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🔐 TLC Plate Cap (Part 1): ~6,400 NYC Taxi Medallions Remain Inactive
In Part 1 of our series, ahead of the FHV License Determination (aka 'TLC Plate Cap') & Report due in September, we explore how ~6,400 taxi medallions in storage should impact policymakers
AutoMarketplace.com NYC covers the for-hire transportation industry and automotive news. Check out AutoMarketplace.com on YouTube ▶️
⏱️Summary
🚕 ~6,400 Inactive Taxi Medallions: The NYC Taxi & Limousine Commission (TLC) will likely NOT allow new FHV licenses (aka lifting the ‘TLC Plate Cap’), until the NYC yellow taxi medallion market recovers & stabilizes
🍎 City Guarantee & Medallion Valuation: Last year’s historic taxi medallion debt restructuring agreement included a City guarantee on restructured medallion debt. Allowing new FHV licenses would likely and immediately invite litigation, as medallion values would be significantly impacted
Post Pandemic
When we saw the latest NYC TLC trip and vehicle data, we noticed that while a trip recovery is taking hold 🚖📈, the number of active yellow cabs and trips are still well below pre-pandemic levels. (Note: the latest data is as of the end of June 2022).
In fact, it still appears that ~6,400 yellow taxi medallions remain inactive! 👀
NYC Taxi Stats
To first understand why so many taxi medallions remain inactive we have to understand the data…before, during and after the pandemic. We think once you have that context, my view and opinions may make more sense.
Firstly, it’s helpful to know that there are 13,587 NYC taxi medallions 🚕🚕. Yellow cab medallions give an NYC TLC driver (i.e., licensed by the NYC Taxi & Limousine Commission) the sole right to hand hail 👋 for-hire trips in most of Manhattan (i.e., Green Cabs can pick up hand hails outside of central Manhattan).
In addition, yellow cabs can also accept “e-hails” via electronic devices. New Yorkers are increasingly using taxi-centric apps such as Curb to modernize (instant card payments) their yellow taxi trips. There is also an expectation that taxis will be added to the Uber App soon!
So, let’s see how the yellow cab industry fared before, during and after the pandemic.
From the data above, one can clearly see that the NYC yellow cab industry went through two significant negative inflection points:
The rise of e-hail apps, such as Uber & Lyft, &
The pandemic
Although a recovery is now taking hold, the industry’s overall decline is astonishing. For example, yellow cab trips have declined 77% 👀 since June 2014!
13,587 Ratio
To this data let’s layer on something we will call AutoMarketplace.com’s 13,587 Ratio (# of yellow cab trips / maximum taxi medallions). We think this ratio is a helpful measurement when assessing the health of the NYC yellow cab market. In simple terms, the ratio measures how many trips exist for ALL yellow taxi medallions in NYC (Note: not currently active, but assuming all medallions were actively being used). Given the recent City-backed debt restructuring agreement, I believe an aim of the TLC should be to return this ratio back to a more sustainable metric.
In other words, it was determined (and agreed to) that the City would back the medallion and yellow cab industry with a capital injection and a City (read tax payer) guarantee. This is a major event in the history of the NYC for-hire transportation market that was ~7 years in the making.
Why Are ~6,400 Medallions Inactive?
If there is a difference between the ratio of ‘Trips per Active Medallion’ and ‘Trips per All Medallions”, that obviously implies not all medallions are active. In fact, from the data above you can clearly see that as of June 2022, only 7,149 taxi medallions are active out of a total of 13,587. This implies that ~6,400 medallions are inactive.
The question becomes why are so many medallions inactive and based on our team’s research, the most obvious reason relates to medallions in foreclosure. There are other factors, including vehicle replacement costs, wheelchair accessible (WAV) mandates and a driver shortage.
If I were to game out the TLC’s thinking re. opening up FHV Licenses based on the above, a fairly straightforward policy determination is likely being reached 👇.
Until all NYC taxi medallions are sustainably active, the ‘TLC Plate Cap’ cannot, in good conscious, be lifted. If it were to be lifted, the yellow cab industry would almost immediately take legal action to defend the industry, which just completed a multi-year debt restructuring. In addition, taxi medallion values would almost certainly plummet on news of the ‘TLC Plate Cap’ being lifted.
