Cab company defied big competitor to advance company
Springs Cab has proven that the Colorado Springs is big enough for two cab companies, despite earlier protests from its competitor that this should remain a one-cab-company town.
Springs Cab just added seven cabs to its fleet and plans to be up to 25 by mid-May. That still puts them at an eighth the size of its only competition, Yellow Cab, owned by Veolia Transportation On Demand.
Springs Cab’s growth is not quite where the owners predicted — about half of where they wanted to be by this summer.
But the 13-member crew over at Springs Cab is nothing but smiles.
“You have to have the commitment, the dedication and the dream and it doesn’t mean it will be easy to make it,” said Ali Gulaid, co-owner of Springs Cab who still has not drawn a paycheck since launching his company in 2009. “We knew this was not a get rich tomorrow stuff.”
It seemed like a long shot when Gulaid hatched his plan to open his own cab company. There was only one cab company in the Springs, and it was big — 171 cars big, Gulaid said. And, he knew it would be risky to launch a new business in the height of the recession.
But his drive to own a cab company came from a deeply personal spot in his heart, he said. The East African community in the Denver area, where Gulaid works as a civil engineer, is rather tight knit. Many of his friends are cab drivers, Gulaid said.
“How come we just drive?” he asked himself. “We don’t own. What is holding us?”
He said if he could dream it, he could do it.
“The dream was already there just because I was trying to make it easy for a lot of them to see me as an example that you can really own a cab, you don’t just have to be a driver,” he said.
The cab competition in Denver is fast and furious, he said. So, he turned his sights on the Springs. Other cab companies, including Freedom Cab, have made a run in the Springs market but eventually closed shop leaving just the one company — Yellow Cab — to dominate the field.
Gulaid’s plan initially was met with opposition from Yellow Cab, which was previously owned by RDSM Transportation. In a letter Yellow Cab filed with the Colorado Public Utilities Commission — the agency that oversees the state’s cab companies — its attorney wrote that a second cab company would “create excessive and destructive competition.”
In Colorado, taxi service is defined as “common carrier” and is closely regulated. Applicants must be approved by the PUC, which will entertain objections if the objector can prove that a new cab company coming into the market would degrade existing service. In counties with less than 70,000 residents, it’s OK to have a regulated monopoly. But, in bigger counties like El Paso, the standard is regulated competition, said Terry Bote, Department of Regulatory Agencies external affairs manager.
“The opponent would have the burden to show that granting the application would result in detrimental competition or not be in the public’s interest,” Bote said.
PUC approved Springs Cab application, but with limits. Springs Cab was only allowed to drive clients within El Paso County and to and from Denver International Airport.
That hardly put a dent in the taxicab market, said Abdul Buni, co-owner of Springs Cab. The restrictions put a lock on the company’s growth, he said.
In February, the PUC approved an expansion plan for the Springs Cab. Now, Springs Cabs can take passengers into 22 counties and grow its fleet up to 45 cabs in 2012 and up to 50 in 2013.
“We just had no growth,” Buni said. “The PUC was controlling us. That made it harder for us.”
Yellow Cab did not oppose the expansion. New ownership is the reason for the about-face. Veolia Transportation bought Yellow Cab in December — about the same time Springs Cab was asking for its expansion, said Brad Whittle, Veolia senior vice president.
“We actually made a decision not to protest,” he said. “The way it was set up, Springs Cab was having a tough time making it — we decided it was better for the community not to protest.”
Yellow Cab in Colorado Springs has 30 employees and 171 vehicles in its fleet, including a newly added wheel-chair accessible vehicle. Springs Cab entering the market has not affected Yellow Cab, Whittle said. The city, he said, is big enough to support two cab companies.
“Will it be big enough to support two companies of 200 cabs, probably not,” he said. “I think there is room for one larger and one smaller provider.”
Whittle said Yellow Cab plans a slow and steady growth in the Springs, and Veolia has plans to continue growing its taxicab business across the country. Veolia, a French company, entered the U.S. market in 2001 and now is doing about $1 billion in revenue in North America.
“We know where the lion is,” Gulaid said about his competition.
His crew launched their company on social media and turned attention to senior living communities. Springs Cab emails clients a photo of the driver for safety, a service that has been popular with older adults, said Ralph Bower, Springs Cab operations manager. And, the little company has one big advantage over its competitor Bower said: they are selling rides for 60 cents less per mile.
Last March, Springs Cab dispatch received 20 calls for a cab. This March, 1,347 calls came in through dispatch, Bower said. He estimates Springs Cab has about 20 percent of market share.
“So, that is quite a growth,” he said. “When I get a chance to talk to customers, they are so grateful there is another choice of cab company.”
Investors have shown interest in Springs Cab, Gulaid said. But, the owners are more interested in growing the company on their own. In May, all of the fleet will be outfitted with a digital dispatching system that will make it easier for online reservations and text reservations. Dispatch will also be able to track all the cars and whether they have a client.
“That will give us more reservations,” Gulaid said.
Springs Cab is still dreaming big, Gulaid said. Next year, he expects to go before the PUC for another expansion plan, Gulaid said.
“Look at the (cabbie) who would get one trip a day, and that trip would be $12 because they couldn’t go anywhere else,” Gulaid said. “Imagine, they have stayed. They see that there is a huge prospect here.”