The Changing Landscape of the Taxi Industry: Implications and Responses
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42% increase in taxi & limo industry revenue
from 2002 to 2012
(in billions, adjusted for inflation)
32% increase in working taxi drivers & chauffeurs
from 2000 to 2006-10
(5-year average)
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What’s Happening with Taxicabs?
Declines in trips and revenues:
•
San Francisco
20-30%
•
Los Angeles
24%
•
New York City
19%
•
Boston
35%
•
Seattle
28%
•
St. Louis
up to 40%
Declines in trips and revenues:
•
San Francisco
20-30%
•
Los Angeles
24%
•
New York City
19%
•
Boston
35%
•
Seattle
28%
•
St. Louis
up to 40%
What’s Happening with Taxicabs?
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Two Schools of Thought
It’s the
American way!
•
Lower standards for criminal record
checks and auto insurance
•
Wider choice of vehicles
•
Surge pricing
•
Uncontrolled entry
•
No requirements for geographic
coverage, wheelchair-accessibility
TNCs, many customers,
commentators and elected officials
Taxi industry, regulators
•
Better service
•
Technological innovation
•
Pricing matches supply and demand
•
Promotes urban lifestyles
•
Reduce DUI
It’s unfair
competition!
What Should be Done?
TNCs need
different
regulatory model
that fits their
different business
model
Regulatory response:
•
Cease-and-desist orders
•
Apply taxi regulations to TNCs
•
Ask for regulatory relief
Competitive response:
•
Taxi apps
•
Friendlier drivers and better-
kept vehicles
Taxi industry, regulators
TNCs, many customers,
commentators and elected officials
TRB Report 319 calls for…
•
Encourage and facilitate innovations that meet mobility needs
•
Ensure fair competition between taxis and TNCs
Fleet size
TNCs
Taxis
“Unlevel” Playing Field
Set by regulation
Set by TNC
Price
Set by regulation
Set by TNC
Driver safety
Gov’t
background checks
TNC background checks
Vehicle safety
Gov’t standards/inspections
TNC standards/gov’t inspec.
Geog. controls
Limited to city/zones
None; operate statewide
Service quality
Mix of gov’t standards and
customer choice
Customer choice
Taxi stands
Authorized to pick up
Limited to dispatch trips
Veh. insurance
Commercial, 24/7
Varies by “period”
•
Be consistent across each type of
service
(taxi stand, dispatch)
•
Systematic evaluation, gauged to risk
•
Driver background checks
•
Insurance requirements
•
Ensure access through regulation,
incentives, mandates and/or
subsidies
•
Apply across each type of service
•
Wheelchair-accessible
service
•
Balance benefits uniformity and
responsiveness to local needs
•
Ensure on-the-ground regulatory
enforcement
•
Regulatory authority
•
Examine minimum regulation
necessary
(greater for hail/stand trips)
•
Entry controls
•
Pricing
Recommendation
Issue
Recommendations for Fair Competition
… Implications for Regulation
•
Match scope of regulation to level of competition and user
choice:
•
Dispatch operations
•
Street hail/taxi stand trips
•
Airport-originating trips
•
Control entry and fares only for hail/stand part of the service
•
Set background check and insurance requirements using risk-
based analysis focused on outcomes
•
Find innovative ways to serve higher-cost trips
(addressing wheelchair accessibility and digital divide)
•
Ensure consistency and coordination between taxi and TNC
regulation
•
Vision where everyone could be both driver and passenger
Goals of Regulatory Framework
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Compete on service quality
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Compete on selection
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Compete on price
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New services
•
New service providers
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Government
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Consumers
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Monopoly power, predatory pricing, deceptive practices, illegal practices to
distort how the market works
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The taxi industry is facing significant challenges with the rise of ride-sharing services like Uber and Lyft. This shift has led to declines in trips and revenues for traditional taxis in cities like San Francisco, Los Angeles, and New York. There are two main viewpoints on this issue: one advocating for regulatory changes to level the playing field, while the other embraces the competition and calls for innovative solutions within the taxi industry. Both sides have different perspectives on regulatory measures and responses to the changing market dynamics.
