Cab fares in Austin will no longer be set by the city government, the Austin City Council decided Thursday.
Instead, the city’s four taxi franchises will be able to set their own fares and change them in response to the market, much like the ride-hailing service companies that have cut deeply into cabs’ market share in Austin and threatened their continued existence. The taxi reform ordinance approved by the council unanimously is an attempt by the council to level the playing field in a ground transportation game where ride-hailing services have been largely unregulated while cabs have faced strict city oversight.
“The marketplace has finally changed to an environment,” Austin Transportation Department Director Robert Spillar told the council, “where we’re pretty comfortable saying we should not be pulling all the strings and levers of this industry.”
The ordinance should take effect sometime in July, officials said, on a date that will be determined in the next few days.
Unlike ride-hailing fares, which can surge or settle dynamically with no notice, the taxi franchises will be required to notify Spillar’s office before putting any particular fare regime in place. The ordinance also requires them to post fares on their websites and prominently display them in each cab.
Council Member Ora Houston, who voted against the ordinance initially but joined the majority on a final vote, said she’s concerned that shifting fares will confuse customers.
“As a rider, I will never know whether to call Yellow Cab or Austin Cab or the Coop cab, because there’s no set fare,” Houston said Thursday during the council’s brief debate.
Giving the taxi companies complete fare flexibility was not something that either the taxi franchise holders or the cab drivers had requested. John Bouloubasis, president of Texas Taxi, Yellow Cab’s San Antonio-based parent company, had suggested instead that the companies be able to flex their fares up or down 20 percent from the current fare schedule. And Ron Means, general manager of Austin Cab, told the American-Statesman earlier this month that he wanted fares to stay where they were.
Joe Garcia, representing Texas Taxi, told the council that deregulating the fares “does not help us compete with (ride-hailing services) … but creates competition between the (taxi) franchises with a race to the bottom.”
Spillar pointed out that the city at this point does not set or regulate rates for any other transportation providers in the city, including limousines, shuttles, pedicabs or low-speed electric vehicles. He predicted that the city’s four taxi franchises, over time, will cut costs and the fees they charge cab drivers, and that customers will gravitate to the cab companies that best meet their cost and service needs.
Cab drivers will still be required to obtain a city chauffeur’s permit, which requires them to be fingerprinted for criminal background checks.
For decades before Lyft and Uber first began operations here in 2014, taxi companies had the Austin market mostly to themselves, with set rates and a strict lid on the number of permitted cabs. Then, after the two ride-hailing giants voluntarily shut down their apps in May 2016 amid a regulatory dispute with the city of Austin, the cab business made something of a comeback.
In the spring of 2017, though, Gov. Greg Abbott signed a law barring municipal regulation of ride-hailing services, and Lyft and Uber returned to the Austin market. Cab rides plunged 70 percent between October 2016 and October 2017, and now there are more than a thousand permitted cabs splitting the sharply diminished market for taxis.
The new ordinance removed any sort of city cap on the number of cabs, and the familiar bright colors identifying the four companies likely will recede over time. Cabs will still have to have markings identifying the company and a cab permit number, applied with stickers or decals, but the vehicles can now be any color.
ALSO ON THE AGENDA
Late Thursday, the City Council planned to tackle two critical tasks: setting the parameters for a bond election to be held in November and debating the best use of the city-owned McKalla Place tract in North Austin, which could become home to a 20,000-seat Major League Soccer stadium.
City staff have recommended $816 million in bond projects, including affordable housing initiatives, but some council members have floated a figure that hits $925 million.
Find our coverage of the council’s late-night decisions at statesman.com .