Updating Tucson taxi issues

Yellow Cab

It's been awhile since I've posted, since a lot has changed for this driver personally, as well as in the overall Tucson taxi environment.

This driver no longer drives for Tucson Yellow Cab - I now drive for a small independent cab company. This was necessitated by the continuing oppressive atmosphere at Yellow Cab, where lease rates continued to rise and the company instituted more ways to extort money from drivers, including once again reducing Medicare voucher reimbursement rates, prohibiting drivers from using alternative credit card processors other than Yellow Cab's, and offering passengers a greatly reduced rate to the airport - which discount is totally subsidized by the driver, having no effect on Yellow Cab's bottom line. Additionally, in order to force more drivers to service the Medicare voucher rides (for which Yellow Cab receives a substantial reimbursement, yet pays the driver at 65% of the regular meter rate), known rides to the airport are only given to drivers who participate in the voucher program. All of this in the face of rising fuel costs until recently.

Recently some local cabbies have stepped up to improve their lot in life, and take on the larger cab companies, including Yellow Cab. Christopher Kroh, a long time Yellow Cab driver, recently spearheaded the Tucson Hacks Association, a group of cabbies banding together to fight oppressive cab company policies and improve their operating environment. This effort lead Yellow Cab to immediately terminate Chris' contract to drive for them. Chris' efforts are outlined in two great stories by Mari Herreras of the Tucson Weekly:

TQ&A: Christopher Kroh (June 7, 2012)

Fired Up! Tucson cabbies question the legality of their independent-contractor status (July 12, 2012)

Cab Stands



Your own boss? More like indentured servant.

Other issues also remain. With all the new work involving the Tucson streetcar, streets such as 4th Avenue, Congress, and University are all being reconstructed, with features such as improved bus pullouts and bicycle lanes, but why can't we get cab stands designated on these streets? Local transportation planners refuse to recognize taxis as part of the transportation mix, yet for a good part of the population it is the preferred method for getting in and out of downtown and 4th Avenue. When will this change? The larger cab companies, such as Yellow and Discount, have no interest in seeing this change - they prefer to establish exclusive cab stands on private properties, such as night clubs, which lock out other cab drivers from picking up at these spots. So why would they want to try to bring any order to the chaos which exists on public streets as all cabbies try to vie for walk-up traffic downtown? The city needs to consider cab stands in these zones to reduce some of the bad behavior on the part of cab drivers, promote public safety by reducing double and illegal parking by cabs, and promoting responsible behavior by inebriated passengers.

Regulatory Environment & Enforcement

Last year, the state legislature passed a law which prohibits other governmental entities from regulating taxis (the Tucson and Phoenix airport authorities are exceptions to this statute). While this decreases regulatory burdens on cab operators across the state (can you imagine Tucson, Marana, Oro Valley, and Green Valley all trying to regulate taxis within their boundaries? Yikes!), the framework of state taxi regulations could use a little more work. For example, state law says that taxi companies must run background checks on individual drivers, but does not specify if any driver is prohibited from driving for any particular class of offense. Also, cab companies must have maintenance records available for inspection, but it is not specified in what form these records must be maintained, what, when, and by whom maintenance must be performed, and what penalties apply if the records are not kept or if maintenance lapses.

And who enforces state taxi regulations? Well, it seems it is mostly up to the state Department of Weights and Measures. Few inspectors exist, however, and they are for the most part tasked with regular inspections of all measuring devices (scales, gas pumps, fabric meters, etc.) as well as enforcement of consumer labeling laws (like making sure your roll of Charmin has the number of sheets as specified on the label). It would be helpful if local police agencies were educated on taxi regulations and did random of inspections, looking for ID card, insurance, and meter violations. This would assist in keeping taxi operators honest in between the annual inspections conducted by Weights and Measures.

The current Tucson Yellow Cab system crash

At 7 pm last night, Yellow Cab in Tucson lost a server that drives dispatch services through a transmitter servicing the east side. It's now 12 pm the next day, and the system is still down.

