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In the September 2016 print issue of TLC Magazine, a paragraph was contained in this editorial section referencing a report made by news media concerning discounted New York City medallion prices. Special attention was given to New York City Credit Unions and, by association, other taxi medallion financing organizations.

Of course, It is well understood by all taxi industry members and the public in general throughout the world, that the taxi business internationally has lost a degree of public demand because of Transportation Network Companies (TNCs). What is not reported by the media, however, is that the New York City Taxi, Car Service Industry and others, for example, are very diverse. Risks are shared throughout the industry.

Lending institutions, like credit unions, are very diverse institutions that not only finance taxi medallions but provide home, auto, life and health, business and commercial insurance. They provide banking services. They provide retirement planning. They provide home and business loans.

Medallion Brokers often maintain their own financing companies. They finance medallion purchases. They finance industry vehicle purchases. They sell liability coverage insurance to Taxis, Black Cars, Street Hail Liveries (SHLs), and TNC vehicles, as well. They sell personal and commercial insurance.

Major New York banks, other medallion financing companies share in the financing of all industry vehicles and, especially, medallions. These risks are shared and represent only a part of a finance company’s portfolio.

The recent experience of TNCs in the taxi, car service industry has introduced new passenger, car service concepts that have been innovative and beneficial to the passenger, car service industry in part. The management of the adverse economic effects of TNCs on the New York City taxi, car service industry has been a fluid test of realistic accommodation that has been successful.

Taxi management companies, taxi fleets and individual taxi owners work together to keep the yellow taxi operating 24 hours a day, 7 days a week.

This has not changed. Lease fees have been reduced and the yellow taxi business is very competitive with all TNCs and other car service companies. The New York City, Taxi, Car Service industry has entered a new paradigm and it is adjusting. For some, this may be a good time to enter the yellow taxi medallion business.

It is because of the 100+ years of experience and understanding of the NYC taxi, car service industry by credit unions, banks, industry medallion brokers, insurance brokers, taxi and car service management companies and taxi fleets that the industry continues to thrive. The industry is vital because of shared responsibility.

In particular, it is very important to note and, perhaps, the most important measure of medallion investment value is that, in the last year, there were less than 25
New York City taxi medallion foreclosures to include both independent (individual) and corporate medallions. There are 13,605 medallion taxicabs in New York City.

Probably, as has been suggested by industry members throughout the United States and as applicable to New York City, the most important story to tell about TNCs and their economic effect on the NYC Taxi, Car Service industry is the following:

If the NYC Taxi Limousine Commission established a special classification and license for all TNC’s and capped their numbers to 10,000 for example, this entire episode of TNC, taxi, car service economic compromise would end.

In addition and as discussed by Matthew Daus, Esq. on P. 12 of this issue of TLC Magazine, essential to the successful management of competing taxi, car service, TNC organizations in a community, there must be a level playing field.

In order to maintain a level playing field a community must regulate fairly among all taxi, car service and TNC entities by enforcing similar:

  • Criminal Background Checks - Names Checks or Biometric Fingerprints

  • Fair TNC License Fees

  • Data Security and Privacy Protections

  • Ensuring Monitored Sustainable & Shared Mobility Growth

  • Ensuring Equity, Affordable Rides and Fair Competition for All

  • Equivalent Wheelchair Accessibility & Public Paratransit Reforms

  • Equal Government Regulation


- Editor

 


 

Leveling the playing field

By Don McCurdy

The California state legislature is reported to have passed a bill transferring regulatory authority over taxicabs to the state. The state has regulated limousines for quite a while so adding taxicabs won’t be too big of a stretch. However, there are reported to be some local issues. You mean like soon to be worthless medallions and permits?

Regardless, if the governor signs the bill local municipalities will lose the right of regulation in their cities. One of the many concerns focused on the negative impact there might be on driverless vehicles if the regulations were shifted to the state level. It will be interesting to see what lawsuits come of this one.

Hasta la vista, baby!

Reports are that Pittsburgh, that Mecca of high tech, is the new test world for the driverless Uber. Yes, the driverless Uber is coming and yes Pittsburgh has become a high tech magnet.

Somehow somebody got elected that sees opportunity in allowing businesses to experiment in their city.

The taxicab drivers in Pittsburgh might see it as somewhat of a downer but there are “monitors” required by state law, at least currently. There will no doubt be kamikaze drivers seeking to cash in on the “driverless nightmare,” but well placed cameras in and outside the vehicles should put that to rest.

Uber is reported to have 500 research employees |working the driverless Uber project. It seems like just a matter of time until Uber drivers and taxicab drivers are listed with the morning milk man as “back in the day” trades. I would speculate that the Uber version of Johnny Cab will speak 92 languages, have no cash on board, be self cleaning and put an end to any independent contractor issues.

Perhaps, the most interesting thing about the reports is the comments attributed to the mayor of Pittsburgh, Bill Peduto, “you can either put up red tape or roll out the red carpet. If you want to be a 21st century laboratory for technology, you put out the red carpet.”