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Presentation Transcript
Implications for the Taxi Industry and Riders Bruce Schaller Principal, Schaller Consulting February 17, 2016 California Senate Oversight Hearing
Ride Service Market is Expanding 42% increase in taxi & limo industry revenue from 2002 to 2012 (in billions, adjusted for inflation) 16.0 14.1 14.0 12.4 12.0 9.9 10.0 8.1 8.0 6.0 4.0 2.0 - 1997 2002 2007 2012
Ride Service Market is Expanding 32% increase in working taxi drivers & chauffeurs from 2000 to 2006-10 (5-year average) 350,000 302,960 300,000 250,000 230,222 194,302 200,000 175,411 152,162 150,000 100,000 50,000 - 1970 1980 1990 2000 2006-10
Whats Happening with Taxicabs? Declines in trips and revenues: San Francisco 20-30% Los Angeles 24% New York City 19% Boston 35% Seattle 28% St. Louis up to 40%
Whats Happening with Taxicabs? Declines in trips and revenues: COMPETITION Uber Lyft San Francisco 20-30% Los Angeles 24% New York City 19% Boston 35% Seattle 28% St. Louis up to 40%
Two Schools of Thought TNCs, many customers, commentators and elected officials Taxi industry, regulators It s the It s unfair competition! American way! Lower standards for criminal record checks and auto insurance Wider choice of vehicles Surge pricing Uncontrolled entry No requirements for geographic coverage, wheelchair-accessibility Better service Technological innovation Pricing matches supply and demand Promotes urban lifestyles Reduce DUI
What Should be Done? TNCs, many customers, commentators and elected officials Taxi industry, regulators Regulatory response: TNCs need different regulatory model that fits their different business model Cease-and-desist orders Apply taxi regulations to TNCs Ask for regulatory relief Competitive response: Taxi apps Friendlier drivers and better- kept vehicles
TRB Report 319 calls for Encourage and facilitate innovations that meet mobility needs Ensure fair competition between taxis and TNCs
Unlevel Playing Field Taxis TNCs Fleet size Set by regulation Set by TNC Price Set by regulation Set by TNC Geog. controls Limited to city/zones None; operate statewide Taxi stands Authorized to pick up Limited to dispatch trips Gov tbackground checks Driver safety TNC background checks Vehicle safety Gov t standards/inspections TNC standards/gov t inspec. Veh. insurance Commercial, 24/7 Varies by period Service quality Mix of gov t standards and customer choice Customer choice
Recommendations for Fair Competition Issue Recommendation Entry controls Pricing Examine minimum regulation necessary (greater for hail/stand trips) Be consistent across each type of service (taxi stand, dispatch) Systematic evaluation, gauged to risk Driver background checks Insurance requirements Wheelchair-accessible service Ensure access through regulation, incentives, mandates and/or subsidies Apply across each type of service Regulatory authority Balance benefits uniformity and responsiveness to local needs Ensure on-the-ground regulatory enforcement
Implications for Regulation Match scope of regulation to level of competition and user choice: Dispatch operations Street hail/taxi stand trips Airport-originating trips Control entry and fares only for hail/stand part of the service Set background check and insurance requirements using risk- based analysis focused on outcomes Find innovative ways to serve higher-cost trips (addressing wheelchair accessibility and digital divide) Ensure consistency and coordination between taxi and TNC regulation Vision where everyone could be both driver and passenger
Goals of Regulatory Framework Flexibility: Compete on service quality Compete on selection Compete on price Openness: New services New service providers Accountability: Government Consumers Prevent abuses Monopoly power, predatory pricing, deceptive practices, illegal practices to distort how the market works Serve goals of mobility, economic efficiency and equity
