I totally get how taxi companies and taxi drivers despise Uber, Lyft and the other ridesharing companies.
After all, taxi drivers typically must meet training, licensing and other vetting standards while ridesharing drivers are largely excused from all that, other than passing a criminal background check and having the right insurance and a nice car.
Taxi companies are regulated and the cabs typically are inspected on a schedule. In many cities, each cab must have a permit, typically called a medallion or a badge, which can cost hundreds of thousands of dollars each – they once hit $1 million in New York. That cost gets passed on, of course, and as a result a taxi driver might have to pay the cab company $100 to rent the cab for the day. Ridesharing companies? They don’t need no stinking badges.
So taxi companies and their drivers are vexed by the notion that Uber, Lyft and their automotive brethren, which aren’t subject to the same costs and obligations as regular taxis, could soon be allowed to pick up passengers at Los Angeles International Airport. Taxi folks see LAX as their last bastion; it’s their biggest source of reliably good fares and the only place where ridesharing companies are now banned. Take that away and, well, maybe the deluge follows.
I understand their outrage. The whole situation just isn’t fair. But still, that’s not a good enough reason to prevent ridesharing companies from picking up passengers at LAX. Consumers have voted with their pocketbooks. They like ridesharing services.
No, it isn’t fair that taxis are saddled with costs and regulations that Uber, Lyft and the others get to skip. But here’s the problem for the taxi folks: This is business. And business isn’t fair. It’s not supposed to be. The business that figures how to deliver a product or service that’s better, faster or cheaper tends to win, fairness be damned.
The taxi business is in the same situation today that most every other industry has found itself in, or will someday. A few years ago, sit-down restaurants complained that they were being decimated by food trucks that showed up at lunch and dinner time – sometimes at a restaurant’s doorstep. It wasn’t fair, they said, because the trucks didn’t have to pay rent or utilities and they could drive to wherever the customers were at any given moment, allowing the trucks to charge less. The trucks essentially said, “Yeah, that’s the point.”
New innovation has always been disruptive to the old. Henry Ford was hell on blacksmiths. Thanks to digital photography, the venue on Hollywood Boulevard is no longer named the Kodak Theater. Netflix may not have acted alone, but it was mainly responsible for killing Blockbuster, which once had 60,000 employees.
This is the price of progress, and innovations that disrupt will continue. Hotels and bed-and-breakfast places don’t exactly feel hospitable to Airbnb. It may not seem fair, but homesharing will keep growing. People like it.
The taxi industry can survive. But cities and other local governments will have to take the lead. They need to generally reduce the costs and requirements on taxi drivers and companies so that they are free to compete.
Cities can start by killing medallions. Their main purpose was to create an artificial shortage of cabs and provide income to cities. But their main effect has been to drive up prices for consumers and force low wages and long hours on taxi drivers. Eliminating those would, in one stroke, help cabs compete on price.
There are other things that can be done. Cab companies could create Uber-like apps, for example.
But in the end, it’s fruitless for cab companies and their drivers to fight the force of history. Like all other businesses and industries before them, they need to adapt to new innovation or they will die.
Charles Crumpley is editor of the Business Journal. He can be reached at firstname.lastname@example.org.
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