Thursday, January 20, 2011

Grappling with regulation

Over the past few weeks I have been trying to gather my thoughts about potential taxi regulation in Tucson. I have been doing research into regulation in other markets, trying to be objective about the issues locally, and grappling with the concept of free markets versus regulation and how all parties - drivers, passengers, cab companies and local governments, are impacted by regulation and market forces.

An article in the Denver Daily  today outlines the efforts of a new cab company to enter the Denver market, and the introduction of legislation to lower the barriers of entry into the marketplace. As I consider this article, and the situation in Tucson, I am compelled to ask a few questions:

  • can the Denver metro area sustain 150 additional cabs? is the demand for taxis growing, or will it be divided into smaller parts?
  • the passenger may benefit by lower fares, but will drivers' wages shrink as well?
  • will increased capacity cause cab companies to compete for drivers, shrinking their profits and driving cost cutting measures that may impact service quality and public safety?
As I look at our situation in Tucson, as an independent contract driver for Yellow Cab, I am torn between the entrepreneurial opportunities that the virtual lack of regulation provides, and the abuses that the same lack of regulation allows. In other words, we have a free market system in Tucson, but what has resulted?

  • in the past 3 years taxi capacity has increased from 200 cabs to about 450
  • the median fare hasn't decreased but has gone up, as most of the independents (those cab companies other that Yellow, Discount and VIP) charge 33% per mile more than the larger fleets
  • driver earnings have decreased significantly due to lease increases, fewer rides (due to the economy and increased capacity), increased gas prices, and the economy
  • customer service has diminished as drivers avoid short fares, certain regions of the city, and certain times of the day due to lack of incentive to wait long periods between fares
  • driver behavior has become more of an issue as they compete for the fewer fares available (this is compounded by the fact that there are not cab stands in Tucson, especially at popular venues, so that there are no orderly queues that assign the next driver up)
  • abuse of drivers by the larger fleets without any recourse available to the drivers
  • taxis on the street without insurance and in poor operating condition as cab companies take shortcuts to prop up profits
  • drivers with poor customer services skills, lack of knowledge about the metro region, and no drug or background screening
Don't get me wrong - as a Yellow Cab driver that is considering going completely independent, an environment that is free of regulatory constraints is pretty inviting. On the other hand, the lack of barriers to entry and any recourse to correct deficiencies in the market are a detriment to protecting one's ability to sustain a profitable business against predatory practices that aren't really good for any of the parties involved. For instance, I would take issue with Mile High Cab's intent to go to market with lower fares - it's the same rate we use in Tucson now - it's going to be tough for any driver to make a decent wage without working 80 hours a week. Lower fares will only result in those drivers looking for longer fares and avoiding short rides and regions of the city that don't generate many rides - as is happening in Tucson.

So my immediate take on Senator Ted Harvey's efforts to open the market in Denver is that it will not lead to a fair playing field, nor will the market balance itself out. Rather, it will lead to overcapacity, poor customer service, higher fares, smaller driver earnings, and driver abuse. I would recommend that the powers to be look at all issues carefully before they loosen regulation considerably and perhaps irreversibly. And as Tucson considers regulation, we should do so step by step, without creating unnecessary bureaucracy or hindering sustainable entrepreneurialism.

Tuesday, January 11, 2011

The Tucson Massacre and the Cabbie

In the aftermath of Saturday's tragic event, I've already heard it suggested that the cab driver (the infamous "person of interest) should have known that something was wrong with his passenger, Jared Loughner, and might have been able to prevent the shooting.

I have not spoken with the cab driver - I know of him, he's been a long time driver with Tucson Yellow Cab - but I know of him as a decent and hard working driver. The bottom line is that no one else was in the cab with the driver and Loughner, and we don't know at this point what, if any, conversation took place. Given the driver's reputation, I would have to say that if he thought or was suspicious that anything was amiss, he would have alerted someone immediately.

