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🚕⏱️ RIP Taximeter? BUT...NYC Taxi Medallion Values Could Rise Because Of Uber!
Proposed TLC rules set to make pre-arranged non-taximeter yellow cab trips permanent, but a lot more might be going on that's not immediately obvious...
NYC TLC public hearing will discuss making upfront yellow cab pricing permanent and review new payment proposals for medallion owners who hack up wheelchair accessible vehicles (WAV)
Hearing will take place this Wednesday, May 8th at 10am via Zoom or by dialing-in. There will be no in-person hearing
Part 1
After TLC findings related to Flex Fare Pilot, which allowed taxis to offer upfront pricing, regulator believes medallion industry will benefit from not subjecting passengers to a running taximeter
Still appears a small percent of yellow cab trips are dispatched through apps, but this could change for several reasons, as new regulations become permanent
NYC taxi medallion values could benefit if yellow cabs can do street hails, app e-hails and aren’t subject to sales tax, higher congestion tolls, UR or EV requirements, when other FHVs dispatched by Uber and Lyft are
Part 2 (to be published tomorrow)
WAV TIF payment proposal calls for upfront medallion owner payment of $20,000 (vs. $14,000), but operational payments will decrease by $1,000 per year
TLC wants to enforce requirement that taxi medallions are attached to hybrid and accessible vehicles, as some medallion owners seem to have been using relaxed enforcement to attach medallions to only hybrid vehicles
There will be a NYC Taxi & Limousine Commission (TLC) public hearing next week, Wednesday, May 8th at 10am. The meeting will be virtually hosted and accessible via Zoom or by dialing-in. There will be no in-person meeting.
How to speak during TLC hearing?
To participate in the public hearing, please e-mail the TLC at tlcrules@tlc.nyc.gov or call TLC at 212-676-1135 by 5:00pm on Tuesday, May 7, 2024. If you need any assistance or accommodation (i.e., sign language interpreter) you should mention that in your sign-up email or if you call the TLC to sign-up.
After you have signed-up to speak, TLC will provide you with a Zoom link or dial-in via phone number if that’s you preference.
You can also submit comments via:
🖥️ NYC Rules website at www.nyc.gov/nycrules
📧 Email at tlcrules@tlc.nyc.gov
📬 Physical mail to the Taxi and Limousine Commission, Office of Legal Affairs, 33 Beaver Street – 22nd Floor, New York, NY 10004
📠 Fax at 212-676-1102
How to attend TLC hearing?
The TLC hearing will be livestreamed on TLC’s website (https://www.nyc.gov/tlc).
Relevant public hearing attachments for Wed, May 8th (Part 1)
🚕📲 Pre-Arranged Taxi?
The part of the upcoming May 8th TLC public hearing we will focus on for today’s article is the proposal to make upfront pricing on yellow cabs 🚖 (and green taxis 🍏) permanent when trips are pre-arranged (i.e., “on-demand” e-hails like Uber and Lyft).
The TLC frames the reason for the newly proposed rules as responding to passenger preferences around having upfront price certainty vs. being subject to a running taximeter 🚕⏱️. The regulator also believes it will make the yellow cab (and green taxi, a/k/a street hail livery (SHL)) more competitive. In addition, if the proposal is passed, it will definitively allow Uber, Lyft, Curb, Arro or another app to show their customers an upfront, “on-demand” pre-arranged price for cabs.
RIP Taximeter?
While the above proposal might seem uncontroversial, the main pushback against it was spelled out by Bhairavi Desai of the New York Taxi Workers Alliance (NYTWA) in City Council testimony last October.
In public testimony during an October 13th 2023 NYC Council Committee on Transportation and Infrastructure hearing, Ms. Desai’s basic point was many e-hail trips were paying a driver less than the same trip done via a taximeter although the passenger is paying the same fare.
We believe a key point she is trying to make is that while a passenger’s gross fare in a pre-arranged vs. taximeter yellow cab trip might be the same, the net earned by a yellow cab driver could be much lower because of taxes and app commissions (i.e., Curb or Uber’s cut of the trip) for originating a trip. Obviously, a typical street hail (taximeter) trip wouldn’t have an app commission (argument for the value of a taxi medallion 🤔).
We believe Desai is basically saying that the City / TLC should be solving for a net driver pay equivalent between a street hail and pre-arranged taxi trip (like-for-like). That’s a noble goal, but her testimony might not be framing the argument in the best way possible or may not appreciate benefits for the taxi industry. Let’s explain.
Firstly, if Curb or Uber is originating a taxi trip, it’s only fair that they are compensated for that. Secondly, her point about taxes, based on our research, might not be accurate. Pre-arranged yellow cab trips do not seem to be subject to a 8.875% sales tax other pre-arranged NYC FHV trips must incorporate. Furthermore, pre-arranged taxi trips will likely only be subject to a $1.25 (additional) congestion surcharge vs. $2.50 for other FHVs when Manhattan congestion tolling begins. Basically, pre-arranged yellow cab trips have a structural price advantage because of New York’s tax regime.
As we’ve previously covered, yellow cab trips are still ~50% of their pre-pandemic level. One explanation for that is less taxi supply on the road, while another is TLC’s misguided policy of allowing more FHVs on NYC streets. That being said, the regulator is correct to point out that many customers might not like being subject to a running taximeter, so avoid taking taxis.
