INDUSTRY IN REVIEW

By Don McCurdy

What’s taking so long?

Recent complaints from Raleigh, North Carolina point up some of the issues facing taxicab companies and drivers stemming from regulators and their regulatory activity or lack thereof. An example of this is automatic cost of living demands being ignored. While every cost category for the industry has increased, meter rates have stayed the same since 2006. 2006? Why isn’t a cost of living increase mechanism built into taxicab regulations?

We all know that costs increase every year. What’s the reasoning behind no automated method of fare adjustment? There isn’t an automated mechanism because politicians aren’t concerned with the plight of their serfs. If you’re not a big donor or a member of the media, who cares what your problems are? Certainly not regulators.

Regulators are concerned with what their bosses want, and why not? What’s fair for drivers and companies isn’t going to improve a regulators lot. I hear a lot of huffing and puffing about the “safety of the public” and “protecting the industry,” but when you get right down to it, the industry’s needs get ignored at best and at worst are treated as some sort of experiment in an idealistic fantasy land. Regulators in any city that don’t have cost of living allowances, at least every other year, should be embarrassed. Well, at least if their boss tells them to be.

What’s the matter with Portland?

A recent article lamented Portland’s refusal to change their rules of operation to accommodate Uber’s business model. As a student of the industry, I had to laugh at the condescending tone the author used toward the industry Neanderthals and the backward yahoos at the Private for-Hire Transportation Board of Review.

Portland has chosen to continue to play by the same rules it has for years rather than capitulate to the new kids in town. Their rules are well established and well defined. There is a clear distinction between an on demand service and a prearranged service in Portland and they have rejected blurring the lines and allowing an on demand service to pretend it is something else.

Raye Miles, the president of Broadway Cab, summed up the exact root of the issue in her comments. “Uber takes the most profitable fares away from the taxicab drivers.” Taxicabs provide a valuable service to residents of cities, picking up the groceries as well as the trips to the airport. Grocery runs, long the bane of taxicab drivers everywhere, are subsidized by the longer trips to airports and other out of the way destinations. Take away those rides and the industry will eventually collapse. When Uber can get grandma home from the grocery for less than ten dollars then let them pretend they’re a taxicab.

Don’t fret though. Even after the reasoning of the board there are still politicians with their hands on the controls. With enough whining by the media and a few big shots they could still throw the taxicab industry under the bus. It would be wise for regulators everywhere to pay attention to Ms. Miles comments regarding the loss of more lucrative trips to taxicabs. They are necessary to more than tourists.

Oh tell my crystal ball…

Two recent cases of patients being discharged from a Winnipeg hospital and sent home in taxicabs have gotten into the news when the patients died before actually getting into their homes. The administrator of the hospital is set to meet with the local taxicab board to establish new guidelines for taking fares home from the hospital. Very interesting!

So the patients, one of whom was 78 years old, were discharged in the middle of the night with no relative available to be sure they arrived home safely? Both of the victims, yes, I can call them that, are alleged to have died of “preexisting conditions.” Really? If they died of preexisting conditions within hours of being discharged from the hospital why were they discharged in that condition?

The puffed up government bureaucrat administrator is now grousing about for someone to blame, in this case the taxicab industry, because they kicked these poor sick bastards out into the cold prematurely. Had this happened in any US hospital there would be lawsuits pending, but that’s not how it works with government run healthcare. So, tell me crystal ball, is this the “better system” I’m supposed to be looking forward to here in the US? My father died at the age of 86 here in the land of backward medicine which I suppose is better than freezing to death in the gutter at age 78. Yeah, they’re way more civilized.

Uber slashes prices!

Or so the headline says. Uber has been getting a bit of bad press lately, especially since their prices went up on New Year’s Eve. These things happen. It’s a good thing they’re not taxicabs because that would be called predatory pricing and predatory pricing isn’t allowed in the regulated world of taxicabs.

While that dog might hunt in the land of state regulated limousines it won’t fly in areas where the cities regulate both the limousine and taxicab industries. Or at least it shouldn’t. It would be very short sighted of regulators not to see the damage to the for-hire infrastructure if Uber can undercut the prices of regulated taxicabs in unregulated limousines and livery cars whenever business is slow. If regulators are taking steps to remedy the problem then they’ve taken some bad publicity.

Now, I realize that these boys are really, really smart and all but why is it that they don’t have to play by the same rules as everybody else? I’m sure I could have been a much better hitter if I’d have gotten seven strikes while everybody else got three. I just wasn’t smart enough to figure out how to do that.

So, is there an answer?

Uber, and its illegitimate twins SideCar and Lyft, have brought to the fore the question, what is the future of for hire vehicles and the for-hire industry in the US? Many cities, like New York, Boston, and Chicago have more than a passing interest in keeping the status quo to keep their prospects of selling more medallions alive. But some cities haven’t prostituted the industry to that extent and are just trying to have an effective for hire industry without too much drama. Where’s the line?

How do you go about having a good ground transportation industry without regulating them into government employment? There is most certainly a need to have affordable public transportation as demonstrated by the SideCar and Lyft models, but how do you incorporate that into the mix? You will not get me to deny that well meaning regulation has stifled competition, increased prices and made drivers veritable serfs to companies in many jurisdictions.

As I see it, no method of entry into the industry is the main contributor to stagnation of the industry. At some level, companies must be forced to deal with competition and market forces to remain of value to the community and the drivers. Drivers with no alternative to exorbitant leases just to do business will find other means of employment, leaving only those willing to work for substandard wages to provide the service cities depend on.

You cannot regulate better service with a work force struggling to eat. The attraction of Uber for customers is their claim to superior service while the attraction of Uber for drivers is lower payments, both of which are brought on by the lower or lack of regulation. Does Uber have a cap on what they can charge? How many vehicles they can operate? Or the myriad of other regulations “necessary” for the taxicab industry to operate? Is the answer more regulations for Uber or less regulation for taxicabs? I know what the regulator’s answer is. The question is what is the real answer?

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

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