As taxi drivers, we can anywhere from 15 to 30 people get in our cab on a given day. Some are known to us, some aren't. As a cabbie, I really only care about a couple of things when I pick up a fare: where are they going, do they have the ability to pay, and do they present a threat to me or my cab in any way? Otherwise, I really don't care if they seem sane or not - driving for a cab company that contracts with mental health providers, you get used to having people in the vehicle that have one problem or another. It is not my job to assess their mental well being, unless I believe that they could cause me physical or financial harm. I'm going to provide them transportation as I would any other passenger, just as I would transport anyone regardless of race, gender, etc.

That is not to say that if they made threatening comments, and/or if I saw that they were carrying weapons, I wouldn't take appropriate action and report the threat immediately. I like to think that any other cab driver with a conscience would do the same. For example, a few weeks ago a number of cab drivers in Tucson realized that they had all picked up several senior citizens at one time or another over a period of weeks to take them to the bank and then on to a store to wire the money. The conclusion reached by this group of drivers was that these seniors were being scammed out of their money. All of the drivers made an effort to point this out to the victims, with one cabbie contacting the Tucson Police Department to alert them to the situation. Some drivers who are familiar with the routines of certain passengers have alerted authorities when they haven't seen these passengers on certain days or after prolonged periods of times - some of these passengers have then been found by the authorities laying on the floor in their apartment or house, having fallen and unable to get up or summon help - unfortunately, some had died. How long might have any these remain undiscovered without the concern of the cab driver is unknown, but it demonstrates that most taxi drivers are decent people like the rest of society.

Cab drivers are not trained in the behavioral sciences, but can generally discern when something is amiss with a passenger. But it cannot be expected that we will or must ascertain a passenger's motives or plans when entering the vehicle, or put "two and two together" as we proceed to the destination. While what happened in Tucson is a horrific tragedy, don't blame the cab driver.

Arizona Daily Star, 1/9/11, "Authorities clear man called "person of interest" in Giffords shooting case

Wednesday, January 5, 2011

The Tucson Airport Authority: Common Sense Transportation Regulation

Here’s a shout out to the Tucson Airport Authority, operator of the Tucson International Airport. Officially, only taxi and livery services that held a valid contract with the authority could pick up passengers at designated curb locations; off-site street cabs and livery companies for years picked up pre-arranged rides by parking in the short term parking lot and meeting their passengers in baggage claim. With the growth in the number of off-site livery services and taxi providers, the authority deemed that this informal process was no longer acceptable, as the possibility for abuse grew through solicitation of passengers at baggage claim for passengers (if anybody has traveled through any New York area airport, you know how irritating this solicitation by “gypsy” cabs could be).

The TAA could have played this straight by the book and prohibited every transportation provider from picking up at the airport except the contracted providers. But the TAA realized there must be good reasons why off-site providers were picking up at the airport, including:
  • There are times when flights come in and there are very few or no airport taxis available, so frustrated customers have looked to other providers for reliable pick up services
  • Many passengers coming into Tucson are elderly and prefer door-to-door assistance with baggage, something that generally cannot be provided by the airport taxi and livery providers
  • The overall supply and demand does not warrant increasing the number of permitted vehicles to pick up the slack if off-site providers were banned from servicing the airport
In other words, the TAA recognized the value, the flexibility, and the customer service that these off-site providers offered, and that the airport’s value proposition would be diminished by banning off-site providers. They realized a solution by listening to all parties concerned, including airport employees, contracted transportation providers, and off-site companies.

The solution: Instituting a permit process that allows qualified off-site providers to obtain a one-time permit for each pick-up, allowing the provider to park just beyond the airport taxi curb, enter the terminal to meet the pre-arranged ride, and escort them out to their vehicle. Each provider must provide the name of the incoming passenger and their flight information when obtaining the permit. While not perfect, it is a very workable solution. This is a win-win situation for everyone: airport providers need not fear illegal solicitations on-site, off-site providers can retain their present customers, passengers can keep their choice of transportation services, and the TAA realizes some additional revenue from permit sales, while maintaining standards for transportation services and minimizing liability concerns.
The TAA’s handling of this issue reflects a common sense attitude, and is one that should be an example for any governmental authority that is considering any regulation or change to operating procedure. As one off-site cab driver that offers pre-arranged pick up services at TIA, I want to personally thank the TAA for their approach to resolving this issue.