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Veterans’ Taxi is newest Pittsburgh cab company on par with Yellow Cab

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Date: Friday, May 13, 2011, 6:00am EDT

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Logistics & Transportation, Consumer Services, Automotive

Anya Litvak
Reporter - Pittsburgh Business Times

This cab war has it all: big company versus small, foreign-owned versus American and a feud that has percolated over the past six years since Robert DeLucia, owner of several transportation companies in Cranberry, first applied to operate a taxi service within Pittsburgh city limits.

“Prior to Classy Cab, you didn’t have a choice,” DeLucia said of his South Side-based company, which contributes 15 cabs to a market dominated by the Pittsburgh Transportation Group, an 83-year-old company that owns 325 Yellow Cabs and four other taxi companies.

Now, DeLucia is pushing for a bigger presence in the Pittsburgh market with his newest company, Veterans’ Taxi.

Unlike Classy Cab, which is a premium, more expensive service that has employee drivers, Veterans’ would be on par with Yellow Cab. That means its drivers — military veterans — will be independent contractors who lease the vehicles and charge the same rate as Yellow taxis.

DeLucia’s business plan stresses Veterans’ is an all-American kind of company: American cars, American veterans, American fuel. The taxis, along with the majority of DeLucia’s other fleet vehicles, run on alternative fuels: electricity, propane and, soon, compressed natural gas. The company already has a propane station installed at its parking lot on the South Side.

The veteran drivers will have special uniforms that indicate their branch of military service and a military photo of them hanging in the cab. The company’s slogan is “Proud to serve you … again.”

Pittsburgh Transportation Group, DeLucia mentioned several times, is owned by French company Veolia. But the operation is run by the Campolongo family, who say they have more than 100 veterans among their employees and that the market has its fill of cabs. Yellow Cab executives did not return calls for comment, but in the company’s protest of Veterans’ application filed with the Public Utility Commission, Yellow Cab said:

“There is no need or demand for additional service in (Yellow Cab’s) authorized territory. Diversion of traffic and loss of revenues in connection with the transportation proposed by Applicant will result in diversion from existing carriers of revenue necessary to sustain their existing operations and would have a substantial adverse impact on the public or may result in destructive competition.”

DeLucia disagrees, and at two PUC hearings held last week, he solicited 23 hospitality leaders in Pittsburgh to agree with him in court.

“The city is hurting for another cab company,” DeLucia said.

Alfred LaGasse, CEO of the Taxicab, Limousine & Paratransit Association, where Pittsburgh Transportation Co. CEO Jamie Campolongo served as president in 2005, said it’s a precarious time to add more cabs to a struggling market.

“Let the demand grow back to where it used to be (before the recession) before considering the addition of more taxicabs on the streets,” he said. “Also, with the recent dramatic climb in fuel prices, it is not fair to the drivers to add more taxis. The drivers need to be able to make a decent living.”

THE COMPETITION

DeLucia and the Campolongos have had a complicated history.

DeLucia started in the transportation business in 1982 with Mars-based Star Limousine Service Inc., adding Cranberry Taxi Inc. in the 1990s and a fleet of 35 paratransit vehicles in 2009.

In 2005, when DeLucia formed Classy Cab Co. Inc. by buying the license from an existing company, Yellow Cab filed protests with the PUC. Eventually, the two companies worked out an agreement that exists to this day: All Classy cars must be stretched, must have drivers who are employees, rather than independent contractors, and must operate at a higher rate: $5 to get in, 35 cents for each additional seventh of a mile.

Classy cabs are new cars that DeLucia sends to a specialty shop to be stretched — the shop splits the car down the middle, constructs an extra six inches for the interior and welds it shut, giving passengers more leg room. Each cab ends up costing about $45,000.

In 2008, when Pittsburgh Transportation Group sought PUC permission to operate airport SuperShuttles as franchisees, DeLucia’s companies were among protesters.

Taxi companies, which are licensed by the PUC, can involve themselves in the licensing process of their competitors by filing protests to new applications.

The protests split into three arguments: that the applicant is financially or otherwise not fit to provide the service, that there is no market need for another cab company, or that the new business would hurt existing companies.

Denise McCracken, a spokesman for the PUC, said these regulations grew out of the post-Great Depression period.

“At that time, the Legislature was concerned with destructive competition, which it believed would end up leaving the public without any transportation services,” she said. “Destructive competition exists when there are so many providers of a transportation service that transportation fares dip to the point where none of the providers can make a profit.”

That’s Yellow Cab’s argument against Veterans’ Taxi. The company filed protests demanding the PUC compel DeLucia to produce his balance sheet, assets, business plan and regulatory assessments. DeLucia, in turn, demanded that Yellow Cab produce the same documents. Both companies found the others’ requests irrelevant and accused each other of filing them “in bad faith” and, as Yellow Cab put it, “with the sole purpose of causing embarrassment and annoyance.”

Concurrent with this conflict, Yellow Cab filed for a license to operate in North Allegheny and Butler counties, and DeLucia promptly filed protests.

In November, he sent an email to Campolongo proposing a deal: He would drop Cranberry Taxi’s protests to Yellow Cab’s application to service North Allegheny and Butler counties if Campolongo withdrew his objections against Veterans’ Taxi. Campolongo passed and passed again when DeLucia tried again in February.

It could be six to eight months or longer before DeLucia gets the PUC’s decision about Veterans’ Taxi.

For now, the new company can still operate in North Allegheny and Butler counties, where Cranberry Taxi is licensed. Two Veterans’ taxis already are in operation in Cranberry, and DeLucia plans to have the desired 25 by the end of the year. He’s also looking to launch the concept in other cities, initially targeting Cleveland, Columbus, Detroit and Fort Myers.

But he’d rather see them on the streets of Pittsburgh first.

Anya Litvak covers energy, transportation, gaming and accounting. Contact her at alitvak@bizjournals.com or (412) 208-3824. Join the Energy Inc. subgroup on LinkedIn.

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