Public Need for Ground Transportation Proposed by Silverado
Airbus, AST and CCS argue that they already provide sufficient service, and there is no public demand for the service contemplated by Silverado. CCS explains that it currently operates at 24% of its total passenger capacity, between Santa Maria and LAX.12 AST and Airbus did not provide similar capacity figures, but argue that current passenger totals will be reduced if Silverado's Application is granted, leading potentially to a loss of service. Airbus and AST also argue that Silverado has not demonstrated a public demand for its service, but rather relies on statements and letters from travel agents. Furthermore, Airbus and AST contend there is no real demand for bus transportation to the Ports, and that such transportation is available when needed in an on-call basis.
Silverado points out that its inquiries of travel agents are similar to methods used by AST to determine public need. In addition, Silverado contends it would serve a greater population base, and operate the only scheduled service to the Ports.13
We have previously stated that it is in the public's interest to permit new competition, although we have also recognized that permitting a new entry into an established market will almost certainly result in the initial diversion of some passengers and corresponding loss of revenue to existing carriers.14 In this record, no party quantified the maximum level of demand for scheduled passenger service in the Counties either to LAX or to the Ports, although using current Airbus passenger figures and estimates of the population served, Silverado calculates that as many as 9,200 passengers monthly might travel by bus from areas north of Santa Barbara to LAX alone.15 Silverado adds that cruise passengers would increase this number.
While AST disputes this estimate, no other estimates of the maximum demand for PSC service were provided. Instead, protestants focused on potential losses in existing passengers and the potential losses in revenues. Unfortunately, this analysis assumes that the service pattern now operated, which meet the needs of existing travelers, will continue to be the norm. It does not acknowledge the prospect of future growth nor the existence of diverse new markets, such as a scheduled service to the Ports.
Furthermore, Silverado proposes to provide service using new buses equipped with satellite television, and other amenities.16 Although we recognize that this is a proposed service using equipment not yet available, and initially Silverado will use existing equipment,17 we also note that Silverado proposes slightly higher fares than its competitors.18 Thus, the proposed competition will include new equipment and different fares. This differentiation in services provides the public different options and contributes to consumer choices. As in all competitive markets19 trial and error, and the pricing of these choices will determine which options truly meet the public need and which do not, but if a qualified operator desires to compete in a market and offer different services it should be allowed to do so, and the established carriers must adapt to the challenge. We note that Silverado will compete with Airbus, AST and CCS in different portions of San Luis Obispo and Santa Barbara Counties, as Silverado's proposed service includes territories currently served by each of the competing carriers.
We conclude that there is a public need for new scheduled service in the San Luis Obispo and Santa Barbara Counties transportation market to serve LAX and the Ports, and that the differences in proposed services and the new service to the Ports are such that the market would apparently be able to support a new entrant. It is entirely possible that we are wrong, and that one or more competitor either from San Luis Obispo or Santa Barbara Counties might falter as a result of the new competition. We recognize that uncertainty is a hallmark of the competitive marketplace, but we see competition as a far better mechanism for guiding our decisionmaking than the traditional regulatory model under which we regulate service quality and availability. Although the transition to open competition is not without growing pains, the public benefits in the long run through the availability of different service choices and prices.
We note that Airbus, AST and CCS provide adequate service in the regulatory sense upon their records of customer satisfaction, existing fares, equipment and service patterns. Furthermore, as all three protestants have pointed out, their vehicles have consistently had excess capacity. However, this fact appears to indicate that, after several years of occupying the marketplace in a particular area, Airbus, AST and CCS have not embraced new strategies for providing service or increasing demand for service. Although AST now has authority to serve the Port of Long Beach, and CCS and Airbus have provided service to the Ports using an on-call service, permitting Silverado to provide a scheduled service to LAX and the Ports provides the public with an option that connects all destinations.
We are not aware of significant consumer complaints for the periods AST, Airbus and CCS served their respective markets in the Counties, and despite attempts by other service providers, we have no reason to disturb the status quo. But circumstances are changing, and the "satisfaction" standard in § 1032(b) is a subjective one, allowing us to change our policy in response to new developments and an opportunity to provide a different service to the public. Furthermore, § 1032(b) states that the Commission may issue a certificate "..when the existing passenger stage corporation or corporations serving the territory will not provide that service to the satisfaction of the commission." As explained by Silverado, this is an upgraded service at higher rates than provided by existing carriers.20 Thus, the current services operated by Airbus, AST, and CCS are not satisfactory as these services do not include the upgraded service proposed by Silverado. Now that a new competitor has proposed to provide this service it would be inconsistent with the essence of § 1032(b) not to allow a new competitor, and inconsistent with our policy as we have construed it in American Buslines.
As we stated in D.00-06-07321 an airport ground carrier can no longer assume that its franchise is forever secure merely by operating service at an adequate level. The modern market place demands- and deserves-more. The principles we articulated in D.00-06-073, and American Buslines are still viable. We conclude that there is a public need for the services proposed by Silverado, and that trial and error should determine what types of service will earn the greatest public acceptance in this market.
12 Exhibit 5, p. 2.
13 Although AST has authority to provide service to the Ports, this service is not apparently not yet established, and currently is provided on a request basis. (TR331-332).
14 See, D.00-06-073, p. 16.
15 Silverado's estimate is based on a population north of Santa Barbara of 403,000 times the current percentage (2.29%) of Santa Barbara's population carried by Airbus (Exhibit 2, p.8). However, it is unclear what portion of Airbus' passengers drive significant distances to the Airbus pick-up locations.
16 TR 13, and 232-233.
17 Silverado expects to use buses built in 2006. (Exhibit 2, p. 5.)
18 Fares may be reduced or increased under ZORF.
19 We note that the competition between Silverado and CCS, AST and Airbus will occur on different segments of Silverado's line run from San Luis Obispo through to the port of San Pedro.
20 In the Santa Barbara territory, where Silverado would compete with Airbus, Silverado's proposed rates exceed Airbus, except in one instance. (TR 233.)
21 See, p. 20.
