Thanks to new services like Uber and Lyft, taxi services has seen an uptick in the amount of news stories it has received and in the mind share of consumers. Obviously, if it’s been in the news, the stories are probably not very positive. Indeed, Uber – the grandaddy of alternative fare service – has brightly exposed the weaknesses of taxis and invited all the normal complaints you would hear from taxi riders but increased tenfold. As the taxi industry struggles to deal with this new competition, it’s worth looking at whether all these complaints – even if valid – are justified.
A taxi or cab, very generally, is simply a hired vehicle that transports passengers between locations of their choice – which Affordable Taxis explains is what distinguishes it from public transport – but taxis (for most, that familiar yellow Crown Victoria) are largely differentiated from other vehicles for hire like limousines and, of course, Uber and are regulated as such. Perhaps what separates taxi cabs most from those other services is that they are part and parcel of a fleet of similar cars and are leased by the driver. This allows a certain monopolization of service. That is, the owner of the fleet of cars sets the prices and the availability of routes. Monopolies, for the most part, are predictably inefficient and not reactionary to the needs and desires of consumers.
In the world of taxi service, taxi operators are – or at least were – free to trot out old and dirty cars that haven’t seen upgrades in decades while leaving prospective passengers in need of a ride standing on street corners for way too long. The prices are seen by the majority to be too high and the personal customer service is predictably poor. You can spot an inefficient monopoly a mile away by seeing how they react to competition and taxi operators acted true to form by attempting to force Uber out of the marketplace. The New York Times reported the efforts of “San Francisco cabdrivers and Chicago car service companies” to pile on lawsuits and push regulators to propose “new rules that would run Uber off the road.”
And it’s no wonder why. Services like Uber flip the script forcing taxi operators to invest in things they previously never had to. You see, Uber’s main take is providing cab service to passengers. The taxi operators are much less interested in that task. The San Francisco Sentinel puts it like this: “Taxi companies are car rental companies making primary money by charging taxi drivers rental fees for use of the company owned vehicles. The taxi drivers are considered their primary ‘customers’, paying fees into the taxi companies for their ‘company provided services’.” Thus, the customer’s satisfaction is unnecessary and therefore unlikely because the taxi operator’s profits aren’t tied to the customer’s satisfaction. So, a standard passenger will call the dispatching service way too many times, wait for way too long and pay way too much. This is all while dealing with poor customer service in which the dispatcher probably acts like that prospective passenger is being insulting by calling.
These boilerplate complaints thrown at taxis are justified. It’s an unreliable structure that services the middlemen rather the the customer (or the driver) and services like Uber have aimed squarely at that inefficiency. According to Reuters, “in Washington DC, UberX costs 18% less than a taxi” while having much better and more efficient service. “And the drivers of those cars are making significantly more money than they would make if they were driving a cab.” If taxis are made to compete with the newcomers, they’ll have to change their way of doing business and become a legitimately reliable mode of transportation. Or – like Blockbuster and Borders and all the other old-schoolers who couldn’t adapt to a new marketplace fitted to the consumers needs and desires – they will waste away.
