up meetings with individual TNCs to obtain further feedback. On April 7, 2014, the Airport released its TNC operating permit, sending application packets to all TNCs that had been issued CPUC permits. Following the release of the permit, additional meetings were held with the TNCs, both individually and as a group, to discuss the permit terms. These discussions continued throughout the summer of 2014, resulting in a pilot permit that was finalized in October 2014. Permit Terms The finalized permit was released under a Pilot Program, valid through August 31, 2015. The permit allowed for both pick-ups and drop-offs, with passenger pick-up privileges subject to review after 90 days. The review period was intended to give the Airport time to evaluate the operational impacts of TNC vehicles waiting at the Airport for pick-ups. The permit included the following requirements:

▪ Company Requirements: ▫ CPUC TNC permit, plus certification that CPUC requirements have been met ▫ Certification of insurance coverage ▫ Real-time notification of TNC vehicle activity:

▪ Entering and exiting Airport property ▪ Passenger drop-off and pick-up on Airport property

▫ Airport permit placard assigned and issued to all authorized TNC vehicles ▫ Electronic waybill displaying the following:

▪ Driver name and photo ▪ Vehicle license plate number and photo ▪ Proof of a ride transaction in progress

▫ Driver training plan covering Airport Rules & Regulations, subject to approval by the Airport


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▪ Operational Requirements for Drivers: ▫ Passenger pick-ups and drop-offs allowed at departures-level terminal curbs only ▫ Vehicles awaiting pick-ups must wait in the Limo/TNC staging lot

▪ Vehicle may not remain in the staging lot for more than 30 minutes ▪ Vehicle must exit Airport property if no spaces are available in the staging lot

▫ TNC app must be open when vehicle is on Airport property ▫ CPUC-approved trade dress and Airport dashboard placard must be displayed at all times, including

in staging lot ▫ Electronic waybill must be presented upon request

▪ Fees and Charges:

▫ Permit deposit and activation fee calculated based on trip activity prior to permit issuance ▫ Trip fee initially set at Limo rate: $3.85 for each drop-off and for each pick-up

▪ Trip fees by mode evaluated annually based on a cost recovery model ▫ Monthly trip report and trip fees due by the 15th of the following month

▪ Deposit increase, pre-payment requirement, or termination may result in event of default ▪ Enforcement and Auditing:

▫ Real-time vehicle activity to be visible to enforcement officers via an Airport mobile app ▫ Real-time data must corroborate self-reported trip fees ▫ Company records relating to Airport operations subject to audit by the City

▪ Insurance Requirements: ▫ Commercial liability insurance coverage while TNC vehicle is on Airport property ▫ Minimum coverage levels consistent with CPUC requirements:

▪ If ride request accepted or passenger in vehicle: ▫ $1 million per incident

▪ If no passenger in vehicle and ride request not accepted: ▫ $50K death/injury per person, $100K death/injury per incident, $30K property damage ▫ $200K excess liability

▫ In all cases, coverage shall cover claims regardless of a TNC Driver’s insurance status Program Commencement, Extension, and Renewal Agreements with Sidecar, Lyft, and UberX were announced in October 2014. An agreement with Wingz was announced in November 2014. Each TNC was required to pay a permit activation fee to cover activities from April 2014, when the permit was first made available. The Airport’s real-time TNC tracking system went live in December 2014, with each TNC coming online after its reporting was validated by the Airport. Tracking went live for Sidecar on December 30, 2014, Lyft on February 12, 2015, Uber on March 9, 2015, and Wingz on May 6, 2015. In August 2015, the Airport announced that it would be extending the TNC Pilot Program by six months through February 29, 2016. This extension was intended to provide additional time to assess the continuing increase in TNC volumes and the resulting operational impacts, and to allow for continued refinement of the real-time tracking system.


