United’s Deal With Uber Raises Concerns

United’s Deal With Uber Raises Concerns
SEPT. 29, 2014


UNITED AIRLINES has been reprising its old advertising slogan about the “friendly skies.” But some airports think the airline was a bit less than friendly when it formed a partnership with the ride-sharing company Uber without seeking airport input.

At a recent industry conference, Jeffrey T. Foland, United’s executive vice president for marketing, was extolling the airline’s promotions on friendliness, its profitable focus on high-yield passengers and strategic capacity reductions, and its initiatives in mobile technology — including an app in which passengers with iOS and Android mobile devices can book Uber rides when making United reservations.

One airport executive took issue with what some have seen as a unilateral move by United to link up with Uber, even as airports are struggling with whether, or how, to accommodate such rapidly expanding competitors to traditional taxi, limousine and other ground-transit services.

Why would United be so quick to welcome Uber when “a lot of airports in the United States are against Uber, also because the drivers are not vetted and not regulated?” Victoria Jaramillo, the marketing director at the Greater Orlando Aviation Authority, asked Mr. Foland at the Boyd Group International Aviation Forecast Summit in Las Vegas.


CreditBoyoun Kim
“I was wondering if that question would come up,” Mr. Foland said. He replied that United was merely responding to customer demands for mobile technology and “emerging views of the marketplace.” With its Uber app, “we want to provide functionality. Our customers want it. They told us they like it and they’re using the product,” he said.

While Uber and other sharing services like Lyft may well be an irresistible force, airports say they do not intend to be an immovable object. Last week, for example, Nashville International Airport became the nation’s first airport to officially recognize Uber and Lyft. The airport struck a deal in which the services must obtain permits and pay airport fees to pick up passengers curbside at designated locations.

“Airports welcome anything that helps them provide better customer service,” said Tom Devine, the general counsel for Airports Council International-North America, a trade group. He pointed out that airports don’t refer to Uber and the like as ride-sharing services, but rather as “ride-booking services,” to more precisely define the commercial nature of the upstarts.

There are 450 commercial airports in the United States, with widely varying ground-transportation services issues, including traffic congestion around terminals and potential liability for passenger pickup and delivery by nonregulated drivers.

The airport trade group has a task force that is considering ways to accommodate and regulate app-driven services, Mr. Devine said. “Airports don’t see themselves as pro-taxi or pro-ride-booking. We’re trying to regulate evenhandedly,” he added.

Revenue is obviously a big issue, since ride-share companies are operating in airport environments where ground-transportation services like taxis, limousines and shuttles pay fees. And that revenue has been rising. At many airports, money from concessions other than airline operations —restaurants and retailing, parking and car rentals, and ground-services fees — can account for half of total revenues.
For example, at Los Angeles World Airports, the authority that operates Los Angeles International and Ontario International airports, airline landing fees accounted for $227.7 million in the 2013 fiscal year — compared with $328.6 million from concessions. Of that concession pot, $9.3 million came from fees on taxis, buses and limousines, up from $8.9 million in 2012 and $6.9 million in 2011.

Major airports have been blocking Uber, and in some cases Uber drivers even have been arrested for operating at airports without permits.

“Airports want to make sure that everybody in ground transportation pays their fair share,” Mr. Devine said.

Uber contends that it is catering to consumer demand.

“Taking Uber to and from the airport is the safest, most reliable and affordable option around,” said Lane Kasselman, a spokesman. “We welcome the opportunity to show airport administrators how Uber can reduce curbside churn, eliminate deadhead trips and end long taxi queues.”

The huge growth of Uber’s airport service, part of its lower-cost UberX tier, underscores the dissatisfaction many travelers have with existing ground-transportation options at many airports.

Complaints include high prices, long waits and taxi service where technology is unavailable even for credit cards, let alone employing tech like Uber’s. You’ll have your own examples, as do I. For example, take the taxi lines at La Guardia at 9 a.m. on any weekday. (Please.)

Fierce opposition from the taxi industry is understandable, said Clayton Reid, the chief executive of MMGY Global, a travel marketing strategy firm. He pointed out that in New York City, a taxi medallion costs more than $1 million. “If I can come in and start driving and not have a dime invested in it other than the ongoing expense of my car, of course it’s a threat to the traditional medallion operations,” he said.

Airports and political authorities have for decades legislated on who can and who cannot operate commercial services at airports, he pointed out. “I think they’ll continue to have that hammer,” he said. “The pressure will be, will they find common ground between the traditional transportation providers and the new disrupters?”

Email: jsharkey@nytimes.com