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.

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.