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In February 2016, the Airport and the TNCs agreed to a new operating permit, valid through June 30, 2018. The new permit incorporates data interface changes to allow for a third-party service provider for the real-time tracking system, updates to recognize new California statutes, and other minor administrative revisions. The new permit also replaced the specified $3.85 trip fee with a reference to the rates established by the Airport Commission. Effective July 1, 2016, the TNC trip fee was reduced to $3.80, which reflects the current cost recovery analysis for ground transportation modes. As of September 2017, three TNCs are active at the Airport: Lyft, UberX, and Wingz. Sidecar ceased operations nationwide in December 2015. Sitbaq was issued an Airport permit in February 2017 but temporarily suspended operations in May 2017. SocialDrv applied for a permit in February 2017 but as of September 2017 has not yet met the Airport’s requirements for approval. Real-Time TNC Tracking System A primary difference between the operating permits for TNCs and for other ground transportation modes is the requirement for TNCs to provide real-time transaction data to the Airport. Because a TNC vehicle is not a full-time commercial vehicle, it is not feasible for the Airport to use decals and transponders to identify and track TNC vehicles. Instead, the Airport developed a tracking system to accept transaction data from TNCs in real-time, allowing the Airport to track when a TNC vehicle enters, exits, picks up, or drops off on Airport property. This system allows enforcement officers to identify TNC vehicles on Airport roadways, provides data for landside operations and planning, and allows for auditing of the TNCs’ monthly trip fee reports. Once the real-time data became available through the TNC tracking system, the Airport began using this data to audit the TNCs’ monthly reports, comparing the self-reported trip counts with the transaction data reported in real-time. This auditing identified under-reporting by three out of the four TNC permittees between September 2014 and April 2015. These TNCs were required to investigate and resubmit the reports for the months in question. This resulted in the TNCs resubmitting a collective total of nine monthly reports, correcting under-reporting that ranged from 3% to 20%. In one case, a TNC under-reported 19,000 trips in a single month, resulting in an additional trip fee payment of nearly $73,000. In total, this verification process identified over 39,000 trips that were not initially reported, representing over $150,000 in additional payments. In response to interest from other airports in SFO’s TNC tracking system, in March 2015, SFO announced a licensing agreement for its “app-based ground transportation system” through the American Association of Airport Executives (AAAE) that allows the system to be licensed for use at other U.S. airports. In November 2015, SFO began using the AAAE system, meaning that TNCs operators now send real-time transactions to AAAE’s App-Based Transportation (ABT) Clearinghouse instead of directly to SFO. The Airport continues to have full access to TNC tracking data, including real-time data on handheld devices for enforcement personnel. TNC Trip Statistics The Airport required TNCs to begin reporting trip counts effective September 16, 2014. Figure 1 shows the monthly trip counts for TNCs and other commercial modes from October 2014, the first full month for which all TNCs reported trips, through July 2017. In October 2014, TNCs operated 101,066 trips (pick-ups and drop-offs), representing 19% of all paid commercial ground transportation trips. By November 2015, just over a year later, TNC represented more than half of all commercial trip activity, operating 351,471 trips (54% of total). The peak monthly TNC trip count was in May 2017, when TNCs operated 692,081 trips (71% of total). As of July 2017, TNCs continue to represent 71% of all commercial trips.


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Figure 1: TNC and Other Commercial Ground Transportation Trips (Oct 2014–July 2017)

The total number of paid commercial ground transportation trips across all modes increased from 528,136 in October 2014 to 941,841 in July 2017, an increase of 78%. However, during that period, all modes other than TNCs and scheduled bus services saw their trip counts decrease. Taxi pick-ups decreased by 45%, limousine trips by 41%, and shared-ride van trips by 32%. However, modes that wouldn’t be expected to be impacted by TNCs, such as charter buses and hotel/parking shuttles, also saw their counts decrease during this period. This suggests that factors other than TNCs may also be contributing to the changes. In July 2017, TNCs represented 71% of all paid commercial ground transportation trips, up from 19% in October 2014. During that period, all other modes saw a decrease in their market share, a result of not only their lower trip counts but also the overall number of commercial trips increasing due to TNCs. From October 2014 to July 2017, the mode share for taxis dropped from 37% to 12%, for limousines from 26% to 9%, and for shared-ride vans from 5% to 2%.

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Increased passenger use of TNCs may be impacting not only other commercial ground transportation modes but also Airport parking and rental car usage. Figure 2 shows activity for all groundside modes in Fiscal Year 2016/17 (July 2016 through June 2017), along with the percent change from the previous fiscal year. Whereas TNC activity increased by 59%, parking exit transactions decreased by 8% and rental car contracts decreased by 6%. Considering that passenger enplanements and deplanements were 5% higher in FY16/17 compared to FY15/16, the changes on a per-passenger basis are even more significant: a decrease of 12% for parking exits and 10% for rental car contracts.

