Congestion Pricing Hearings Begin. Why are Uber & Lyft Supportive? Medallion Politics Could Show Up

Overdue implementation of congestion pricing is increasingly becoming a political priority to not only fund the MTA, but also to reduce traffic congestion. How could the NYC TLC industry be impacted?

AutoMarketplace NYC Newsletter is written by Dawood Mian, Founder of AutoMarketplace (launching soon). He covers the NYC for-hire transportation industry and related news.

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This isn’t the first time (it won’t be the last time either) I’ve written about NYC’s delayed congestion pricing program. However, with flooded subways becoming a norm and increasing traffic congestion, implementing Manhattan congestion tolling has become a political priority. Meetings taking place over the next weeks aim to start laying the foundation for how to implement NYC congestion pricing as soon as possible (remember this is a ‘when’ not ‘if’ situation) . Many believe the congestion tolling system will only come fully online by 2023, but it’s hard to imagine the City and State would wait that long to start collecting desperately needed revenue.

Congestion Pricing Means Different Things to Different People

As with any big government project, especially one involving toll collection, emotions can run high and as expected the political machinery related to congestion pricing has begun to move again. You have to remember this isn’t a simple project to implement both technically (i.e., tolling infrastructure) or politically. If you don’t have a car you may initially be indifferent until your Uber gets $10 more expensive or Amazon charges you more to deliver your package! On the other hand if you use public transport or are a biker, you probably wouldn't mind less busy roads and more money allocated to public transport infrastructure. The fight for congestion tolling exemptions is really what is in play and a lot is on the line for a lot of different people and industries, the TLC industry is no exception.

Currently, emergency vehicles and those carrying people with disabilities are the only exemptions from the program, with tax credits in place for residents living within the CBD and earning less than $60,000.

Drivers on the FDR Drive, West Side Highway and the sections of the Battery Park Underpass and Hugh Carey Tunnel that connect the two will be exempt from tolls, unless exiting into the CBD, with protections in place to ensure residential vehicles will only be tolled once per day. Commercial vehicles may be subject to multiple tolls.

It’s possible that the TBTA will include additional exemptions in the plan, though each additional exemption will likely drive up the price for other drivers, with the MTA required to meet the annual revenue generation goal. - Staten Island Advance

For example, New Jersey representatives argue that congestion pricing would effectively ‘double toll’ their constituents when they come into Manhattan, as they already pay steep bridge and tunnel tolls to cross over. Commuters from the Bronx, Brooklyn and Queens are worried that it would make the commute into Manhattan unaffordable when public transport is not an easily accessible option. NYC TLC and Amazon drivers are nervous that they maybe (in reality the customers) subject to hundreds of dollars of weekly tolls to simply enter and exit the Central Business District (CBD) of Manhattan, defined as any area south of 60th Street.

So…one may wonder why Uber & Lyft would be for (i.e., have spent lobbying dollars) congestion pricing! The answer may surprise you. In addition, could the struggling NYC yellow cab industry use congestion pricing politics to seek a standalone exemption for their vehicles, which have always been historically CBD focused.

If People Don’t Drive Into Manhattan…Doesn’t Mean They Aren’t Coming To Manhattan

Uber spent close to $2 million to PROMOTE Manhattan congestion pricing legislation passed in 2019. Why?

“Over the past several years, we’ve been proud to work with a diverse coalition to fight for comprehensive congestion pricing, and we’re excited to see Albany take action to reduce congestion and invest in mass transit,” - Harry Hartfeld, Uber spokesman

Firstly, it’s worth mentioning that for-hire cars in NYC are already subject to congestion taxes, paid for by passengers ($2.50 for yellow cabs, $2.75 for other for-hire services). So it’s probably even more confusing on its face why Uber (and Lyft) would want to be subject to more congestion-related tolls and fees, even if the passenger is ultimately paying for it. Remember the higher a fare, the less likely a passenger is going to want to take an Uber/Lyft, even if the reason for the increase is unrelated to the Apps business decisions. For example, if a passenger had to pay $10 to $15 more to go from the Brooklyn to TriBeCa, that presumably would kill a lot of trip demand.

However, Uber and Lyft are likely thinking about the long-term benefits of congestion fees on private cars and how it would help their businesses (Note: plural, as both companies have large bike (i.e., Lyft runs Citi Bike) and scooter divisions (i.e., Uber is a Lime shareholder) that would benefit too). In addition, I would also assume both companies expect (and will lobby for) their vehicles to be subject to only one congestion toll per day vs. multiple times per day, allowing them to distribute the cost over several trips. While the ridehailing platforms may lose some trip volume to higher fares, the influx of potential new riders, discouraged from using their own car, could be very good for business. Uber and Lyft’s underlying visions are, after all, to help end personal car ownership by making it more affordable to rely on their services alone, especially in dense urban areas.

“Raising the cost of driving a car into midtown Manhattan or other central parts of cities has counterintuitive benefits for Uber and its peers. Less traffic means shorter wait times for passengers. They are also betting on a broader shift away from private car ownership to other forms of transportation they offer, including shared rides, bikes and scooters, and to public transit. Uber says many customers combine an Uber trip with the bus or subway.” - Financial Times

"Our intention is to make Uber so efficient, cars so highly utilized that for most people it is cheaper than owning a car…Uber doesn't grow if car ownership is cheaper than taking Uber" - Uber Co-Founder Travis Kalanick

Congestion Pricing May Come Sooner Rather Than Later

With traffic returning to pre-pandemic levels and less than 50% (!) of NYC office workers back, traffic congestion could explode if a stronger economic recovery takes hold as virus fears subside and people embrace a “new normal”. Imagine if more office workers returned to NYC with many opting to drive into the City if they are only required to be in the office a few days a week? That could lead to a disastrous NYC traffic situtation. The fear of that traffic congestion combined with a recovering, but still extremely underutilized (i.e., revenues are down) and near bankrupt MTA, I would imagine lead to quicker action on congestion pricing implementation.

How Yellow Cab Medallion Politics Could Enter Congestion Pricing Discussions

As the yellow cab medallion crisis continues to make headlines, one thought that also crossed my mind was whether those politics could leak into congestion pricing exemption discussions. For example, Manhattan has historically been the domain of yellow cabs and it wouldn’t surprise me if the medallion industry lobbies for a congestion toll exemption for yellow cabs, BUT NOT for other TLC-plated cars. It would be a way to try to take market share back by effectively pricing out app-based companies (i.e., yellow cabs could offer cheaper fares if they didn’t have to pay the congestion toll).

Remember all of this is still early days and a lot is yet to come and TBD. This won’t be the last time I discuss congestion pricing, but be prepared to hear about it in the news more as its implementation nears.

How to have your congestion pricing concerns and thoughts aired?

If you would like to participate or have a say in the upcoming virtual congestion pricing meetings, please visit the official MTA site dedicated to the hearings. You can submit a question online and/or register to speak. Those who prefer to sign-up by phone may do so by calling the Public Meeting Hotline at (646) 252-6777.

What are your thoughts? Will TLC cars be exempt from multiple congestion tolls per day? Will Yellow Cabs be exempt, but not other TLC-plated cars? Please let us know in the comments section below.

AutoMarketplace NYC Newsletter is written by Dawood Mian, Founder of AutoMarketplace (launching soon). He covers the NYC for-hire transportation industry and related news.

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