In her testimony, Ms. Desai says that many pre-arranged yellow cab trips are occurring in central Manhattan and that those trips would otherwise be street hail “taximeter” trips. We disagree with this commentary. Clearly, the passenger in most of those instances, has a preference to call an FHV via an app. By allowing a customer to e-hail a taxi, one might argue, the medallion sector is in fact gaining back trip market share that otherwise would have likely gone to a non-taxi TLC-plated vehicle working for Uber or Lyft.
No Sales Tax? Lower Congestion Tolls? UR? No EV Mandate?
During the public hearing we would encourage participants to ask the following questions:
If a yellow cab trip is pre-arranged, is that trip subject to other taxes it otherwise wouldn’t be subject to if it was street hailed (i.e., taximeter trip is not subject to sales tax, higher congestion fee surcharges)?
Are pre-arranged yellow cabs dispatched by Uber or Lyft subject to TLC driver minimum pay rules, including abiding by utilization rate (UR) thresholds
In the proposed rules, the TLC does lay out that e-hail app providers dispatching to yellow cabs (or green taxis) will need to submit a Flex Fare Rate Schedule. However, it’s unclear (to at least us) what this schedule will include or exclude vs. a taximeter trip. In addition, would pre-arranged taxi trips be subject to driver minimum pay rules, including utilization rate (UR) thresholds. If yellow cabs are not subject to UR math, that’s as big deal.
⭐⚡ Uber & Lyft Could Use Yellow Cabs As A UR & EV Mandate Loophole
Continuing the above line of reasoning, if a a yellow cab is logged onto the Uber and/or Lyft app (actively willing to accept trips and marked as being online) it’s not obvious to us whether the idling time is being included in industrywide utilization rate (UR) calculations.
UR is a key input in the NYC rideshare driver minimum pay formula and one we think the TLC should not use anymore. Rather, in our opinion, they should strictly enforce previous caps on NYC for-hire vehicle supply and even consider caps on the issuance of TLC driver licenses.
To be simple, if a yellow cab is logged into the Uber app for one hour and doesn’t get a trip, Uber we believe does not need to come out of pocket and compensate that driver. If this is true, then this is effectively a loophole where Uber and Lyft can dispatch (at will) to taxi medallion supply in a way that might be detrimental to non-medallion NYC TLC drivers (argument for the value of a taxi medallion 🤔).
Another point worth mentioning is while the yellow cab industry needs to make 50% of its fleet accessible, the taxi industry is not subject to any electrification (EV) mandate. Uber and Lyft must abide by the Green Rides Initiative requirements that all trips be dispatched to 100% WAVs or EVs (zero emission vehicles) by 2030. Once again, similar to our UR point above, if Uber dispatches to yellow cabs and it is not hurting their Green Rides compliance, it might be more attractive to dispatch to yellow cabs (argument for the value of a taxi medallion 🤔).
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What % Of Yellow Cab Trips Are E-Hailed?
Based on our understanding the number of total taxi trips dispatched by Curb, Arro, Uber, etc has not been published by the TLC. To be fair, they’ve just concluded their Flex Fare Pilot and published a report in September 2023. The TLC’s findings from the Flex Fare Pilot (essentially testing out upfront yellow cab and green taxi pricing) is the precursor to the proposed rules we’ve been writing out. In TLC’s 2023 Flex Fare Pilot report it only says the following related to e-hail trip market share in the yellow cab industry.
“While Flex Fare trip numbers remain small as a proportion of all taxi trips, the additional income earning opportunities for drivers and the flexibility it affords to passengers has positively affected the for-hire landscape in New York City.”
- NYC TLC. Flex Fare Pilot Evaluation Report – September 2023.
Based on our industry conversations, Uber’s penetration rate of yellow cab drivers is increasing and they are beginning to do more rideshare trips in NYC. This is a “grapevine” observation, as we don’t have the hard data yet.
🫨 NYC Taxi Medallion Values Set To Go Up Because of…Uber?!
To conclude, if NYC taxi medallion yellow cabs:
Can do both street hails and pre-arranged e-hails
Don’t have to pay sales tax and and have lower congestion tolls when doing a pre-arranged e-hail trip
Aren’t subject to utilization rate (UR) rules
Aren’t subject to an EV mandate
Perhaps the value of a taxi medallion might recover after all because Uber and Lyft might prefer to dispatch to yellow cabs. Who could have gamed that out? 🫨
Look out for our article tomorrow, which will cover the second part of next week’s TLC public hearing on Wednesday, May 8th at 10am. Topics that will be covered include:
WAV TIF payment proposal calls for upfront medallion owner payment of $20,000 (vs. $14,000), but operational payments will decrease by $1,000 per year
TLC also appears eager to enforce requirement that taxi medallions are attached to hybrid and accessible vehicles, as some medallion owners seem to have been using loophole to attach medallions to hybrid-only vehicles
It would be nice to know UR of yellow cabs to determine how good they are doing
E-hails were taken for granted when they first came out over 10 years ago by a company called Hail-O and the city allowed Uber to come and dominate the e-hail business.
Unfortunately for yellow cabs the street hail has shifted to e-hail and they continue to be two steps behind.
The problem I see with the e-hails from Uber, Curb and ARRO is that more times than not the flat rate fare offered to drivers is less than if it was a metered fare.
The TLC is right on not only one thing, passengers are shifting to e-hail as opposed to street hail but also passengers love to know how much they’re paying for a ride. This is why Upfront pricing is also so popular even though i believe it over charges the passengers