INDUSTRY IN REVIEW

By Don McCurdy

We have a winner

The city of Dallas won a victory in federal court over the city's ordinance to allow CNG taxis to the front of the line at Dallas airports. Citing federal air quality standards the mayor was pleased with the court’s decision.

Many independent drivers work the airport as their primary source of income, so their choice is simple: install CNG equipment in their vehicles or go out of business. Clearly, the ordinance is another example of sitting politicians, regardless of party, not caring about the impact their policies have on small business.

It’s easy to pick out taxicabs as a place to start cleaning up the air, ask Bloomy he’ll tell you, because they have few resources to resist government’s power. In fact, it’s getting harder and harder for anyone to resist government’s power.

Once upon a time…

Well, Mayor Daley has exposed the fairy tale for what it is. Which fairy tale might that be? Well, the fairy tale that taxicab medallions are to protect the industry and especially the drivers. What medallions really are is a way for the city to generate something from nothing, except that the nothing they already sold will now be worth less.

How much do you think a device that enables you to make less than minimum wage would be worth on the street today? The real problem is that you are making a deal with the devil. The city may, at any time, issue a hundred more medallions. Well, of course they won’t. Really? Why not? They don’t need taxicabs now but they’re issuing medallions anyway thus exposing what the real purpose is to having medallions in the first place.

Meanwhile, the good citizens of Chicago have to pay the interest on the medallion note by way of higher taxicab fares in perpetuity. Ah, the gift that keeps on giving. Yes, that’s correct. The taxicab medallion owner will have to pay interest on the note taken out to purchase it until it’s sold to some other sucker, er, buyer then that buyer pays the interest on the loan. Meanwhile the good citizens have to pay higher fares so drivers can make enough to keep the entire joke afloat. The truly interesting part of the whole program is that drivers in Chicago actually believe
that the medallion system protects them.

Okay, you’ve identified the problem.

Recent studies in Washington DC show that taxicab drivers routinely pass up blind customers with a dog to pick up sighted passengers further away. Great, you’ve identified the problem. Who is going to enforce the existing law? Well, nobody, currently. That’s the problem with a lot of laws, regulations and ordinances, nobody puts any thought into who is going to enforce them.

On one hand the government attempts to be all things to all people yet the most vulnerable in our society go unprotected. Feeling good about all we’ve accomplished really doesn’t mean much if you don’t enforce the feel good laws you passed. DC, like a lot of cities, regulates its taxicab industry, or at least pretends to regulate it. If you’re not going to enforce your regulations then why pretend? Let go. Save the money you pay for licensing and inspections and just turn it loose. If you are going to regulate how about doing it. If you need help there are folks out here who can help you.

“Ain’t nothing like the real thing babay”

Imagine the surprise of an Atlanta bank robber when the taxicab driver he was ordering around with his plastic gun pulled out a real pistol. Damn the bad luck. Not only did the driver not become a robbery victim he assisted police in apprehending the suspect. Which brings us to the favorite expression of a driver I know, “fight crime, shoot back.” It’s probably a good thing drivers in other big cities like New York and Chicago aren’t allowed free exercise of their second amendment rights. They might have to lay off some cops if the crime rate went too low.

It’s a round world after all.

Years ago the city of New York made the regulatory decision that there would be a limited number of taxicabs. By the way, those medallions have appreciated tremendously. It was also decided that only yellow cabs could pick up street hails and could not take phone dispatched passengers. There were, of course, some unintended consequences to go along with the new and improved regulations, like you couldn’t get a cab anywhere except Manhattan unless you were really lucky. No problem, let’s invent the car service. Viola! The car service, livery to some, was actually the half of the taxicab service that was removed from the yellow cabs, the dispatch half. But the car service half couldn’t pick up street hails, well, at least not legally. Despite the fact that they can’t legally pick up street hails livery drivers always seem to be having trouble, robberies and such, with the street hails they don’t pick up.

Well, one of the places that illegal street hails might have been an issue was Staten Island’s St. George Ferry Terminal. The regulators saw this issue, okay so it’s been going on for decades, and sprang into action with the first car service “stand.”

Fares are calculated by mileage, sort of like taxicabs except no meter. The “stand” has a dispatcher on duty 24 hours a day provided by United Car Service who has exclusive pick up rights. The other “gypsy” cabs have to pick up outside the terminal area, despite actually having licenses and time orders for pick up. Hmm, that sounds like even more unintended consequences.

While the TLC spokesman, Allan Fromberg, called the stand “a new and innovative approach” some of the riders are complaining that their fares went up from their regular car service providers. It would appear that the TLC has invented the cab stand, well, okay, the car service stand. One has to wonder, now that the yellow cab’s street hail exclusive has been violated how long it will be before the cab, er car service stand will be declared a huge success and expanded to cover other areas of the city? Have you ever tried to get a cab on the upper west side in the morning? Now, there’s a place that cries out for a car service stand.

Another regulatory success!

Fresh off the big medallion sale, Yellow Cab of San Francisco claims to need another 139 medallions to service their customers. According to published reports 25% of Yellow’s customers never get a cab, but more cabs will help. Gee, I have a suggestion, start a new franchise with the 139 new medallions and stop throwing good money after bad.

It has long been my contention that not allowing for some method entry into a taxicab market allows inefficient companies to survive that wouldn’t survive with viable competition. I don’t want you to think I’m bragging, but in Houston we had the average response time down to 8 ½ minutes. Now, with Houston having a service area about the size of New Jersey I’d say that a company operating in San Francisco should be able to beat that number fairly easily.

There is really no telling how much damage Yellow’s inefficiency has done to the industry as a whole. I mean really, if one in four times you call you never get a cab why would you continue to call? Could the answer be in the idea that the only way the company makes more money is to have more permits?

Yellow has no incentive to provide good service. Its business doesn’t depend on its service, just the possession of the coveted medallions. Let’s do some quick math. According to the article there were 1,094,742 phone calls to Yellow Cab requesting a pick up in the first 6 months of 2010. Now, mind you it doesn’t say that there were tha many dispatched trips, just that many “requests for service.” But for our purposes we’ll say that every “request for service” generated a dispatched trip. Sounds like a lot doesn’t it? Well, 281,297 callers weren’t picked up, so that leaves Yellow loading 813,445 dispatched calls. Now, considering that there are 362 12 hour shifts in the first 6 months of 2010, the period quoted in the article, that leaves an average of 2,247 trips per shift. I am told that Yellow is the largest company in San Francisco so let’s just say they have 20% of the total, 1,500, medallions. That would leave 300 cabs doing 2,247 trips per 12 hour shift or right around 7.5 trips per car. Sorry, Yellow’s
service problems don’t have anything to do with not having enough cabs. If these are truly Yellow Cab’s numbers their problems are much more fundamental, like no quality control.

If you have any comments regarding this or any of my articles please feel free to contact me at dmc@mcacres.com. —dmc