Carey Suit Raises Question Of Limo Service Fees

<FONT SIZE="+3"><B>Carey Suit Raises Question Of Limo Service Fees</B>

By Lynn Woods

<I>Washington, D.C.</I> - A class-action lawsuit against Carey International alleging that it engages in deceptive billing practices raises questions about the justification, if not the legality, of pricing structures in the ground transportation industry.

As with rental cars, limousines are subject to numerous airport and municipal charges, which vary from city to city. But unlike the car-rental companies, which adopt a similar pricing structure, ground transportation firms differ as to which charges they pass on to their customers. "Limousines typically aren't regulated as to whether they can pass a fee onto the customer," said Ray Moody, executive director of Airport Ground Transportation, a trade group based in Knoxville, Tenn.

In some states, state tax is included, while in others it is added to the base rate. Not only do rates vary widely from location to location, but in a given location companies vary significantly in what, and how, they charge a customer.

Location Charges Vary</B>

For example, the charge for a sedan from midtown Manhattan to LaGuardia Airport in New York City is $58 plus 15 percent tip at New York-based Manhattan International; it's $65 from the airport to the city, due to required parking. Dav-El Chauffered Transportation Network charges its standard flat rate of $46 an hour with a two-hour minimum, or $1.65 per mile, whichever is greater, plus 15 percent tip.

At BostonCoach, a sedan costs $49, plus 18 percent service fee, which includes tip. At each of these companies, tolls and parking are extra. The exception is Empire International, which includes tolls and parking in its $83 rate, plus 15 percent tip. Carey charges $75 plus 15 percent tip and a 10 percent "surface transportation charge," or STC; tolls and parking are extra. It's that STC fee that raised the hackles of Philadelphia businessman Jonathon Felix when he used Carey on a round trip between Villanova, Pa., and New York and paid $38.80 in STC.

Three law firms subsequently filed a class-action complaint on his behalf in May in Philadelphia's U.S. District Court. Carey subsequently filed a motion to dismiss the complaint, on the grounds that the STC isn't fraudulent because it's disclosed to customers. In early November, however, the judge denied the motion, leaving the issue to be wrestled out in court.

Richard M. Meltzer of Mesirov Gelman Jaffe Cramer & Jamieson, the lead attorney in the case, said that Carey falsely presents the charge as a tax. "The term Surface Transportation Charge and its presentation are inherently misleading and deceptive," the suit says. "The term makes it appear that the cost imposed is attributable to out of pocket 'charges' paid by defendants."

But Carey president Don R. Dailey defended the charge. "It's in every reservation system. It's been in effect for 12 years," he said. The charge represents different types of municipal fees, depending on the city. In New York City, for example, the STC covers the fees Carey pays to the Taxi and Limousine Commission, an agency regulating taxis, car services, and limousine companies.

Firms falling under the TLC's jurisdiction are required to pay a $675 fee per vehicle in order to be licensed and operate in New York. None of Carey's competitors, however, pass on the city charge to their customers.

"It's the cost of doing business," said Scott Solombrino, president of Chelsea, Mass.-based Dav-El. While acknowledging that most cities do not have an agency similar to New York's TLC, "there are rules and regulations regarding insurance," he said.

One also could argue that BostonCoach takes liberties similar to Carey's with its 18 percent "service fee," levied on all rates and higher than the standard 15 percent tip charged by its competitors.

Legal questions aside, such discrepancies make it difficult for travel managers to compare rates. While corporations with a large volume typically pay a negotiated rate, in many cases this does not include all those extra fees.