Lyft, Uber Dethroning Taxi Industry in San Francisco

The San Francisco taxi industry is on the verge of being dethroned by transportation network companies (TNCs) such as Lyft and Uber. Last week, the San Francisco Municipal Transportation Agency (SFMTA) reported that the average trips per taxicab in the city had declined from 1,424 a month in March 2012 to only 504 as of July 2014 — a nearly 65 percent drop.

The taxi industry's health "overall is being impacted clearly" by competing transportation network companies, said Kate Toran, director of Taxis and Accessible Services for the SFMTA.

Fueled by copious amounts of venture capital, Uber and Lyft have been locked in a vicious battle for the transportation throne. In a bitter conflict for users and drivers alike, the leading TNCs have left a festering taxi industry in their wake.

"There's been a real reduction, but obviously this doesn't tell the whole story. Part of the story is we don't have hard data yet from the [transportation network companies'] side to really analyze the full impact on the streets and our air quality."

Toran has approached the California Public Utilities Commission (CPUC) about conducting a joint study with the SFMTA on the impacts of taxis and TNCs competing in the for-hire transportation industry. CPUC established the new business category in September 2013 and is responsible for regulating TNCs such as Uber and Lyft.

One of the major implications of a shrinking taxi industry is that it is making it more difficult for those living with disabilities to find a ride. Many taxi fleets require a certain number of accessible vehicles to be on the road at any given time, which can be dispatched by phone. In December 2013, Taxi Mecca New York City settled a major class-action lawsuit and adopted regulations requiring half the city’s more than 13,000 yellow cabs be accessible to people with disabilities within six years.

But TNCs are not required to accommodate wheelchairs, which has created accessibility problems for members of the disabled community trying to use Uber and Lyft. However, CPUC has mandated that TNCs develop an “Accessibility Plan,” including modifying apps so they “allow passengers to indicate their access needs,” among other things.

Lyft, Uber, Sidecar and two other TNCs filed disability-access plans with the CPUC, claiming that they will ensure drivers don’t discriminate against disabled customers. The companies said they already have or soon will make their apps and websites accessible to blind users, but they maintained that drivers can still determine whether or not to allow service animals in their vehicles.

Another challenge facing TNCs as they strive to become more accessible to the disabled community is that they don’t own any physical fleets of vehicles — they only provide the technology platforms that allow passengers and drivers to match themselves for a shared ride. Few Uber or Lyft drivers would be willing to go through the expensive and aesthetically-hindering process of modifying their personal vehicles for accessibility. As I wrote earlier this year, the most realistic solution seems to be TNCs partnering with paratransit companies, which already have the proper vehicles and trained drivers to assist the disabled — but this is much easier said than done.

According to Toran, total wheelchair pickups by wheelchair-accessible taxis dropped from 1,378 per month in March 2013 to 768 per month this past July because it was difficult to get drivers to commit to the program that takes more time and money.

"The ramp taxi program is just a vulnerable program in the taxi program overall because it costs more to operate, maintain and it costs more in gas for the drivers," Toran said. "It takes more time to do wheelchair securement, so it's kind of the first to go."

In an attempt to increase incentives for drivers to join and stay in the taxi industry, the SFMTA waived dispatch renewal, color scheme renewal and driver application fees for fiscal year 2014-2015, reduced some medallion-use and renewal fees, and eliminated metal-plate fees. The agency is also exploring other ways to make taxi driving more financially attractive, such as reducing fees for medallions, which allow holders to operate taxis. Other ideas include reducing the fee to transfer medallions by 20 percent, eliminating the $500 ramp taxi medallion use fee, lowering the medallion renewal for transferrable medallion holders and allowing taxi-wrap advertising.

All of this seems like the last desperate acts of a dying industry. As more and more consumers adopt smartphones and lead app-driven lives, they are going to be turning to apps to drive them. Taxi companies’ only hope for survival is to accept that times have changed and adapt to new technology — a good start would be joining up with companies such as FlyWheel, which uses Uber- and Lyft-like technology to connect users to taxis via their smartphones.

As TNCs continue their wayward struggle for the hearts and minds of today’s tech-savvy consumers, they ought to keep one thing in mind: When you dethrone the king, you inherit his kingdom, along with all the responsibilities to serve his people — all of his people.

Currently based in Washington, D.C, Mike Hower is a writer and strategic communicator helping to drive the conversation at the intersection of sustainable business and public policy. Connect with him on LinkedIn or follow him on Twitter (@mikehower)