Administrators with the Niagara Frontier Transportation Authority say they support ride-hailing services and scrambled on a short timetable to make sure Uber and Lyft could offer rides to and from the Buffalo and Niagara Falls airports.
But the services could drain more than $2 million in revenue from the Buffalo Niagara International Airport each year.
Lost taxicab, car rental and parking fees, as well the potential for increased staffing costs to oversee ride-hailing operations and increased curbside congestion, mean less money for the airport and other public transportation services that airport revenue subsidizes, said NFTA Executive Director Kimberley Minkel.
Minkel and Aviation Director William Vanecek pointed to the potential revenue losses Thursday in a meeting with the Erie County Legislature. Majority Leader Joseph Lorigo, C-West Seneca, asked Minkel to appear before the Legislature to justify the fees being imposed on ride-hailing companies who pick up and drop off passengers at the Buffalo and Niagara airports.
"Honestly, we're very concerned about the revenue the airport might lose," Minkel said.
She added that Buffalo had the opportunity to learn from data gathered at other airports where ride-hailing has already been in place. Minkel noted losses in rental car transactions by as much as 13 percent, and lost taxicab revenue of between 5 percent and 30 percent.
The explanations provided to the County Legislature came after lawmakers criticized the NFTA for its "bad optics" in handling the arrival of Uber and Lyft to the Buffalo region after a long wait.
Many of those who sought to bring ride-hailing services to Buffalo were surprised and dismayed to learn of the NFTA's initial plans to try to seek a $3.50 fee for each pickup and drop-off at the Buffalo and Niagara Falls airports, on top of a $5,000 permit fee.
The NFTA board adopted the fees after learning similar fees were in place at other airports, and that the new fees were needed to offset declines in parking revenue. But elected leaders who pushed for ride-hailing services said the public transportation agency sought to impose fees with little to no input from lawmakers who lobbied to bring these services to Buffalo.
Blowback to the initial $3.50 fee proposal was swift from politicians and ride-hailing companies who criticized the fee as too high. Lyft stated it would not offer customers airport service and described the initial fee as the fifth highest in the nation and "outside of industry standards for the size of its operations."
Vanecek later disputed that assertion, pointing to eight other airports that charge higher fees. Those airports are located in larger cities like Chicago, Detroit, San Francisco and Washington, D.C.
The NFTA decided to lower the fee to $3 after a "sensitivity analysis" and ongoing negotiations with both ride-hailing services the day after the board approved the higher fee, he said.
He also acknowledged that he unintentionally misinformed the board regarding ride-hailing fees at the Pittsburgh airport. He incorrectly told the board the fee was higher than it actually was.
Eventually, the NFTA reached new agreements with both Uber and Lyft, reducing the pickup and drop-off fee for Lyft to $3, and allowing Uber to pay a flat, one-time fee of $180,000. Both companies were given the option of either paying the flat fee or the $3 charge as part of a one-year pilot agreement.
Prior to the committee meeting, Minkel sent a lengthy letter to the Legislature stating that companies like Uber and Lyft are no different than other commercial companies that do business at the airport and pay airport fees. She listed airlines, car rental companies, food and retail vendors and taxi operators among them.
"It should be noted that the NFTA's one-year pilot program access fee is the ride sharing company's cost of doing business at the airport and not charged to the user," Minkel wrote. "In any event, all fees collected are reinvested into the airports to help cover the costs of running the airports and to meet our self-sustaining requirement."
She also said bus riders pay $2 to take a bus anywhere, so it's fair to charge private, multi-billion-dollar companies a higher fee, given the loss of revenue the airport expects over the year. Vanecek stated that even with the $3 fee from ride-hailing companies offsetting other revenue losses, the NFTA estimates the airport could still lose more than $343,000.
But that figure is far from certain, which is why the fee agreement with Uber and Lyft will be re-evaluated after the first year.
In response to Legislature questions about how the initial fee figure was determined, Vanecek said the NFTA looked at annual parking revenues, assumed a conservative 5 percent decline and estimated what it would cost to make up that figure. The agency then did an analysis of how much it charges cab drivers and looked at what other airports charge.
Legislators said they appreciated the information from NFTA leaders but suggested the authority should be more transparent and inclusive with its decision-making process in the future. Several legislators said they would also appreciate a heads-up over decisions affecting services to the riding public.
Minkel responded the NFTA had a very short timetable to research and negotiate with Lyft and Uber to ensure that both ride-hailing companies would be able to pick up and drop off riders on their first day of service. That the NFTA worked out an agreeable arrangement with both companies counts as a success, she said.
"I think that's a win," she said.
Lorigo credited Minkel and Vanecek for being prepared to answer questions but said the arrival of Uber and Lyft shouldn't have required so much last-minute preparation by the authority. Chairman John Mills, R-Orchard Park, also said the NFTA would be better served if it had been upfront and open about imposing charges on the ride-hailing companies from the beginning, when it seemed there was a good chance the companies might have a future presence in the region.
"Don't surprise everyone at the end," Mills said.