INDUSTRY IN REVIEW

by Don McCurdy

How do you tell?

Reports are that Toronto has hired a firm to review the number of taxicab licenses required to provide sufficient service to the community. Well, that should be easy enough, poll the companies, find out the average response time and compare that to the perceived necessary response time and then you'll know how many you need.

Yeah, sure, it should be that easy. First, there’s utilization. How many of these taxicabs are occupied what percentage of the time? If a taxicab is vacant the majority of the time wouldn’t that indicate a need for less cabs? Not necessarily, sitting at a central business district, hotel and airport cab stand when other business is available is common for taxicab drivers. They like what they like, not everybody likes to hustle the streets and work the radio, or computer as the case may be. So, maybe, that’s not as critical a number as I thought.

Second, average response time. Average response time, being the time from customer hang up on the phone and the driver turning on the meter upon loading the customer. That sure seems like it would be important. Well, it depends a lot on the dispatch method as to how fast a trip is dispatched and loaded. Using the same number of taxicabs, a company can cut its response time significantly by utilizing a straight GPS dispatch over zone dispatch or other methods.

Since companies more often than not lease taxicabs and have no direct interest in what the driver earns there isn’t much incentive for them to provide the most efficient dispatch method. Conversely, if the response time is poor it would indicate that more taxicabs were needed to improve service. The company would make more money leasing taxicabs or providing dispatch services to a growing number of permit holders if the city decided more permits were required.

Okay, so average response time isn’t that good an indicator. How about driver income? That would be a good indicator, wouldn’t it? Well, not really. Some drivers consistently make more money than other drivers regardless of the level of business.

How about a “taxicab to residents” formula survey of other cities? Irrelevant, geography, price, attitude and a whole host of other variables make city to city comparisons practically useless. I’m sure the “science” behind the answer will be convincing but, whatever the outcome, it will have its supporters and detractors depending on who gets the prize.

Meanwhile...

Chicago has the entire "how many cabs" question figured out: more! How many more? Who cares, just more. Chicago is dealing with what all major cities deal with, how do you get service to “under served markets?” Let me translate that for you, “under served markets” means areas that are not safe for taxicab drivers to ply their trade. That would be areas that are sometimes called “high crime” or “under privileged.” You know, the place the police won’t go without backup. Since we all know that there is no such thing as a “bad neighborhood,” at least in political speak, these areas are simply referred to as “under served markets.”

Will more taxicab medallions solve the issue? Probably not. What they will do is provide the city with a revenue boost, at least short term, and a few more cabs cruising the loop. So, what is the answer then if not more taxicab medallions? There could be several, neighborhood taxicab companies, transit authority local service with cab stands at the terminals or neighborhood car services. The question is what are you willing to give up to get the public served? Most times nothing, just a lot of talk about “cracking down” on taxicab drivers who don’t serve the community and forcing mandates on how many “neighborhood trips” a driver must make in a 12 hour shift.

Like all other well intentioned regulations, medallion limits keep neighborhoods from being serviced by creating barriers to new startups designed to service neighborhoods. How long has this problem existed? If the government could regulate a solution don’t you think they would have by now?

Stand by to repel boarders!

It would appear from news reports that the taxicab industry is under siege. Various on demand services are popping up pretending they’re not providing taxicab service when by all appearances they are. While some services, like Uber, utilize existing permitted vehicles, other services like Lyft do not.

How a vehicle is dispatched would not seem as critical to regulators as whether or not a vehicle is properly licensed. I laughed right out loud at the comments attributed to Lyft CEO Sunil Paul that regulations haven’t caught up to technology. I wouldn’t want to point out to him that a “ride sharing service” that collects “voluntary” contributions is hardly a business model. Lyft, and co-conspirator Sidecar, are reported to check driver backgrounds and inspect vehicles which leads me to ask why? If you’re not providing transportation services why would you need to inspect the car or check out the driver? The answer is that you are providing ground transportation, only unregulated.

Mr. Paul’s comment doesn’t appear to match up with the facts. Regulators are compelled to enforce their regulations, especially with regard to public safety, and all providers need to play by the same rules. Pretending that your service is free from regulations does not diminish the idea that you are providing ground transportation in a regulated market without the benefit of a license. The reported comments from the driver also indicate that the driver is not sharing a ride, but providing a ride and using the proceeds to pay “car expenses and other bills” while driving four or five days a week. Sounds like a cab driver to me.

Meanwhile nearby…

British smart phone app dispatch company Hailo has just announced receiving 30.6 million dollars in funding to establish a market in the US. Now, how does that work? Are our dispatch services here so poor that we have to import a phone app from Britain? It would seem to me that if a company was picky about their vehicles and drivers they should be able to gain a market share, especially with the business traveler, without any great expense. So, if Hailo is Uber with an accent I have to wonder why it cost 30 mil, unless they just want to hit the ground hard in cities where Uber hasn’t established a foothold.

Quality counts, so if either one of the big hitters in the smart phone dispatch business cull out the broke down vehicles and surly drivers they could potentially have a viable service. Who gets there first could easily be a serious factor in developing brand loyalty, especially if reliability was stressed. It might just be time for Uber to find some funding of its own.

Finally, some good news!

NBC announced that it will be streaming video to Philadelphia taxicabs giving them that “New York feel.” If they mean that irritating, constant noise feel then they’ve hit it on the head. The article stated that they were headed for a 50-50 mix of advertising and entertainment. Let me see, the average taxicab ride in Philly is said to be 13 minutes, so I would get to watch 6 ½ minutes of commercials? How “New York feel” is that?

Call me crazy, but I used to get local information from taxicab drivers in our short period of acquaintance and you want me to trade that off for 6 ½ minutes of commercials and that “New York feel?” Who is going to reimburse the driver for the lost fuel economy from generating the electricity necessary to operate this noise pollution generator? Who has to pay for it when the passengers start beating their faces on it to shut it off? Since its Comcast and NBC at least we won’t have to listen to a bunch of gun commercials.

A software solution.

Reports are that Las Vegas has found a way to stop drivers from “long hauling.” Long hauling, being that pesky taking the long route to run up the meter idea. Well, it seems they are developing a computer program to tell if the driver is taking the long way.

It would seem to me that they may develop a software solution to a management problem. The regulators can now rest easy knowing that the problem is solved and they don’t have to chase any cabs around. The only problem with that theory is that the drivers will simply find a way around it and you’ll have a new piece of worthless equipment in the car. The real solution is to get rid of the drivers creating the problem.

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

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