Taxi Medallion Index
We appreciate the above commentary, especially to someone not familiar with the TLC industry, is esoteric. Therefore we thought it would be helpful to launch the first edition of what we are calling the AutoMarketplace.com Taxi Medallion Index. While the TLC publishes medallion transfer values, sometimes this information doesn’t reflect CURRENT market realities and can also be confusing to understand.
Since our previously disclosed view that NYC taxi medallion values are set to increase, we’ve also realized it’s not easy for many to understand the medallion market and valuations. The Taxi Medallion Index hopes to provide more insight into the market with the hope of not only informing TLC drivers & other market participants, but also helping attract capital, both human and financial, to the industry.
We think increased investor interest, from solo drivers to larger investment groups, will benefit the overall TLC industry. Not only from a taxi medallion liquidity & valuation perspective, but also related to promoting FAIR & LEGITIMATE financial products offered to commercial NYC TLC drivers - many who can’t easily access capital to pursue an idea or grow their NYC for-hire transportation related business.
A major role of any media publication is to help facilitate information & data exchange among people and businesses. In FULL DISCLOSURE, AutoMarketplace.com currently has no active stake in any taxi medallion, but its parent company does own & operate, as disclosed multiple times, a small-to-medium sized FHV Corporation that can benefit from several dynamics listed above. If AutoMarketplace.com’s or our parent company’s investment holdings or advertising revenue sources change in any other way, we will FULLY DISCLOSE that, so it’s clear where any potential conflict of interest exists.
Just because a conflict of interest may exist, and we will try to minimize them, our reporting will provide hard data and analysis in making our opinions clear. It is for our readership to judge if our conflicts compromise the effectiveness of our reporting. To be clear though, the Taxi Medallion Index is not based on our wishful thinking, but on our discussions with licensed TLC brokers, drivers, fleet owners and publicly-disclosed medallion transfer values.
⏭️…Preview of Part 2
⬛ Black Car & Livery Base “Only” Licenses: “Traditional” Black Car & Livery Base arguments for an exemption to the ‘Cap’ are valid (to an extent). However, the inability to offer a competitive service vs. Apps is the core issue. Proposals for any FHV License “exemption” needs to be studied thoroughly
🤝 Black Car & Livery Base Partnership With Apps: In interim, similar to yellow cab industry, the TLC should facilitate discussions between App companies and traditional black car & livery bases to help meet unmet demand. Rules and regulations around revenue sharing should be codified
🔐 FHV Licenses in Storage: FHV licenses (aka TLC plates) currently in storage need to come out of storage by December 31, 2022 to prevent artificial FHV supply abuse, which influences policy decisions around the ‘TLC Plate Cap’
In the next part of our TLC Plate Cap series, we revisit black car & livery base exemptions, “One Driver, One Plate” & more! It’s a topic that’s recently got attention from the media.
AutoMarketplace.com NYC covers the for-hire transportation industry and automotive news. Check out AutoMarketplace.com on YouTube ▶️
Guys we need to stop arguing and make peace with the past. That being said, consumers are the one suffering. Between shortage of yellow cabs and apps surge pricing customers are left with less options. I suggest that yellow cab medallions lift their cap and allow a window of 1-2 years for drivers to purchase medallions at market price. Many unused medallions can not be taken out of storage because of foreclosure proceedings which was mentioned in the article. The alternative for helping consumers is to increase taxi capacity. In December 2005, NYC had a transit strike and under then Mayor Bloomberg a contingency plan was developed. This is a quote from NYT "Taxicabs will be allowed to carry multiple fares, and will be able to charge based on a zone system. Cabdrivers will be allowed to charge up to $10 to start and up to $5 for each zone covered during the trip." Cabdrivers and passengers both gained from helping each other and not to mention the city benefited as well because congestion was controlled that day. I propose to allow cab drivers to carry multiple fares during rush hour as a pilot so that supply of rides increase with the current resources available. This will be a win-win for everyone including the city.
"hand hail " there is nothing in any law that spells out the taxi medallion exclusive as "hand hail' although I’ve used that expression myself, it is not the law. The law gives exclusive STREET HAIL rights to taxis, and if i see it for what that is, it includes the ability to use the phone as a street hail device. On the other hand, app cars, should not be allowed to arrange an on-demand service, because that is a street hail, even though an app was downloaded previously. What that does if allowed, is a private street hail, which again falls under the category of street hail and therefore can only be used by medallion cabs