New Uber USA Base Could Be Sign of Things to Come in NYC For-Hire Transportation Industry

Consolidation of Uber's NYC bases into Uber USA, LLC might be a preview of future industry developments, including the end of "cross-base" dispatch & new FHV licenses tied to a specific base

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AutoMarketplace.com NYC covers the for-hire transportation industry and automotive news. Check out AutoMarketplace.com on YouTube ▶️

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As the above image shows, Uber sent out a peculiar message to many NYC TLC drivers whose vehicles are affiliated with Uber’s black car bases. Some may have not made much of it, but for those who’ve been in this industry for a minute…we know better than that! So, what does this mean? 🤔

I believe (note: I could be wrong) the official announcement of a new consolidated Uber base (Uber USA, LLC) in NYC maybe telling of future market developments.

A New FHV Base Class

In June 2021, the TLC amended the rules governing High-Volume For-Hire Service licenses, creating the HVFHS base license. An HVFHS base applies to TLC bases that dispatch more than 10,000 trips per day (i.e., Uber, Lyft & Via). The new rules clearly makes the HVFHS license a separate & distinct FHV base license, no longer requiring Uber, Lyft & Via to maintain traditional black car base licenses to dispatch trips. Basically, it makes Uber, Lyft, Via and the TLC’s life/admin a lot simpler - from redundant licensing requirements to keeping track of compliance with minimum pay rules (see below).

So now that you have a background to why Uber sent the email, why do I think it’s interesting?

Cross-Base Dispatching Could End As “Traditional” Bases Want To Add Cars

Cross-base dispatch is a term used to describe the ability of any TLC-plated vehicle affiliated with a black car or livery base (licensed by the TLC) to accept a NYC for-hire job REGARDLESS of what TLC base the job is dispatched from. The term cross-class dispatch, which is also used often, refers more to the ability of cars affiliated with livery bases to accept black car base trips (i.e., doesn’t cover the dynamic of black cars working for different black car bases).

Cross-base dispatch is a term used to describe the ability of any TLC-plated vehicle affiliated with a black car or livery base (licensed by the TLC) to accept a NYC for-hire job regardless of what TLC base the job is dispatched from

For example, if your vehicle is affiliated with an Uber black car base, like Uber-Vierzehn-NY or Uber-Zwolf-NY, you can still take jobs from a “traditional” black car base service like ETG, Carmel, Elite, Vital, Alpine, Dial7, Agape or Skyline. (Random fact: Uber’s bases in NYC correspond to numbers in the German language - Vierzehn is 14 in German, Zwolf is 12 in German)

In fact, in 2014 there was some noise around whether to allow for such a mechanism without some sort of formal agreement in place between bases. Back in October 2014, as a NY Times article covering the story highlights, the dynamics were interesting. Some drivers were against new rules on cross-base dispatching as they thought it would restrict their options, while other TLC drivers thought it would benefit them as they thought base companies would pursue them more aggressively.

‘App companies and some drivers were skeptical. One black-car driver, Eran Zach, said that bases were clearly “not going to play nice with each other.”

“Partnership with multiple bases makes my life easier,” he said. “The proposed rules will simply take my freedom away.”

Other drivers spoke in support of the rule, predicting that if drivers were eventually compelled to choose between companies, they would be courted more aggressively, potentially improving income and work conditions’ - NY Times, October 16, 2014

This is pretty technical, but if you actually dig into this issue, the New York Taxi Workers Alliance (NYTWA) also called out the cross-class dispatch mechanism in a July 2019 letter to the NYC Taxi & Limousine Commission. Their concerns though centered around the issue of whether livery drivers would qualify for workers comp from the Black Car Fund (BCF) and the taxability of such trips (i.e., sales taxable black car base dispatch vs. non-sales taxable livery base dispatch).

Source: NYTWA July 22, 2019 Letter to the NYC Taxi & Limousine Commission

Basically, with the establishment of a separate and distinct FHV base class, HVFHS, will the current cross-base dispatch mechanism be changed?

If you follow the industry, you’ll know “traditional” black and luxury car bases are fairly upset about the FHV License Pause (aka TLC Plate Cap). They believe the rule unfairly punishes them by preventing them from growing their businesses (i.e., base wins a new corporate contract and needs to add vehicles). After all, they reason, they didn’t flood the market with cars like Uber and Lyft did.

