McCarran to cut rents for limo, shuttle bus companies

Faced with a sharp drop in business, McCarran International Airport will slash the rents for the limousine and shuttle bus companies that pick up fare-paying passengers.

In addition, AWG Ambassador LLC will be brought in to replace Jacobs Transportation Services LLC as the fourth company allowed to serve the airport. Managers at Jacobs, which goes by the street name Executive Las Vegas, decided to drop service after concluding that it could not make a profit even at reduced rents.

In November, for example, Executive grossed $400,000 and paid about $152,000 in rent. "No one can operate with a rent that is 38 percent of gross revenues," attorney James Jimmerson, the co-owner of Executive, told the Clark County Commission on Tuesday.

The commissioners approved both the rent cut and the AWG application. The courtesy limos and shuttle buses owned by hotels were not covered by the action.

Clark County Department of Aviation director Randall Walker said revenues for the limo and bus companies have dropped 21 percent this year, after hovering around $40 million since 2007. As a result, he recommended discounting by 21 percent the minimum annual rent paid by the companies and capping the rent at 20 percent of revenues.

The change will cost the airport $6.5 million out of the original $36.8 million in rent under the current five-year concession agreement, which expires in April 2017, according to Walker. Executive pledged a minimum annual rent of $1.8 million. with the three other companies ranging from $1.4 million to $2.4 million.

According to Jimmerson, traffic fell well below projected passenger counts at the new Terminal 3, which were based on past numbers from Terminal 1. Although ticket booths for the limos and the buses were placed inside Terminal 3, Jimmerson said visitors would go past them to the curb, where the taxis queue. The limos and buses stage from an area past the taxis, so the cabs effectively became the ride of first choice, he said.

Earlier this month, Walker said the airport would construct outdoor ticket booths like the ones at Terminal 1 to try to attract more consumer interest.

"I think that will improve revenues, but to what extent I am somewhat skeptical," said Jimmerson. "Only time will tell."

By contract, the limos and shuttles at Terminal 1 use the opposite side of baggage claim across from the taxis.

At Terminal 1, Walker said the "lion's share" of the revenue decline stemmed from a federal regulatory change in January that required airlines to break out each line item of the final price they charge travelers. Some airlines, notably Las Vegas-based Allegiant Air, had previously built the limo or shuttle charge into packages.

Because Executive's bid was ranked fourth in November 2011, it was given the fourth and lowest ranked door at the north end of Terminal 1's baggage claim area. Once seven airlines moved from Terminal 1 to Terminal 3, including United, Alaska and JetBlue, Executive's gate was close only to Allegiant and US Airways passengers.

By contrast, the door at the south end of the baggage claim by the baggage carousels used by Southwest Airlines, the largest carrier at McCarran, generates more traffic than other doors.

Executive, which has 212 vehicles and more than 500 employees, will now focus on picking up clients among the resorts in town. The company has been at the airport since 2007.

AWG previously served McCarran, but finished fifth in evaluations when the concession was rebid last year. To avoid diluting the business, airport management limits the number of limo and shuttle companies to four.

When Executive told the airport management it would pull out on Nov. 30, the idea of staying with three companies was studied.

However, managers decided that the airport did better financially with four instead of three, helped by AWG's willingness to step into the void.

Contact reporter Tim O'Reiley at toreiley@reviewjournal .com or 702-387-5290.