The positive and negative impacts of ride-hailing or ridesharing services on the taxi industry have been provided below. This is outlined for the five largest (in terms of population) cities in the US which are New York City, Los Angeles, Chicago, Houston, and Phoenix, as reported by the World Population Review in 2019. Some of the positive impacts in New York City are the following: taxi companies tried to improve their services, the price of taxi medallions dropped which means less expense for taxis, a pilot program that uses apps for cab-hailing was launched, and outdated taxi regulations were removed. The negative impacts in New York city include increased traffic congestion, a decrease in the market share of taxis which led to a decrease in taxi drivers’ earnings, and an increased suicide rate among taxi employees.
Positive Impacts of Ride-hailing/Rideshare Platforms
1. New York City, New York
- Taxi companies tried to improve their services
- The price of taxi medallions dropped
- In New York City, taxi medallions or permits sell for more than $1 million in 2013. But by 2015, as a response to competition from ride-hailing services, the price of a taxi medallion dropped by about 25%. This means less expense for taxis.
- Flexible Fare Pilot, a program that uses apps for cab-hailing, was launched
- The New York City Taxi and Limousine Commission (TLC) launched its two-year Flexible Fare Pilot program in 2019. According to Rebecca Harshbarger, spokesperson of TLC, “It uses apps that ‘offer binding, up-front fare quotes to passengers’ so they can pay drivers a flat amount before accepting the trip.”
- This program is voluntary both for the participating taxi drivers and the technology companies. They can all exit the pilot program the moment they choose to do so.
- Curb and Waave are two company apps that have been approved and are already participating in the pilot program. Wapanda and Myle Technologies are two others that have been approved but are not yet operating.
- Harshbarger said, “Our focus with the pilot has been to give yellow taxi passengers the same price certainty that [ride-hailing] passengers enjoy and increase competitiveness in the sector.”
- Outdated taxi regulations were removed
- According to New York TLC’s Harshbarger, “There has been a great deal of work under Commissioner Joshi to remove outdated taxi regulations that no longer serve a useful purpose.”
- An example of a taxi regulation change is the loosening of taxi leasing terms. There’s a pilot program in 2017 and 2018 that led NYC Taxi Group to create “a smartphone app for drivers to flexibly lease taxis at times that are convenient for them, rather than being forced into longer-term leases.”
2. Los Angeles, California
- Local taxi drivers spent more time in Los Angeles airport
- As the ride-hailing services dominated the Los Angeles market, local taxi drivers have been spending more time at LAX, the LA airport, since the demand for taxi services there remained robust. According to Eric Spiegelman, Los Angeles Taxicab Commission’s chairman, “Over the last five years, that became a crutch for the entire industry.”
- Discriminatory practices in the taxi industry have been exposed
- According to a three-year study about transportation equity in Los Angeles, “ride-hailing services like Lyft and Uber are providing better vehicle access to low-income communities.” This study was authored by Anne Brown, an urban planning doctorate degree holder from the Institute for Transportation Studies of UCLA.
- This study has “also revealed discriminatory practices by the taxi industry, including dramatically increased wait times and ride cancellations for black riders in particular. “
- Brown said, “For so many decades, taxis were the only way to get car access for people who didn’t have it. A lot of people really want to make Uber and Lyft the bad guys in this, but my study finds that while there is still a gap between black and white riders, it’s so much better than the appalling state of our taxi industry.”
3. Chicago, Illinois
- There has been a decline in certain types of complaints regarding taxis
- According to Scott Wallsten’s research, “In Chicago, Uber’s growth is associated with a decline in particular types of complaints about taxis, including broken credit card machines, air conditioning and heating, rudeness, and talking on cell phones.” The research study is entitled “The Competitive Effects of the Sharing Economy: How is Uber Changing Taxis.”
- The research results reveal that “Uber has created an alternative for consumers who would have otherwise complained to the regulator and encouraged taxis to improve their own service in response to the new competition.”
- The study shows that the decline in some types of complaints about taxis is also true in New York City, not just in Chicago.
- These results were presented by Wallsten in his research paper that was published in 2015. Wallsten gathered the datasets for Chicago and New York which were then analyzed separately because different statistics were collected for each city.
