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How to (maybe) save SF’s taxi industry

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Consultants urge SFMTA to help restart stalled cab companies

Taxi cabs driving by Union Square in SF. Anton_Ivanov /

Silicon Valley has taken no bigger bite out of any former San Francisco mainstay than the ailing taxi industry, which began hemorrhaging fare dollars almost as soon at transit network companies [TNCs] like Lyft and Uber opened their doors.

The San Francisco Municipal Transportation Agency, which oversees SF taxis, retained cab consultant specialist Bruce Schaller and Philadelphia-based PFM Consulting in 2017 to find out what, if anything, might be done to help disgruntled cabbies and cab companies who feel deserted by City Hall.

“[We] were retained to review the current health of the taxi industry in San Francisco and to recommend potential regulatory changes that can support the industry,” the consultants write in their 35-page final report issued this week.

Cab drivers who want more than anything for the regulatory hammer to come down on TNCs will be disappointed by the results, mainly because SFMTA doesn’t have authority over such things. Instead, Schaller and PFM offer a frank assessment and a few ideas that might potentially turn yellow back into gold for those taxis that haven’t yet hung up their medallions for good:

  • The SF taxi industry is in as bad of shape as it can be without collapsing completely: “Only 17 percent of medallions earn a level of income that is financially sustainable. [...] The medallion sales program is currently stalled by lack of buyers—there has not been a sale since April 2016. [...] In contrast to a decade ago, when taxis were routinely operated 14 shifts a week, most medallions are not even operated one shift per day on a regular basis. [...] The San Francisco County Transportation Authority (SFCTA) estimates there are 12 times more TNC trips than taxi trips per day in San Francisco.”
Justin Sullivan/Getty
  • This is part of a nationwide trend away from taxis: “As of June 2017, taxi ridership had declined by 13 percent in New York City and 44 percent in Chicago compared to the previous year. A report from March 2017 showed that more than 2,900 of Chicago’s approximately 7,000 licensed taxis were inactive. [...] Medallion Financial, which finances medallion loans in markets across the country, including New York, Chicago, and Boston, reported $58.3 million in medallion loans as delinquent in September 2016; an increase of over $50 million from the previous year.”
  • Consultants claim this is largely because the taxi industry made itself vulnerable: “Due to an undersupply of taxis and limited service in the outer areas of the City, the taxi industry was not meeting demand at the level required by the customer. This provided an opening for the rise of the [TNCs.] This has been a primary factor in the subsequent decline in the taxi industry over the last several years.”
  • However, cab driver are right when they say the new status quo is slanted against them: “The taxi industry is right to point out that in some respects, this competition may be ‘unfair’ for example, in that Uber has a deep well of venture capital that can underwrite relatively low fares. TNCs also have advantages in driver recruitment since CPUC does not have the same driver screening and training requirements that SFMTA currently applies to taxis.”
  • If cab companies want to regain lost ground, the report has a few recommendations: “Offer the public a smartphone app for requesting trips and paying the fare; operate a dispatch system for trips requested through the app, on-line and through telephone order; manage trip dispatching at SFO, most likely through the app (replacing long waits in the taxi hold); [...] train drivers, including classroom training, ride-alongs and mentor programs (replacing current SFMTA training requirements).”
  • And one more big tip: provide more and better service for the disabled: “The reduction in ramp taxis has compromised the availability of accessible taxis under the SF Paratransit Taxi and Paratransit Plus programs, which subsidize part of the taxi fare for eligible users. [...The city should] create an incentive structure for the purchase and operation of accessible vehicles. Incentives could be financed through a surcharge on taxi trips.” Note that wheelchair users are presently suing both Lyft and Uber for alleged discrimination.

You can read the full report here.