Pearl Street, New York
I've been in New York for the past couple of days. It's a place I like to visit and as a city-lover, it's a common place of focus for the many urban themed books I work my way though.
I spent the morning in DUMBO in Brooklyn where I had the occasion to wonder about how New York's Boro Taxi program is faring given the unrelenting rise of Uber in recent years. It's an interesting question in New York given the unique partnership between the municipal government and the cab companies.
The Boro Taxi program started in 2013 as a city initiative to provide consistent and accessible service for the folks in the four boroughs outside of Manhattan.
It was all rather hard to come by. The city fought and won a court challenge brought by a group representing yellow cab medallion holders.
The city imposes very strict regulation of its taxi industry, controling branding and mandating certain equipment be available in every cab; things like fare meters, creditcard readers, cameras, dividers, etc. The number of legally operable cabs is also capped through the taxi medallion program. You might have heard that one of these went at auction for a sum north of $1 million, allowing the new owner to legally operate only one additional cab on New York's streets with the new medallion.
This is where the Boro Taxi program comes in. In 2013, as part of the 5 Boroughs Taxi Plan, the city made available 18,000 Boro Taxi permits allowing for the legal operation of taxis outside of the expensive yellow cab medallion program. But to keep yellow cab operators happy and to ensure expanded service to borough residents, additional rules apply.
- Boro Taxis may only accept hails in the boroughs outside of Manhattan or north of East 96th street or West 110th street;
- One fifth of permits are reserved for wheelchair accessible vehicles;
- The transfer of permit ownership is subject to some regulation.
Expanding wheelchair accessible vehicles was a major objective of the program and the permit system provided a successful approach.
After launch it proved a popular program. In only the first few months after it was announced, operators held over 6,000 permits and demand remains high still.
So, with such strong regulation and such success in meeting the stated objectives, it makes me wonder if the nascent Boro Taxi program is being squeezed by Uber, the social car for hire service.
In New York, ride-sharing services like Uber and Lyft essentially go without much of the regulation that the taxi industry faces. It is untrue that these services are entirely unregulated in New York however. Both Uber and Lyft are required to operate as for-hire vehicles, prohibited from accepting street hails and subject to other regulation.
In recent years, Taxi operators in NYC have faced a 4% decline in revenue from the farebox against a sixfold increase in Uber drivers.
So does the city owe it to operators to protect the monopolistic partnership they bought into with the city?
Perhaps for a moment we might consider the way that New York works. This city is used to having players on the outside of the system. In New York, you can pay for a permit to sell people "ice cold water" in Central Park or on a hot summer day you can choose spend your money on a wheelie cooler instead and skip the permit altogether. It's what's done. More capacity is brought out to meet the obvious demand for "ice cold water" on a hot, sticky day (much like the day I write this, I'm sitting in Central Park and cravings are induced every time I hear or write the words "ice cold water") and people know what to expect. Water costs a dollar, no less, no more and service may come with a smile or with confused tension as you are pressured to buy several more bottles.
To this city, Uber might be an extension of that arrangement. Savvy New York riders know what they get when they tap to hail an Uber.
But operating a multi-million dollar Taxi operation is slightly different than a stand in Central Park. The city sets out to achieve very specific ends with its taxi industry. In New York the arrangement between the industry and government is slightly different than elsewhere, the city government operates a true partnership to ensure a safe, reliable and accessible transportation service to its residents. Taxis in New York are not really a business, they are operated like a public good by the Taxi and Limousine Commission.
When incoming mayor Bill de Blasio came to office with his Vision Zero traffic plan, he easily imposed speed monitoring technology on all licences Taxis in the city. To increase service in the boroughs, the Boro Taxi program was implemented.
And it seems that the city will stand to protect its partnership with operators. Big changes are coming to for-hire cars.
Proposed regulations are in the works to limit surge-pricing, a contentious elastic pricing model Uber uses to incentivise drivers to stay out longer when demand is high. The growth of the service may also be capped, as regulators are citing increasing congestion concerns. Also, regulators are studying what hailing a cab actually entails, hails being a call for-hire services are prevented from taking. A case is considering whether a request via app is actually an 'e-hail' and therefore prohibited.
Even without regulation, the capitalistic model under which Uber operates might be its biggest failing yet. In New York the service competes with Lyft. This summer they have started a price war, rates have dropped as low as $10 flat fares within Manhattan. Lyft recently offered $5 flat fares within Manhattan. With all of these discounts, it can be tough to operate a for-hire car with these services. Uber faces a staggeringly high driver attrition rate at around 50%.
So, I'm sure Taxi operators and regulators in cities across North America will be watching what plays out here. Both industries in New York are backed by powerful interests. The regulators and and large taxi operators fight with big money from wall street who are backing these new ride-sharing apps. Don't expect the jockeying to be over. But in this city you can probably expect an equilibrium to be found, begrudgingly. The ultimate arrangement should benefit New Yorkers the most. Their access to their public cars being that most iconic form of New York transportation and a wonderful part of the life of the city.