- The data were not easily obtainable because ride-sharing companies are private and largely-unregulated. However, new data tools made “it possible to create an index of the popularity of ridesharing.” Particularly, “Google Trends has been shown to track economic activity and can generate an index of the popularity of ride-sharing over time.”
- A taxi-hailing app was introduced
- Since 2016, Chicago has made it mandatory for all their cab drivers “to make themselves available through a universal cab-hailing app, with the city claiming it was the first to make this move.”
- Verifone and Arro won the contract as partners of the city for the creation of the app. Just like ride-hailing services, “the universal cab-hailing app gives estimates for fares and wait times, plus a direct payment option.”
- Financial help was given to cab drivers by lowering license renewal fees
- Chicago’s new ride-hailing tax for Uber and Lyft has been in effect since January 2020. This will allow the city to collect more fees from these ride-hailing companies which will then be used to provide some financial help to taxi drivers.
- This financial help is in the form of lowered license renewal fees. From $1,000, the fee will now be $500 every two years.
4. Houston, Texas
- Taxicab companies were given time to adjust their business model
- In September 2019, the Houston council approved some changes in its taxicab regulations. According to At-Large Council Member Mike Knox, “Essentially, this is an opportunity to give some time to the taxicab companies to adjust their model so that they can compete more effectively.”
- According to city council member Greg Travis, “I hope that these people in the taxicab industry understand that the industry is dying by the [ride-hailing services], and it needs to innovate.”
- Houston council members approved “loosened regulations and lower prices for taxi permits.” According to ARA Director Tina Perez, “By December 2020, when the final permits are sold, the city will no longer be tasked with determining which providers to sell permits to or the optimal number of permits to sell.”
- Some costly requirements for taxicabs were removed
- Based on the city ordinance which was passed in September 2019, expensive requirements such as the costly card reader technology and data reporting are no longer required for taxicabs.
- According to the report from Community Impact, “Wheelchair-accessible taxis will still need to report ride data to the city, and all vehicles must provide card readers, but they will no longer have to provide the specific, costly readers the city used to require.”
5. Phoenix, Arizona
- There has been a decrease in carbon-dioxide emissions and traffic congestion, leading to time and money savings
- In 2016, “three Arizona State University researchers conducted the first study of how the ride-hailing service affects traffic and pollution in urban U.S. areas and found positive results. ” Research associate Ziru Li, associate professor Zhongju Zhang, and assistant professor Yili Hong are the three researchers in this study.
- The study shows that carbon-dioxide emissions and traffic congestion have been significantly reduced after Uber enters an urban area.
- According to Ziru Li, “In metro Phoenix, that means 1.8 million hours not spent in traffic jams and more than 900,000 gallons of fuel saved since Uber entered the market in 2012, totaling about $43 million saved.”
- Assistant professor Yili Hong said, “Basically, in research, we look for statistical significance and, even with the most conservative estimates, we are able to find significant effects.”
- Taxi fees were reduced in the airport
- In 2019, the Phoenix city council voted for increased trip fees in the airport for ride-hailing companies such as Uber and Lyft. This was set to be in effect last May 2020.
- Taxi fees in the airport, however, were generally reduced even though taxis also have to pay a drop-off fee.
Negative Impacts of Ride-hailing/Rideshare Platforms
1. New York City, New York
- The value of taxi drivers’ licenses has severely dropped and taxi drivers can’t sell off their licenses anymore
- Since Uber drivers are not required to have licenses to enter the market, the value of licenses has been severely reduced. A license is no longer a protection from competition. Also, taxi drivers are not able to sell off their licenses anymore.
- Uber has really made it difficult for taxi drivers. In New York, “the price of individual licenses dropped from $1 million in 2013 to $700,000-$800,000 in 2015, while in Chicago, they decreased by 33.3%.”
- The market share of taxis decreased from 37% in 2014 to just 6% in 2018
- According to the Taxi & Limousine Commission (TLC), in 2017 more people have been using Uber than taxis in New York City. Also, “receipts from Certify software show that in Q1 2014, ride-hailing was a mere 8% of the business traveler ground transportation market, while rental cars were 55% and taxis were 37% but by the first quarter of 2018, “ride-hailing had grabbed 70.5% of the market, with rental cars getting 23.5% and taxis just 6%.”