What does this mean? Cabbies east of Country Club can see calls on their computer screen, but cannot log into the system or bid on (ask for) calls on the east side via their mobile data terminal (MDT). After the system first went down, the dispatchers dispatched calls using the voice radio, but sometime after 4 am this morning, stopped doing so. Drivers are now being instructed to drive back to a small zone within a couple of miles of Yellow Cab (near 18th & Park) where they can communicate on their MDT's via the radio tower located at Yellow Cab, and bid on calls while near the yard. If they wish to accept a call on the east side, they then have to drive to call, service it, then drive all the way back to Yellow Cab so that the MDT clears the call correctly before they can bid on or accept another call.

What's happening as of right now? Passengers are waiting up to 2 hours to get a cab. When calling into Yellow Cab, they are not being told that there is system issues. They hang up after placing their request, thinking the cab will arrive shortly. After waiting for some time, they call Yellow Cab back, only to be told that their cab will be shortly, then they wait, and wait some more. This includes AHCCCS voucher passengers, who have enough trouble getting a ride as it is, due to the fact that many drivers are unwilling to service their rides due to insufficient reimbursement rates. And this is the 1st of the month, when many senior are out grocery shopping today. Would you want your 80 year old mother or grandmother waiting for 2 hours for a taxi?

A simple solution to this problem would be for Yellow Cab to continue to voice dispatch all calls throughout the city until the problem is resolved. This would allow drivers to efficiently service all customers without wasting fuel or time by having to travel back and forth from Yellow Cab's vicinity to use the computer dispatching system. This is the current scenario: A cabbie is at 22nd and Kolb. He has to travel 5 miles and 15 minutes to Yellow Cab's area so as to accept calls via his MDT. Let's be generous and says he gets a call with 5 minutes. The call is back at Fry's at 22nd and Kolb. So he travels back to Fry's, 5 miles and 15 minutes later. It's a $7 grocery run. It takes 10 minutes to service. Then he has to travel back to Yellow Cab to clear his meter, another 5 miles and 15 minutes. For $7, he's spent 55 minutes invested in the call, and at least 15 miles. With gas at $3.35 per gallon, and the cabs getting 12 miles per gallon, his net on the call is about $3.65, and that's before he has to pay his lease. The average driver has to gross $25 per hour.

I've already spoken with several drivers this morning, and the story is the same: most of them have grossed maybe $50 in the past 6-7 hours. And yet, Yellow Cab refuses to voice dispatch calls so as to ease driver and passenger pain. Why?

Hopefully someone in the media will read this post and call Yellow Cab seeking some answers. This happens too often, yet Yellow Cab feels they are accountable to no one.

More updates to follow as appropriate. I'm going to try to get some photos of MDT messages that show how long customers are waiting for service.

1:30 pm update: Yellow Cab finally decided to go to voice dispatch - there's a large backlog of calls holding. No word on what's being done to bring the system up.

5 pm update: Yellow Cab apparently was able to raise the power on the downtown transmitter to provide coverage for most of the outlying areas, including the east side, until they can get the east side tower (actually located on Mt. Lemmon) back up. This is workable, but some shadows exist in coverage. Let's hope that the downtown tower/server doesn't go down, too. They need to get the Mt. Lemmon tower up, because I believe the raised power on the downtown tower causes interference with other users.

8:45 pm update: East side transmitter still down - at least Yellow Cab continues to dispatch by voice. Call volume has subsided for the night, and hopefully some drivers will be able to make some money tonight after a horrendous day.

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.

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

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.

Yellow Cab Has Declared War On Its Drivers - Part 1

AAA Full Transportation, aka Yellow Cab, has decided to wage war on its hard working cab drivers in its endless quest to squeeze every dime it can from them, and control their working habits as though they were employees, even though they are independent contractors.

It can do this because of the lack of any regulatory oversight of taxi transportation in Tucson, or for that matter, in the state of Arizona. Other than Weights and Measures which insures accuracy of taxi meters and that vehicles carry the necessary insurance, and ADOT which issues "taxi" plates, there is no oversight of pricing, driver standards, vehicle equipment and safety standards, or driver drug and alcohol screening. No special license is required to be a cab driver, and unlike most large cities, no limit on the number of cabs any company can field in the city or state exists.

