Economics of Employees vs. Independent Operators

John McCarthy

Go Airport Express

• City Operation– 175 Unionized Employee Drivers

• Suburban Operation– 60 Independent Operators

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Independent Contractor

• Driver / Vehicle Owner – Partner

– Receives Majority of Revenue

– Assumes Majority of Operating Risk

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Employee

• Productivity– Number of Passengers Carried

• On time Performance• Number of Trips Operated

– Vehicle Maintenance and Repair

– Fuel Consumption

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Employee

• Compensation and Motivation– Hourly Rate

– Commission Formula

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Employee

• Costs– Overtime Premium Pay– Fringe Benefits

• Paid Time Off• Health Insurance• Pension

– Payroll Taxes• Social Security, Unemployment, Workmen’s Comp

Insurance

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Employee

• Unions– Negotiated Wages

• Rates & Guarantees

– Negotiated Work Rules• Productivity• Flexibility

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Employee

• Unions (Continued)– Negotiated Benefits

• Health Insurance• Pension

– Underfunded Pension Liability

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Market Environment

• Competition– Driver Status, Qualifications and

Compensation

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Market Environment

• Differentiating from the Competition– Flexibility with Pricing

• Shared Ride vs Cab Rate

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Market Environment

– Ability to Build a Higher Load Factor• Ticket counters & Curb Space

– Convenient and Visible

• Signing – – Highly Visible Directional Signage to Counters

and Loading Zones

• Announcements in Baggage Claim

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Chicago’s Front Desk

Present Day Shared Ride

• How can Airport Shared Ride Survive with Employee Drivers?– Create a Market Environment that supports

shared ride services.– Have an Airport Fee Structure that supports

quality employment and provides a return on investment for the company owners.

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Shared Ride in 1950s – 1970’s

• Survived due to the following:– State Regulatory Commissions

• created a market environment that supported shared ride serivces.

• Monitored Profits and Return on Investment– Providing protection for both the consumer and

company owner.

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Opportunity for Airports Today

• Create and Monitor an Economic Environment that Provides:– A Low Cost Transportation Alternative– An Important Green Alternative of Shared

Ride Service at the Curb.– Quality Employment with Wages & Benefits – Return on the Capital Invested in the

Operation

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