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Austin hopes deregulation will save taxi companies

Friday, June 29, 2018 by Jo Clifton

Austin’s City Council on Thursday approved a radical change in the city’s taxicab regulations that the Transportation Department drew up in the hopes of saving the industry.

The most important of the changes is the deregulation of fares. That means each individual taxicab company will be able to determine the rates for its fleet, and different companies can charge different rates during peak usage or when there is high demand, such as during a festival or another large-volume event.

The department requested the change in an attempt to save taxicab companies, which are in danger of being run out of business by low-cost ride-hailing transportation network companies such as Uber and Lyft. Jacob Culberson, acting Mobility Services Division manager, explained the need for such a big change to the Urban Transportation Commission earlier this year.

Rob Spillar, director of the Transportation Department, told Council members it was important for them to act in order to preserve the services taxi companies provide. A critical part of that, he said, is reducing regulations. “We’ve managed this industry for some time, and we’re just trying to give the full business authority back to the industry,” he said.

In October of 2014, the first year that Lyft and Uber offered services in Austin, local taxis provided 418,000 rides. In 2015, that number had dropped to 300,000 rides. In October 2016, after Uber and Lyft left town following a resounding rejection of regulations they put before voters, taxis provided 563,000 trips. But after intervention by the Texas Legislature, the ride-hailing companies returned, and by October 2017, taxi service had plunged 76 percent compared to the year before, to just 137,000 rides.

Mayor Pro Tem Kathie Tovo seemed particularly concerned about the fate of people who rely on taxis to go to doctor’s appointments, saying that they would not be able to schedule their trips around the lowest-priced time to use taxis. Council Member Ora Houston expressed similar reservations.

Spillar said it would be several weeks before the city notifies companies that they are in charge of their own rates. Later, he told the Austin Monitor, “I don’t think the prices are going to surge as much as people fear. Because I think the TNCs are in the market and are undercutting the taxis on any given day. It’s only when those special events occur and then taxis have to think about what their market approach is. They don’t have to surge for everybody – they can surge just for the trips out to the (Circuit of the Americas) or whatever it is. I don’t want to tell them how to do their business.”

Spillar said he would return to Council with reports on the effects of the deregulation after three months or after six months, depending on how long it takes to make all the changes required by the new system.

Three individuals who spoke to Council from the taxi franchises on Thursday had very different opinions about the need for change in setting fares.

Joe Garcia, an advocate appearing on behalf of Yellow Cab, said the companies were adamantly opposed to deregulating rates. He said Austin’s current rates are pretty much in line with rates charged in the top 10 cities in the U.S. Although city officials said that they were using the same model as Atlanta, Garcia said when he called companies in Atlanta they were not aware that they could set their own rates. He said the Atlanta companies told him that their rates were set by their city.

Garcia said Council should be worrying about the impact of the varying rate structure “on the elderly community and the disability community.” He said, “This year we are targeted to provide over 1 million trips in the city of Austin. We do about 500 wheelchair-accessible rides on a monthly basis, and there are many customers who use taxicabs as their choice of transportation.”

He said the TNCs rely on thousands of part-time workers to provide low-cost service, but “our business model relies on professional drivers who support families.” Although Yellow Cab supports giving companies flexibility in what they charge during large events such as SXSW and University of Texas home games, he said, it does not support wholesale elimination of rates.

Innocent Njoku and Mukul Siddique, members of the ATX Co-Op Taxi, also told Council they were apprehensive about the proposed changes and urged rejection of the part of the ordinance related to rates.

Many people use taxicabs exclusively to go to and from the airport. In response to questions from the Monitor, Spillar said that his department had worked closely with the airport to let them know what changes are coming. Rates will be deregulated for airport rides, he said, but the $1 surcharge charged by ABIA will continue. He also said that passengers approaching the taxi queue would not be required to take the first taxi in line. In fact, Spillar said customers currently have a choice about which taxi to get into, and he indicated that he has recently exercised that choice.

Photo by Marcin Wichary made available through a Creative Common license.

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