Almost all cab drivers in Tucson are independent contractors, not employees of the cab companies. In essence, cab companies are glorified car rental companies. The driver pays a flat rate for the car for a 12 hour, 24 hour, or weekly period. The cab company does not generally take a slice of any fare. Since this is the case, drivers can choose what hours to work, what parts of town they wish to service, what dispatched calls they wish to accept or reject. Some drivers show up, lease (rent) their cars, take calls from dispatch, sometimes pick up a "hail" or "flag" off the street, and then go home, happy with whatever they made that day. Others drivers have seized the opportunity that their status as independent contractors have given them - they have made an effort to establish real businesses as transportation providers - they have built a client list ("personals"), they've developed a strategy, some advertise and have web sites to attain new customers, and some are even incorporated. Drivers in this latter category generally derive more of their income from their own customers than from taking calls from Yellow Cab. While the cab company provides for insurance and maintenance of the vehicle, the driver is responsible for fuel, paying income taxes, and his own health insurance.

Yellow Cab, in the meantime, has built a strategy in the last few years of providing managed transportation services particularly for the state of Arizona for AHCCCS (Medicaid). AHCCCS through their member providers arranges for transportation to and from medical appointments. Yellow Cab not only provides transportation, but in the case of APIPA, provides call center services. This amounts to several thousand rides per day in the Tucson area. These are known as "voucher" rides, as the passenger does not pay the driver, but rather the driver collects the fare from Yellow Cab.

Yellow Cab utilizes a computerized GPS dispatch system. With the system that had been used for the last 7 or 8 years, a call is entered into the system, then the system locates an available cab closest to the customer, and offers that driver the call. In the past, the driver was presented with a street name, a block number, and the type of call - cash, credit card, or voucher. The driver makes an assessment as to whether he should accept the call or not depending on a number of factors - distance to the call, traffic, prior knowledge of the address, future appointments he has with other passengers that he has to keep, and the type of call. If the driver accepts the call, he receives the call details - specific address, passenger name, phone number, special notes and instructions, and if a voucher, the reimbursement rate. If the driver rejects the call, he gets back into the queue for another call.

Knowing the type of call is important to the driver. Some drivers will take any call, others will only take cash. Many drivers will not take voucher calls, as these pay at a rate less than the "meter" rate - in other words, Yellow Cab drivers collect $2.00 per mile for cash calls, plus the $2.50 flag, and $28.00 for waiting time (time while waiting at stop lights, for customers making purchases in convenience stores, or anything else that prevents the driver from actually having the vehicle in motion). Vouchers, on the other hand, are paid at a flat rate per mile ($1.30 per mile), and do not include any allowance for waiting or delays. A cash call going 5 miles might pay a driver $13 to $15 before tips, while a voucher will only pay $8.50 (Yellow Cab pays $8.50 for any ride up to 6 miles, then at 7 miles, pays the mileage times $1.30 - 7 miles = $9.10, 8 miles = $10.40, etc.).

Most experienced drivers know that if they want to make the most money in the shortest period of time, they need to avoid taking vouchers. On a good day, a driver taking only cash calls will make another 30 to 40 percent more than one taking vouchers. Most drivers, however, are willing to take some vouchers during the day, because cash calls are not always available.

Over the past few years, both meter rates and voucher rates have remained fairly level or have actually decreased. In the past five years, the meter rate has gone from $1.60 per mile to $2.00 per mile, while voucher rates have fluctuated from $1.20 to briefly $1.50 per mile. In the meantime, gas has risen from $1.89 per gallon to $2.69 per gallon, Yellow Cab’s lease rates have gone from $475 per week to $588, and the recession has severely impacted call volumes, with fewer people taking cabs, while Yellow Cab has increased the number of cabs in their fleet by 25%. Additionally, given no government restrictions on the number of cabs in the city, a plethora of smaller independent cab companies have started up in the last couple of years, and the other two large cab companies - Discount and VIP - have also increased their fleet sizes. For any driver, this means competing for a piece of a much smaller pie. Let’s do the math. If you are Yellow Cab driver, you are going to work during a good week 38- 42 hours just to pay Yellow Cab - this to cover your $588 weekly lease, and the gas expense just to generate the $588. This is a breakeven point of approximately $690. Then you’ll have to work another 40 hours to make money for yourself - $300 to $400. That’s right - most cab drivers work the equivalent of two full time jobs to provide for themselves and possibly a family.

