On December 21, 2018, a New York State judge in Manhattan, New York City temporarily blocked the implementation of an additional traffic congestion surcharge on taxis and for-hire vehicles. On January 1, 2019 for-hire drivers in Manhattan will have had to pay a hefty price for that traffic congestion.
Starting January 1, 2019, for-hire vehicles—including yellow taxis, black cars, and Uber and Lyft vehicles—will have had to pay the State of New York a congestion fee on every trip from 96th Street to the southern tip of Manhattan, no matter what time of day or night, 365 days a year. The fee ranges from $2.50 per taxi trip to $2.75 for Uber and Lyft rides.
For yellow taxis that means a base fare of $5.80 before a taxi even travels a single inch: $2.50 base fare, plus the $2.50 congestion fee, plus 80 cents for other city mandated surcharges.
The congestion fee was imposed by Gov. Andrew Cuomo, with the $2.50 charge going to fund the state run the Metropolitan Transportation Authority (MTA) which runs public transit bus and rail lines in and around the city.
Ironically, it was Uber’s and Lyft’s cheap fares, subsidized by venture capitalist investment, that have contributed to driving people away from public transit in the first place. A 2018 study by noted transportation expert Bruce Schaller placed the decline in NYC subway ridership squarely at the feet of increased reliance on rideshare companies.
Now, those same companies will pay to support the public transit system it helped to put in decline while at the same time gaining a competitive edge over its competition from yellow cabs.
Even the city’s own taxi czar has warned the congestion fee will be “devastating” to the taxi industry because its fares are set by the city. By contrast, Uber and Lyft could simply lower their opaque surge price amounts to cover some or all of the $2.50 fee giving them an enormous—and unfair—price advantage over their competition.
“They’re not bound to a metered fare, so they can reduce the price of the trip so that the passenger doesn’t feel the effect,” said Taxi and Limousine (TLC) Commissioner Meera Joshi in a media statement this month.
Others have also voiced strong skepticism that New York City’s plan will work. Former TLC Commissioner Matthew Daus stated flatly last month, “I don’t think congestion pricing is going to work.”
“This is basically going to be a fare increase for the yellows,” Daus said on an Oct 22 episode of Fleet Forward, the podcast of the national Taxicab, Limousine & Paratransit Association (TLPA). “Everyone is going to be clogging the streets and working more hours to try to make up for the fact there is going to be a ridership loss. And Uber and Lyft have the money to cut their fares and drive people out of business.”
The congestion pricing is a first in the United States, although cities around the world have instituted similar plans. London, perhaps the most notable of all, has reported a reduction in vehicles by some counts and yet still ranks among the 10 most congested cities on the planet.
“Fleet operators and city officials from around the country are going to watch New York very closely to see how this works,” said Alfred LaGasse, CEO of the TLPA. “It’s far too early to tell if it will work at all, and it certainly seems that New York needs to address the glaring additional unfair competitive disadvantage that will be felt by taxi drivers. Whether that increased disadvantage was intentional or not, it needs to be fixed before the implementation of an additional traffic surcharge.”
Earlier this year, the executive chairman of Florida based Mears Transportation, one of the biggest and best known fleet operators in the country, had an unexpected proposition to archrival Uber.
“I have an outside of the box idea I’d like you to consider,” began Trey White’s proposal to Uber, the very company Mears, a member fleet of the Taxicab, Limousine & Paratransit Association, had fought publicly and loudly for years from city hall to the state Legislature, reported the Orlando Sentinel.
That proposal led to a bombshell announcement last month when Mears and Uber held a joint press conference and said they would be partnering to better serve passengers. Under the partnership, luxury sedans from Mears would, as of Nov. 28, 2018 help fill some of the ride requests made through Uber’s app. Mears taxis would also soon be added onto Uber’s platform by the end of the year.
Under the deal, passengers will pay the same normal cost to hail a ride from Uber, whether or not the trip is serviced by an Uber or Mears vehicle. Uber keeps part of the fare for its fee.
At a press conference, Uber spokesman Colin Tooze said that the deal combines “the innovation and the reach of the Uber platform that we’ve worked so hard to build across the globe every day, with a beloved Orlando brand that has eight decades of goodwill and experience serving this market.” He added that Uber is “looking to expand the partnership over time.”
Until the partnership announcement in November, the deal with Uber was kept under lock and key even though hints appeared as early as April of 2018. That’s when Mears was bought by an investor group, Palm Beach Capital. At the time, the 1,000 employees of Mears, a company based in Orlando, Florida, with 1,200 vehicles, were notified by memo that technological advances were afoot. They were informed that Mears would “be the first and only full service transportation company in the country that can meet all the ground transportation needs of a customer, including demand response rideshare services.”
Asked at that time, in April, how Mears would accomplish that, a company spokesperson said, “Mears has an app, but it’s nowhere nearly as robust as the app that Uber and Lyft invested hundreds of millions of dollars in.” That’s why, Mears executives say, the deal with Uber makes sense.
“From a point of the consumer, and ease of use and access, it will never have been easier to get in a Mears car, whether it’s a taxi or a sedan, as this partnership is together,” White said at the press conference announcing the partnership. “I’m excited for what this means for Orlando, I’m excited about what this means to our drivers, and we’re just excited to be in partnership with Uber.”
During the announcement, Uber’s Tooze—who’s company founder once famously said he was in a political battle with “an asshole named taxi”—also addressed the obvious elephant in the room, the two rivals now coming together not just in peace, but to actually pursue a new business model together.
“This relationship has come a long way. We’ve definitely had our differences with Mears over the years, and they’ve had their differences with us. And we’ve had some very frank discussions with each other, in the room, behind closed doors and in the public square. But that’s behind us…and that’s because we’ve changed,” Tooze said.
While the partnership is an unexpected turn in the industry, one thing that won’t change is Mears’ focus on safety. It’s drivers, including any who services an Uber-based hail, will continue to be screened using fingerprint based background checks. They will also be subject to Uber’s less stringent background checks. Those checks by Uber have been criticized regularly by TLPA because they do not use fingerprinting.
As unexpected as the new deal is, this is not the first time a partnership between a TNC and another fleet operator has happened.
Provide A Ride in Cleveland, Ohio began partnering with Lyft earlier this year. Company president Alan Groedel said the pilot program of cooperation is expected to expand in 2019.
“We’ve been very successful in integrating Lyft into our mix of transportation,” said Groedel, who operates 100 vehicles in his paratransit operation and is a TLPA member. “They’ve become one of our largest contracted transportation providers. The Transportation Network Companies (TNCs) are all chasing non-emergency medical work, and we have learned how to work with them so that it’s to our advantage, to Lyft’s advantage and to our passenger’s advantage.
Groedel emphasized that Lyft only handles certain passenger trips. He does not use Lyft for any trips involving passengers who use wheelchairs or people with intellectual disabilities.
But, says, Groedel, there are synergies with the two companies despite their past differences. Both, he says, have something to offer.
“As the industry changes, all of our roles are adjusting a bit,” Groedel said. “To pretend that TNCs don’t have a role is just not an honest assessment.”
John Boit is a senior partner at Melwood Global, the public relations firm of record for the Taxicab, Limousine & Paratransit Association. To learn more about the national trade association and how a TLPA membership can help your fleet, visit www.tlpa.org.