Tough to compete against subsidized Uber, Lyft fares

Give us a level playing field -- less regulation, more flexibility

UBER AND LYFT spend hundreds of millions of dollars each year to subsidize artificially low fares. They have never been profitable. Uber lost $2.8 billion in 2016, according to a recent Bloomberg report, and it has “burned through at least $8 billion” of its investors’ money since the company’s founding in 2009.

Cut-rate underpricing from Uber and Lyft, along with outdated regulations that hold taxis to different standards than our competition, have combined to threaten the viability of taxis in Boston. The Boston taxi medallion system, which has served the citizens of Boston and visitors to the city for almost 90 years, is facing an economic crisis that could soon mean the end to our existence. Hundreds of taxi medallion owners and their families are threatened with foreclosure and bankruptcy.

The roughly 500 members of the Boston Taxi Owners Association are small business owners, predominately immigrants. We’re not giant taxi companies; most of us own one, two, or three medallions. We drive our own taxis and invested in medallions at a time when the city promised it was a good way to make a living.

In order for us to start competing with Uber and Lyft, we need relief from burdensome city regulations. With basic fairness returned to the ride-for-hire industry, we can attempt to compete with these multinational corporations.

Here are just a few of the onerous regulations we deal with every day, and some common-sense solutions to start leveling the playing field:

  • First, the city of Boston must allow new credit card processing services for taxis. The two credit card vendors we are forced to use are outdated, not cost-effective with industry standards, and put us at a competitive disadvantage.
  • Next, current Boston regulations force us to pay a weekly fee to a taxi dispatching service, regardless of whether they direct any riders to us or not. Affiliation with a dispatching service, or “radio company,” should be optional, not mandatory, and radio fees should be paid per ride, not through costly upfront weekly charges.
  • Finally, the City of Boston should solicit bids for the creation of one universal hailing/booking mobile application. A meaningful software product, properly marketed, and mandatory in all licensed taxis, would guarantee that riders could easily hail a ride.

This app should also allow for dynamic, changing taxi rates based on supply and demand, like other ride-hailing apps provide, for rides that are booked through the app. This is something taxis, with our strict meter rates, are prevented from doing now.

In June, the state transportation department’s new Ride for Hire Task Force convened for the first time to undertake a comprehensive review of the taxi and ride-hailing industry. It is essential that the task force immediately devise a regulatory fairness scheme that will restore balance to the entire ride-hailing market. Until then, we need a temporary moratorium on all medallion foreclosures in Massachusetts.

Meet the Author
Without quick action, Boston riders may be left at the mercy of a few multinational ride-hailing companies. If Uber and Lyft’s venture capital investors get tired of losing money and turn off the spigot, where will that leave Boston riders?

Steven Goldberg is an owner and operator of three city of Boston licensed taxis.