Stephen J. Boitano  /  AP
International Limousine Service Inc. CEO Richard Kane, left, watches as company fuel supervisor Jame Lewis fills the gas tank of a vehicle earlier this month. Limo owners have been able to pass their higher fuel costs on to customers, many of whom don't fret about a slightly more expensive stretch when they're already paying for a prom or wedding.
updated 6/22/2005 7:27:21 PM ET 2005-06-22T23:27:21

Richard Kane's fuel costs have soared 40 percent in the past year, forcing his limousine service to charge customers more. But he's still had a full schedule of wedding and prom bookings.

"Fuel is an issue, people know it and are understanding," said Kane, owner of International Limousine Service in Washington, D.C. "And prom only comes once a year, so the kids still want their limos."

Taxi drivers are having a harder time with rising gasoline prices. Empire Cab driver Akram Mohammed, who also works in Washington, hasn't had the same freedom as limousine operators to pass along his higher expenses to customers. Taxi fares are generally set by municipal governments, so drivers can't charge more as their costs go up.

A few months ago Mohammed was paying $15 for a tank of gas. Now he's paying up to $35.

"We have to work everyday. We cannot stop just because the gas prices go up, so it gets paid out of pocket," he said.

These two industries built on driving have had very different experiences as they've coped with rising gas prices.

Kane's company uses about 600 gallons of gas each day to run the 40 limousines and 70 shuttle-buses it uses to get people to and from the airport and to weddings, conferences and other events. With the current national average of gas at about $2.15 a gallon, that's nearly $1,300 the company spends on gas every day.

Because of the higher prices, International Limousine charges customers a fuel surcharge; in May, it was 8 percent, up from the 5 percent charged earlier this year. Kane said he's lost a handful of customers, but for the most part, people are willing to pay a little extra for a limo for a once-in-a-lifetime event like a prom.

Harold Morgan, director of education for the National Taxicab Limousine and Paratransit Association, an industry group, said customers tend to choose cheaper forms of transportation for what he called discretionary trips — nights out on the town or going to a ball game — but not for milestone events.

With limousine companies coming off a "pretty good prom season," Morgan predicted wedding reservations will boom as usual during the summer because they are one-time expenses booked far in advance.

Kane agreed, and noted that a limousine service accounts for a small part of what the average wedding costs. Engaged couples hoping for the perfect wedding aren't ruffled by prices sent higher by rising fuel costs.

Adena Whitaker, a manager with Five Star Events in Washington, D.C., said many of the limousine services she works with have raised their rates recently, but that hasn't discouraged limousine use, especially for wedding parties.

"It doesn't really matter to them (customers) what it costs," Whitaker said. "They want to have a nice night, where they don't have to be worried about being focused on the road or worry about drunk driving."

But that doesn't mean consumers aren't shopping around for the best deal. Cara Halstead, of Pleasantville, N.Y., is planning an October wedding and recently finalized her limousine arrangements. Cost was an issue.

"I looked at a whole bunch of limo companies and tried to find the one that gave us the best price for the amount of time we needed the limo," Halstead said.

Halstead said none of the companies she considered charged a fuel surcharge, but if they had, it would have influenced her decision.

"I know that gas is an issue, but that's their business," she said. "Pay for your own gas and don't charge me."

Jeff Rose, owner of Attitude New York, said that because his limousine company serves a higher-end market, the impact of gas prices is not as significant as it might be for other transportation services.

"Cabs are a lot more affected. Drivers are the ones who are really hurting," he said.

To help cab drivers, officials in Washington approved the addition of an emergency fuel surcharge of $1 per trip. Rates have also gone up recently in Chicago, Baltimore, and Milwaukee, and Philadelphia regulators will be voting on a fare hike on June 27.

Simon Garber, who owns cab companies in New York, Chicago, and Moscow, said income for his drivers has dropped 15 percent in the past year.

Drivers are now "working harder than ever before because of the costs," he said.

In New York, a city that adjusts taxi rates on a long-term basis, rates went up in May 2004, before the latest surge in gas prices. Jason Howard, a regular Manhattan taxi user, said that while his wallet has thinned because of the fare increase, it hasn't deterred him from using taxis on a regular basis.

"I really hate the subway," he said.

Taxi drivers must wait months and sometimes years for permission to raise fares. Kane, however, adjusts his surcharge rate every month. Still, there are limits to how much of a surcharge limo companies can impose.

"There's more competition, so if they (limousine services) raise prices because of fuel and competitors don't, they'll suffer a loss," Morgan said.

David Johnson, president of Ace Executive Limousine in Los Angeles, said higher gas prices have raised his company's costs by at least 15 percent this past year, "definitely cutting into profits." He's charging new customers more, but so far has held off on higher prices for established customers.

But for many limousine services, the pressure from increased gas prices outweighs fear of competition.

Dominick Rizzi, manager of Farrells Limousine Service in New York, said his company has imposed a 7 percent fuel surcharge.

"It's impossible. We can't survive without doing it," Rizzi said.

© 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


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