Yellow Cab makes a tremendous amount of money on vouchers, and does everything they can to protect the profits they realize. Hence, while drivers' costs have increased, Yellow Cab has reduced the reimbursement rate to drivers. Drivers bear the brunt of the risk and cost for servicing vouchers. First, drivers bear the fuel cost. Second, if the ride is a no show (a previous cancellation made was not entered into the dispatch system, the passenger forgot about their appointment, or decides not to go when the driver arrives), the driver has an opportunity cost, receives nothing for his effort, while we suspect that Yellow Cab collects a no show fee from AHCCCS (the same is true for some special services, like providing car seats - in order for the driver to be able to service a voucher requiring a car seat, he has to purchase his own car seat, while we believe that Yellow Cab charges for sending a car seat equipped car but does not share that fee with the driver).Third, the average voucher takes 30 to 40 minutes to service - generally 10-15 minutes to get to and load the customer, another 15 to 20 minutes to get the destination, all for $8.50. The average driver needs to gross $23 to $25 per hour in order to make a decent wage - that's not going to happen doing $8.50 vouchers all day long.

It might sound like most drivers would avoid vouchers like the plague, but that is not the case. At some times, like towards the end of the month, cash calls get a little sparse, but generally there are voucher calls every day. Some drivers with a lot of personals will fill in with vouchers as the destination is always known when the call is accepted - if a driver accepted a voucher that would make him run late for his personal, it was easy enough to call the dispatcher and ask to be taken off the call - not easy to do when you get to the cash call and find out they are going to a distant medical appointment or the airport and are already running late.

Why is all this detail about vouchers so important? Because it is at the crux of the relationship between Yellow Cab and the drivers. Since Yellow Cab derives so much profit from vouchers (more than from leasing cabs), nothing would make them more happier than a fleet of drivers that serviced voucher calls all day long. The dispatch system that had been in place was prioritized to offer voucher calls first to drivers, then cash. Drivers have long suspected that during days where vouchers calls were backed up and running late, cash calls were not being entered into the system for dispatch (or entered in so late that once drivers got to cash calls to find out that passengers cancelled or left they would become frustrated and more willing to take vouchers). Over the past few months, Yellow Cab has made it clear to drivers that they are not interested in cash business, since they don't share in the revenue. No effort is made at attaining new cash business, and it's apparent from reviews on web sites such as Yelp and Ripoff.com that cash customers are not important from the time calls are taken to the time they are dispatched, and even when complaints are filed, they are almost never followed up on.

Within the past few weeks, Yellow Cab has rolled out a new dispatch system which is designed to completely hide information about the call being offered to the driver until he accepts it. The only information given to the driver in the offer is the zone in which the call is (the city is divided into zones that are 2.5 miles long on each side) and how far the call is from the driver. No street or block number, no clue as to whether it is a cash call or voucher. If you are in the middle of the zone in which the call is, you have no idea in which direction you might be headed - only if you are on the edge of the zone will you have a clue as which direction you might be headed. The system will offer the driver calls up to 6 miles away - during the night, that might be alright, given the lack of traffic, but during the day that's almost never a good thing. If you are willing to accept vouchers (each driver has a profile which tells the dispatch system what kind of calls he's willing to accept), getting a voucher six miles away and worth only $8.50 will burn up an hour's time.

There additional factors that a driver considers when offered a call besides the type of call:

do I want to travel in that direction?

do I have a future commitment that might be impacted by the offered call?

am I familiar with the address being offered, hence is it someone that I don’t want to pick up (there could be a number of reasons for this - the passenger has been troublesome in the past, the driver might be familiar with his payment record, his expected route of travel might conflict with the driver’s schedule, etc.)

is there a safety issue? do I want to go into that neighborhood, apartment building or convenience store at night? (while the old system offered only the street and block number (coded to indicated if it was an even or odd address) one could ascertain if that address being offered was a certain house, apartment building or business (i.e. the block 5301 E Grant is the odd side of Grant, and there’s only one thing there - TMC))

With the new system, the driver is given almost no information to make any of the above decisions.

To be continued...