Figure 2: Groundside Activity (FY 2016/17)

Activity (trips/exits/contracts) Activity per 1,000 passengers FY16/17 Change from FY15/16 FY16/17 Change from FY15/16

TNC trips 6,975,190 +58.9% 129.2 +51.4% Taxi pick-ups 1,392,191 -18.1% 25.8 -22.0% Limousine trips 1,105,738 -14.5% 20.5 -18.6% Other GT trips 920,295 +1.3% 17.1 -3.5% Parking exits 3,273,043 -7.9% 60.6 -12.3% Rental car contracts 1,833,334 -5.6% 34.0 -10.1% Total 15,499,791 +12.4%

While changes in groundside revenue would typically be expected to correspond to changes in groundside activity, this is not the case for all modes. Figure 3 shows revenue for all groundside modes in FY16/17, along with the percent change from the previous fiscal year. In many cases, the change in revenue does not match the change in activity, including the following examples:

▪ Taxi revenue is down 3% despite taxi trips being down 18%. One reason for the discrepancy is that the taxi trip fee was increased from $4 to $5 in November 2015, which lessened the impacts on revenue.

▪ Parking revenue is up 3% despite parking exits being down 8%. This is because parking rates were increased in July 2016 to reduce demand, as the Airport was facing a parking shortage due to construction.

▪ Rental car revenue is down 3% despite rental car transactions being down 6%. Rental car companies have seen a decrease in short-term (e.g., single-day) rental transactions, which is assumed to be attributable to TNCs. However, rental rate increases may be moderating the impacts on revenue.

Figure 3: Groundside Revenue (FY 2016/17)

FY16/17 Change from FY15/16

TNC $26,505,722 +56.9% Taxi $6,960,955 -3.3% Limo $4,201,805 -18.8% Other GT $3,020,252 +8.4% Parking $106,893,355 +3.3% Rental car $51,035,090 -3.3% Total $198,617,179 +5.5%


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As the examples above illustrate, a quantitative impact of TNCs on groundside revenue cannot be estimated with confidence due to the number of other contributing factors. Overall, however, total groundside revenue has kept pace with passenger growth, increasing by 5.5% compared to a 5.0% increase in passenger enplanements and deplanements. As of July 2017, TNCs have generated over $52 million in net trip fee revenue since the start of permitted operations. In October 2014, the first full month of TNC operations, TNCs generated $389,104 in revenue. In July 2017, TNCs generated $2,532,324 in revenue. Operational Issues Since the launch of the program, the Airport has been actively working with the TNCs to address issues identified by Airport operations and enforcement personnel, including the following:

▪ Vehicles not displaying trade dress and/or placard ▪ Drivers staging at terminal curbs or recirculating on the terminal roadways ▪ Drivers staging at the cell phone lot (instead of the designated TNC staging lot) ▪ Drivers turning off their apps while still on Airport property ▪ Vehicles without license plates ▪ Vehicles displaying non-conforming placards (e.g., with missing or handwritten plate number) ▪ Drivers dropping off or picking up in unauthorized locations ▪ Drivers blocking travel lanes when dropping off or picking up passengers

These issues continue to be addressed through a combination of driver education and procedural changes by the TNCs as well as enforcement by the Airport. Administrative Fines Through August 2017, the Airport has issued 21,093 administrative fines totaling $ 2,430,600 to TNCs for violations of permit operating requirements. These fines result from administrative citations issued to TNC drivers by SFPD officers and Airport Ground Transportation Compliance staff, and from incident reports by Curbside Management staff. Initially, lack of TNC trade dress and/or Airport placard was the most common violation for which TNC drivers were cited. Now that most drivers are familiar with this permitting requirement, operational violations such as unauthorized staging or parking are most common. Although the citations may be issued to the TNC driver, the associated administrative fine is issued to the TNC that holds the operating permit. According to TNC representatives, TNCs are passing the cost of the fine along to the driver responsible for the citation. In cases where drivers are cited for California Vehicle Code violations that make them ineligible to drive for a TNC (such as a suspended driver license), the Airport notifies the TNC, which blocks the driver from serving the Airport. These cases have been rare, but in each case the TNC has immediately suspended or banned the driver from their service.


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TNC Audits The Airport’s TNC permit includes provisions that allow the City to audit a TNC permittee’s records to verify compliance. In November 2016, the City Controller’s Office released reports of its audits of Uber, Lyft, and Wingz. These audits, covering the period of October 2014 through September 2015, determined whether the TNCs complied with the reporting, payment, and other selected provisions of their permits. A summary of the findings is as follows:

▪ One TNC permittee was found not to have reported 7,803 trips, resulting in an underpayment of $30,042. (This TNC subsequently fixed the reporting issue identified by the audit, which uncovered a further underpayment of $46,260 for the period of November 2015 through December 2016.)

▪ Another TNC permittee was found to have not complied with vehicle inspection and background check requirements for its commercially licensed (limousine) drivers.