In one of my first AutoMarketplace (then known as TLCMKT) pieces, I spoke about this dynamic.

As it relates to the TLC Plate Cap, [AutoMarketplace] believes a “restricted” for-hire vehicle license will gain traction. A “restricted” for-hire vehicle license would essentially allow non-high volume black, livery and luxury limo car bases (i.e. not Uber and Lyft) to add vehicles based on some sort of demand formula. The twist being those vehicles could only work for a specific base vs. enjoy the “cross-base” freedom of a traditional for-hire vehicle license that can work for multiple companies (i.e., Uber and a traditional black car base). A good example of this would be if a livery base won a new contract that required it to add twenty cars, it could do that by adding vehicles under restricted licenses (subsequently if the contract was lost the base may then be forced to retire those licenses?). As the Black Car News reported in December [2019], Council Member Rodriguez, who also chairs the Transportation Committee, has already shown support for such a measure, including correcting other issues related to the hard license cap.

[Rodriguez] even held a rally outside City Hall just prior to the hearing, calling on the [Taxi & Limousine Commission] to “correct a loophole in the current for-hire vehicles regulations, which is killing the City’s [traditional FHV bases]… to amend the For-Hire Vehicle licensing regulations and across-the-board cap, so that drivers lost to retirement, career change and other common causes could be replaced.” - Black Car News, December 2019

- AutoMarketplace (August 27, 2020)

Furthermore, as reported by the Black Car News, presumptive/incoming NYC Mayor Eric Adams is said to be in favor of opening up FHV Licenses (TLC Plates) to traditional black car and luxury bases if they can demonstrate a need. To create such a mechanism you now have the regulatory infrastructure in place - a separate and distinct FHV base class (HVFHV) for Uber, Lyft and Via.

Gaming out a potential ‘Black, Luxury & Livery Base’ Exemption to the FHV License Pause, it would be hard to imagine that cross-base dispatching (in its current form) would be allowed. It’s likely that all black, luxury and livery base licenses would be converted to only having dispatch rights to one base (i.e., car affiliated with Carmel, can only do Carmel work). Layer on to this the yellow cab medallion industry’s absolute demand for there to be no more TLC-plated cars added to NYC streets, maybe getting rid of cross-base dispatch would be an acceptable concession (i.e., would limit the cars that are able to work for Uber, Lyft and Via).

Some other thoughts I had was, given Uber and Lyft (HVFHS) control so much of the for-hire trip market share (>75% share of total trips) in NYC, would TLC drivers rush to change their vehicle’s base affiliation if they knew such a rule was coming and cross-base dispatch rules could be changed or eliminated? I actually think many TLC drivers would change their vehicle’s base affiliation to Uber and Lyft’s HVFHS bases, subsequently resulting in a vehicle & driver supply shock for the traditional black, luxury and livery base industry that they might not be able to survive in the short-term (i.e., their current clients would not be serviceable even if they rushed to add drivers and cars). Again, maybe I’m wrong. Also, to be clear, I do somewhat understand the broader point of the FHV License Pause unfairly penalizing corporate-client focused black and luxury car bases.

Finally, while Uber and Lyft were recently experiencing a driver shortage, that is no longer the case. As I wrote previously, as driver shortage issues fade away and trip demand recovers, you’ll likely see the Uber (& Lyft) Planner come back. The Planner was a response to the TLC minimum pay requirements passed in late 2018 and basically created “Uber-only” and “Lyft-only” drivers. Even though cross-base dispatching is allowed between HVFHS bases like Uber and Lyft, companies cannot combine a TLC driver’s earnings on both platforms when calculating whether TLC minimum pay requirements were met (this is perhaps something the TLC should consider to encourage multi-platform driving).

Analyzing all the above, it seems like TLC drivers are going to increasingly become beholden to one company, whether that’s Uber or a black car base, which I don’t think is ideal. This piece isn’t meant to argue one side or the other. It’s merely framing what I think is to come. As always let me know your thoughts!

Would you support Black, Luxury and Livery Bases being exempt from the FHV License Pause (aka TLC Plate Cap)? Why or why not?

AutoMarketplace.com NYC covers the for-hire transportation industry and automotive news. Check out AutoMarketplace.com on YouTube ▶️

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