- There has been increased traffic congestion as more vehicles were added to the road
- There has been a trend in increased congestion in areas where ride-hailing platform services have been prevalent. According to a study conducted by Bruce Schaller, a transportation consultant, this trend is also seen in New York City “where Uber, Lyft, and other app-based services added 50,000 vehicles to the road.”
- However, a study reveals that this has not been the case in 2016. That study is outlined above in the positive impact under Phoenix, Arizona.
- There has been a decrease in the financial income of taxi drivers
- According to a study conducted by Jonathan Alley in 2016, the earnings of taxi drivers in New York city decreased upon the arrival of Uber as more and more New Yorkers have been opting to use Uber instead of a taxi.
- Alley’s study is entitled “The Impact of Uber on the New York City Transportation Industry.”
- The suicide rate increased among taxi employees
- According to Smart Cities Dive, “Consumers’ considerable shift from taxis to ride-hailing in such a short period of time has led to desperation for some taxi drivers and owners, even to the extent of an increase in taxi employee suicides in New York.”
2. Los Angeles, California
- There has been a decrease in the revenue of taxi drivers
- According to Leon Slomovic, taxi driver and spokesman of the Taxi Workers Alliance of Los Angeles, “We’re on the brink of the whole industry collapsing because there’s so little revenue.”
- A study from the Los Angeles Department of Transportation reveals that LA’s taxi ridership has decreased by about 77% since the advent of ride-sharing.
- It takes a longer time to exit the airport due to increased congestion
- Officials at the Los Angeles International Airport (LAX) said that “on a bad day, it can take over an hour to exit the airport’s grounds after alighting from an aircraft.”
- According to Airport Technology, “The new levels of congestion are widely attributed to the rise of ridesharing apps, such as Uber and Lyft.”
3. Chicago, Illinois
- There has been a decline in the average monthly fare per taxi
- A 2020 study conducted by Eitan Muller shows that from 2014 to 2019, there has been an observable decline in revenue per taxi vehicle because of ride-hailing services. This constitutes a “full-blown crisis at the taxi driver level that has led to numerous foreclosures and even several suicides.”
- The study shows that there has been a 28% decrease in average monthly fare per cab.
- There has been a decline in the price of a taxi permit
- The decline in revenue per vehicle also led to a decline in the price of taxi permits or taxi medallions. This has been happening in other major cities as well such as San Francisco, Boston, New York, and Houston. Though this may be a positive impact because of lowered expense for taxi drivers, this can also be a negative impact as it can increase congestion because of a lower barrier to the addition of new vehicles on the road.
- Muller’s study also shows that there has been an 82% decrease in the price of taxi permits.
- Pollution has increased because of a surge in congestion
- Mayor Lightfoot said, “We don’t have a rush hour. We have a rush day. It’s a challenge for mobility, it’s a challenge for pollution, it’s a challenge for the stress on our infrastructure.”
- Lightfoot also “elaborated on issues with ride-hailing: lots of single-person rides from downtown and ride-hailing drivers idling downtown waiting for the next ride.” The mayor added, “These situations add to congestion, make it difficult for downtown buses, and cause pollution.“
- It has been reported that “transportation accounts for 25 percent of Chicago’s greenhouse gas emissions and ride-hailing companies are contributing to an increase.”
4. Houston, Texas
- Taxicabs are no longer regulated in a way that brings significant revenue
- Due to the growing competition from ride-hailing platforms such as Lyft and Uber, “the Houston Department of Administration and Regulatory Affairs has determined Houston can no longer regulate taxicabs in a way that brings in significant revenue for the city.”
- The September 2019-city council-approved changes in Houston’s taxicab regulations will allow the city to divest from the industry. City council members said that it is still in the city’s best interest to keep the taxi industry alive.
- According to Mayor Sylvester Turner, “The state of Texas controls ride-hailing service regulations, so taxicab regulations are the only vehicle-for-hire regulations Houston can create.” Turner added, “if the market for taxicabs continues to look dire, the city will change its approach.”
5. Phoenix, Arizona
- The number of taxi trips severely decreased
- According to ABC15 Arizona, “In 2018 taxis only made 459,046 assessed trips, a 42 percent drop from 2015, a year prior to rideshares being an available option.”
- According to a report by Airport Technology, Uber “accounted for 2.3 million pickups at the airport in 2019, compared to the 400,000 trips recorded for taxis.”