New York Caps Ride-Share Vehicle Numbers

In a recent article on Motoring Weekly, we wrote about the huge difference between the numbers of ride-share cars and taxi cabs on New York’s streets – only 20% of the total vehicles are cabs. Like other cities across the world, the taxi industry has been battling with the Ubers and Lyfts of the world, mainly because ride-sharing was originally designed as a way to reduce the volume of cars simply by having two or more people who travel to the same destination share a vehicle. Quite quickly it evolved into a competing service to taxis without the structure.

The Taxi and Limousine Commission (TLC) in New York has been given new powers to level the playing field somewhat. There are several issues that the City Council and the TLC will address. The first is the fact that the imbalance between ride-sharing vehicles and yellow cabs is too wide and so to address this, several new regulations will be put into place that is expected to push existing drivers out of the market and prevent new drivers from signing up.

Interestingly, one of the benefits with reducing the volume of ride-share vehicles is that each driver might earn more per day. One complaint today is that with too many drivers fighting in a finite market, the possibility of earning good revenue is shrinking. New York will define new licensing requirements on ride-share drivers that close the gap between these operators and the taxi medallion owners/drivers. The TLC also wants to define a minimum wage for the ride-share drivers so that there is a floor for each driver to earn before they pick up fares. That would be a good result if they could achieve that. The two big operators – Uber and Lyft – are actively working to get the new regulations removed. They say that it would damage the drivers ability to earn and that it would limit the ability for someone to get to their destination.

Another issue that will get addressed as a result of the new regulations, is the volume of traffic that has grown since ride-sharing became popular. Research estimates that the ride-share drivers have added over a million miles per day of extra traffic and 45% of that is dead-heading, the act of cruising around without a fare. This alone, reduces the income earned by the driver. By limiting the volume of ride-share vehicles, should be a start on reducing the volume of traffic.

Another way to reduce this traffic will be by regulating the unused portion of each driver’s shift. An example was given that certain suburbs would have to reduce the dead-heading to below 20% and this could be done simply by parking the vehicle and waiting for a local request via the app. The City Council and TLC want to have that data shared with them so that each app provider (Uber, Lyft, Via, Gett, Juno or CityWide for example) can be penalised if they fail to ensure that their drivers are obeying the regulations.

The ride-share operators claim that certain suburbs will lose the ability to hail a vehicle, however those suburbs have typically been abandoned by the tradition taxi businesses because there were not enough fares for all the ride-share vehicles and cabs roaming the streets. If the ride-share companies have to wind back the volume of vehicles, the taxi cabs will soak up the shortfall – that is simple market dynamics at work!

Clearly, they are worried about their own revenues in the first instance. It doesn’t make sense for two identical services to have different legislation or regulation requirements and if the TLC could govern both services in the same manner, the ride-sharing companies would be simply taxi services that should own medallions in their own right. It is also clear that there are too many cars on the streets of most cities and this has been exacerbated by an increase in ride-share vehicles. The research on ride-share usage found that many trips were replacing public transport systems, further compounding the traffic and emissions volumes.

I think a lot of cities will look and see how New York manages their ride-share and taxi systems and the battle between the two. I’m sure that over the next year, New York will adjust the regulations to flatten the imbalance further and this will spread to other cities.