▪ The last TNC permittee was found to have complied with all permit requirements. The full audit reports are available on the City Controller’s Office webpage (sfcontroller.org). TNC Regulations When the Airport released its TNC permit, the only regulatory framework for TNCs was provided by California CPUC Decision 13-09-045, dated September 19, 2013, which defined rules and regulations for TNCs. Subsequently, there have been further decisions released by CPUC as well as new state legislation enacted that have modified requirements for TNCs. The Airport’s TNC permit has been written to be consistent with these requirements as well as future anticipated requirements. The Airport has also been actively engaged in the regulatory and legislative processes involving TNCs. The Airport and the San Francisco Municipal Transportation Agency have filed joint briefs with the CPUC as part of its ongoing proceedings regarding TNC and Transportation Charter Party (TCP) regulations. The Airport has also been active in supporting state legislation to clarify and strengthen regulation of TNCs, including enhanced background checks for drivers, drug and alcohol testing, and access to the California Department of Motor Vehicles (DMV) pull notice system for TNCs. Space Allocation for TNCs At the start of the pilot program, TNCs and limousines shared a 133-space staging lot located on Airport property approximately 1.3 miles north of the Airport terminals. A Curbside Management coordinator was assigned to staff the lot from 9 a.m. to 11 p.m. daily to enforce the 30-minute dwell time restriction and the trade dress and placard requirements for TNC vehicles. Due to the large volume of TNC vehicles, the staging lot was reaching capacity at peak times, leading to congestion from vehicles unable to enter the lot. In July 2015, a second coordinator was assigned to the lot to assist with traffic management. In September 2015, limousines were relocated to a separate lot, leaving the entire lot for TNC use. Finally, in March 2016, the TNC staging lot was relocated to a nearby lot with 170 spaces. Despite the increase in size, the lot continues to reach capacity at peak hours, but this has not affected the supply of TNC vehicles serving the terminals.

http://sfcontroller.org/


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At the terminals, TNCs are authorized to pick-up and drop-off on the Departures level at the white curbs designated for passenger loading and unloading. Following the 90-day evaluation period for passenger pick-ups, Airport staff considered establishing a designated TNC pick-up zone to facilitate monitoring and enforcement of TNC activity. However, staff determined that there is inadequate curb space to provide a designated TNC zone without negatively impacting overall operations on the Departures level. More recently, congestion has been increasing on the Departures-level roadways, in part due to increased TNC activity. The congestion has thus far been managed by reallocation of traffic enforcement resources, but the Airport is currently studying operational adjustments that may be required to handle in the steadily increasing TNC volumes. An initial adjustment was implemented at the Airport’s Terminal 3, which was starting to see daily congestion issues, particularly at the near end of the terminal. In May 2017, the Airport restricted TNC pick-ups to the far end of the terminal to reduce curbside congestion. Because the TNC apps direct passengers to specific doors for pick-up locations, this change was implemented through a configuration change by the TNCs and with only minimal signage changes by the Airport. TNC Dispatching Procedures Starting in 2016, Uber and Lyft began working with the Airport on refinements to their vehicle dispatching procedures. The first change was introducing a procedure intended to reduce TNC passenger wait times, which the TNCs called “pre-dispatch” or “pre-match.” Prior to pre-match being implemented, a TNC vehicle was only dispatched from the staging lot to the terminals when a ride request was received. This resulted in typical wait times of 7-9 minutes for TNC passengers requesting rides. With pre-match enabled, a TNC vehicle is dispatched from the staging lot not with an active ride request but instead with the expectation of receiving a request while heading to the terminals. Since the Airport’s permit prohibits TNC vehicles from entering the terminal roadways without a passenger or an active ride request, the Airport required Uber and Lyft to run tests of pre-match prior to approval to ensure that vehicles were being matched prior to entry and not staging at the terminals. With pre-match implemented, the TNCs have reported reduced wait time for passengers with no impacts on the Airport’s curbside operations. The second dispatching change was introducing a procedure the TNCs called “re-dispatch” or “re-match.” With this procedure, vehicles dropping off a passenger can be immediately matched with a passenger requesting a pick-up, allowing the vehicle to pick up that new passenger before leaving the terminal area. This results in shorter wait times for TNC passengers requesting rides. Moreover, since each re-match eliminates a vehicle trip from the terminal roadways, this also results in the same number of passengers being served with fewer TNC vehicles, which should reduce congestion on the terminal roadways. To ensure compliance with permit regulations, the Airport required the TNCs to run re-match tests prior to approval to ensure that vehicles would not stage at the terminals after dropping off. The TNCs continue to work with the Airport on refinements to increase the number of vehicles being re-matched, which is mutually beneficial for the TNCs, TNC passengers, and the Airport.

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Transportation Network Companies at San Francisco … · 2020-04-08 · San Francisco International...

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