Wow, you mean get the government off the back of business? 500 research jobs? Perhaps, a presidential candidate might suggest that at the federal level? Oh yeah, one of them did.


No IPO?

Recent reports are that Uber will not be offering an IPO anytime soon. While they are reported to hold 80% of the market to their nearest competitor, Lyft. Lyft is apparently trying to beat Uber on price. The reported competition was described as “intense” but failed to mention the taxicab industry at all.

Apparently, the taxicab industry can’t muster a defense against the Uber onslaught. A recent taxicab insider admitted to taking an UberX ride and had some interesting comments:

  • First, all of the cars were spotless.

  • Second it was cheaper than a taxicab. He actually stated that it was only slightly more expensive than a bus.

With the weight of regulation on their backs it’s no wonder taxicabs weren’t considered a competitor. The downside of the entire trip was the driver had no idea where he was going. Along with intense competition, Uber is also getting price shopped by Google who offers an app that compares prices of each service available in your area. All in all it seems the race to the bottom is on in earnest.


Speaking of plates . . .

Reports from Ottawa are the major plate (Canadian for medallion) holders in Ottawa are suing the city for loss of value of their plates (medallions). Hmm, sounds familiar. Ottawa has been controlling the number of plates for decades but is now allowing Uber to operate with no plates.

Unlike New York City, Chicago, San Francisco and Boston, the city of Ottawa has not been selling the plates directly, but has allowed their transfer. Given the protection of the city the plates rose considerably in price to a reported 320K. Now that Uber has been
allowed to enter the market the price of the plates has crashed. Damn the bad luck.

Well, the Ottawa taxi king is quite upset about this and is suing for $215 million. That’s a lotta dinners on those plates. I can see the city’s case; they didn’t sell them, they just allowed them to be transferred.

The same cannot be said for cities that sold the medallions with exclusive rights promised that aren’t being delivered. It will no doubt take years to get through all of the court cases revolving around the crash of the medallion prices.


Cartel?

A recent editorial from Las Vegas quoted a decreasing number of taxicab trips and an increasing number of Uber trips out of the airport. Uber and Lyft still slide in under the “shared ride” moniker even though nobody but they knows how many “shared” ride trips they complete.

The editorials final warning was to politicians “the next time they feel the urge to run interference for the local cab cartel.” The editorial was very informative with a variety of information about the pickups and drop-offs at McCarran Airport by taxicabs, Uber and Lyft.

It also mentioned that Uber and Lyft pay $2.45 for every trip while taxis pay $2.00 for pickup and nothing to drop off. The way it was stated was that Uber and Lyft vehicles pay to drop off also. Well now, utilizing that scenario it’s a wonder that taxicabs are allowed at the airport at all.

The airport gets paid for drops and loads? What a bonanza. With a large segment of the young population thinking the government to be the be all end of regulation, Uber offers somewhat of a problem. Here comes an upstart, regulation be damned group of capitalists bludgeoning a highly regulated industry into submission with the press and hip generation cheering them on. Uh, gee, isn’t that somewhat of a contradiction?

Well, yes and no. It’s against their dogma to be pro capitalist, but trendy to be using Uber in case you miss the team bus or something. The real culprit, at least in my opinion, is the press. Time and again upstart companies, like say Microsoft, come out with a product in an
unregulated market and generate a few hundred millionaires. Examples abound for this and yet the press attacks the corporate world like they were demons.

Meanwhile heavily regulated industries, like the taxicab industry, stagnate under the yoke of regulation. Was it really necessary to have noisy televisions in the back of New York taxicabs? Uber has remade the taxicab industry thumbing their nose at the regulators every chance they get.  In discussions with an industry insider we came to the conclusion that Uber has “fixed” some of the biggest problems the taxicab industry has been grappling with for years.


UBER Advantages v. The Taxi

  • No Cash. Taxicabs take cash and are easy targets for robbers and worse. Uber requires a credit card on file.

  • Unknown riders. Taxicabs pick up fares with absolutely no idea who they are or what their intent is. Uber riders have a traceable smart phone and a credit card.

  • Quality control. Taxicab companies lease cars and consider their customers to be the drivers. If he pays he stays. Uber riders rate their drivers and vehicles after every trip, too many low scores and you’re out the door.

  • Peak service. People may gripe about the surge pricing, but costly service is better than no service. Tightly regulated numbers of taxicabs with inefficient dispatching methods lead to poor or no service at peak times.

  • Regulation. Uber fights off regulations at every turn while taxicabs have utilized regulation for protection.

  • Problem customers. Some jurisdictions, like say Colorado, require taxicabs to be dispatched to everyone that calls, even if the last pickup at the address shot the driver. Uber knows you’re going to pay before they send a vehicle.


So, what has Uber done right? A lot. What has Uber done wrong? Not near as much as the taxi industry would like us to believe. It would seem that we don’t need quite as much government babysitting as the government thinks, but the true purpose of government is to generate more government.

The TLC put televisions in the back of taxicabs because they could, not because they were necessary to the proper operation of a ground transportation vehicle. Perhaps California has the right idea, move the regulation to the state level and try real hard to not micro manage.


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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