Why some say new Austin taxi proposal would be bad for business


Highlights

The proposed law, likely to pass, would let franchises set taxi rates and change them on short notice.

Taxi fleet sizes would no longer be controlled, and cabs would not need to have uniform paint colors.

The changes are meant to allow cab industry to better compete with largely unregulated ride-hailing services.

The Austin City Council on Thursday likely will loosen regulations on the taxicab industry, an effort to level the rides-for-hire playing field long after ride-hailing companies have run up a substantial lead.

The proposed ordinance, which Council Member Ann Kitchen said “should fly through” to passage, would remove city control of taxi rates and fleet sizes, leaving those decisions to the city’s four cab franchise holders. Those three companies and one nonprofit could change those rates based on time of day or for special events, as long as the current rates have been shared with the city’s Transportation Department and posted both on online and in the taxi.

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The city-set cab rates currently are $2.50 for the first 1/6 of a mile, and 40 cents for each 1/6 of a mile after that.

Despite a series of meetings over several months with cab officials and drivers, and public assurances from city officials of solid support in the wake of that, not quite everyone is on board with the proposed changes.

“I’m against any change,” said Ron Means, general manager of Austin Cab, which has 125 taxi permits under the current system. Despite plunging usage numbers over the past year, Means insists that the system “is not broken. We need to leave things the way they are.”

John Bouloubasis, president of Texas Taxi, Yellow Cab’s San Antonio-based parent company, said he was mostly satisfied with what the city staff was proposing but in fact wants less flexibility on fares.

Bouloubasis suggests maintaining the current fare structure, but giving franchises authority to move them up or down by as much as 20 percent. That would allow drivers, he said, to maintain a fair wage.

“If you allow it to be a wild market, no one’s going to want to be a taxi driver,” he said.

Hannah Riddering, a Yellow Cab driver who has been working Austin streets since 1987, was startled to hear about the ordinance. Although taking the city out of the fare-setting business could mean higher returns for cab drivers, Riddering, looking at the low rates charged by ride-hailing companies most of the time, said it could go the other way as well.

“Another example of Uber leading everyone to the bottom,” she said. “Good Lord. Does this mean to make money I’m going to have to do the drunks and drug addicts downtown at night?”

As for the number of cabs, the city in recent years had allowed some flexibility in response to the introduction of thousands of loosely unregulated ride-hailing vehicles onto Austin streets. The number of permitted cabs had increased to 1,026 as of May from about 750.

The new ordinance would remove any ceiling, allowing cab franchises to put out as many vehicles as they choose, as long as they pay the annual $450 fee for each, or half that fee for cabs equipped with wheelchair lifts.

The city and disability rights advocates want to preserve the industry because, among other reasons, cabs provide most of the rides for those who use wheelchairs in Austin.

The franchises would even be allowed to bring in temporary taxis from out of town for big events, such as South by Southwest, paying a quarterly permit fee of $112.50 per cab, as long as every driver had an Austin-issued chauffeur’s permit. Those permits, not changed by the proposed ordinance, would still require that the applicant pass a fingerprint-based criminal background check.

The city would no longer conduct any sort of up-front vehicle inspection — other than looking at meters for accuracy — instead allowing a vehicle into cab service if it passes the state’s emissions and safety inspection.

Cabs would not have to have identifying, uniform paint colors, as is the case now. Instead, the cars could have varying colors as long as each had decals or magnetic placards identifying the franchise with a phone number and that cab’s permitted number.

The new law would also remove a curious, highly subjective requirement that bars a taxi driver from soliciting business “in a loud or annoying tone of voice.” The current law does not specify a decibel level, or what qualifies as annoying.

RELATED: Cab deregulation in the works for at least two years

Cab rates, under current law, must be the same for all customers, including those who use a wheelchair. That mandate would not change under the proposed ordinance.

The changes are meant to help the cab industry, which in Austin and elsewhere has sagged since Uber and Lyft stormed into local markets four years ago, officials said. The ride-sharing industry, after the city imposed restrictions in late 2015 that the companies opposed, is now under loose state control thanks to a 2017 law that banned city regulation of ride-hailing companies.

In Austin, the number of rides provided by taxis decreased by almost 76 percent between the 564,000 cab rides in October 2016, when Uber and Lyft were temporarily inactive in Austin because of their distaste for the city law, and the 137,000 cab rides in October 2017 after the state law had taken effect, said Jacob Culberson, the city’s division manager for mobility services.

Without material change, Culberson said in a February presentation to the city’s Urban Transportation Commission, rides “will continue to decline until there are no more taxicab services operating in Austin.”

Culberson said in that presentation that cabs are no longer available, for instance, in Waco.

Will the changes be enough to save the taxi industry?

“I don’t know,” Kitchen said. “It’s something we need to do. And it certainly won’t hurt.”



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