While the New York City economy is opening and the city starts to return to the new normal, this summer is turning out to be a brutal ride for people who need for-hire transportation. Although the airports are getting busier, people are going back to their offices and tourism is picking up, passengers are facing a shortage of for-hire vehicles (FHVs), including taxicabs. This is primarily since FHV drivers who largely stopped working during the pandemic remain reluctant to come back, have taken other jobs or are still collecting unemployment. Receiving unemployment will certainly diminish the desire of drivers to return but this will come to a halt when the federal unemployment benefits expire in September 2021.
While Uber’s prices are surging to draw more drivers out and back onto the road, there is still a shortage of drivers. The underlying question is how much of that is going to the drivers. Apparently, not enough because despite Uber supposedly spending $250 million dollars on temporary bonuses to get more drivers on the road, there is still a shortage of drivers.
At the same time Uber’s prices are surging, consumers are starting to see that without the subsidies that Uber has traditionally provided on each trip, the cost for many is too prohibitive. The increased costs are forcing some to go back to taking public transportation. For other passengers who have enjoyed a good bargain, they are now lamenting the disappearance of these subsidies and are going back to traditional yellow cabs. But there is still a shortage of yellow cabs on the road.
Today there are about 6,000 cabs on New York City streets. That represents fewer than half of the total pool of yellow taxi medallions. Some 5,700 of taxis were taken out of service indefinitely by owners who put them into storage voluntarily and returned the license plates, so they did not have to pay for the high cost of insurance and vehicle upkeep while the pandemic was raging.
Uber’s increased fees appear to be their attempt to finally get on the road to profitability. Uber fares were traditionally cheap, thanks to venture capital. But that free ride seems to have either ended or is on its way to extinction. Uber cannot continue to indefinitely fail to make a profit and stay in business as an ongoing venture.
While Uber and Lyft are not my concern, the small local livery bases who primarily service the outer boroughs and the immigrant drivers who are just trying to survive are my concern. It is the people who can’t speak up for themselves or don’t have a platform to do so that compels me to stand up and speak up about the issues facing the FHV industry.
It seems evident that as vaccination rates increase, consumer demand for transportation is increasing as well. With a shortage of drivers, this means demand is recovering faster than supply or driver availability. This equates to longer wait times, frustrated customers, more complaints, and a troubling trend to say the least. But this will not last forever. Every market goes through a period of a correction.
Livery drivers are wary about how soon business will rebound. Demand is inconsistent and could be diluted if more taxis and other for-hire vehicles come rushing back to the streets. It seems logical that as vaccination rates continue to go up, more people will start utilizing livery services again. But that will depend on many factors, including offices reopening, leisure activities returning, business travel rebounding, and people starting to return to their daily routines.
Supply and demand, which is the backbone of the FHV industry, has always fluctuated. Before the pandemic, the supply of drivers exceeded demand. This was problematic too because too many drivers on the road means each driver does not make enough money, since there are only so many trips to go around on any given day.
So, what do we do from here? Is there more going on than meets the eye? When tourism and travel increase sufficiently, drivers will feel confident to return to the streets, knowing they’ll be able to make enough money to pay the bills. In the interim, passengers may not be happy, but we hope they understand that this is a complicated industry, and it has been rocked like a pendulum for the past decade. The FHV industry must balance itself out before it can return to normalcy.
The pandemic is the obvious immediate cause of this paradigm, but in my opinion the bigger problem is that the New York City Taxi & Limousine Commission (TLC) has meddled its nose where it didn’t belong in the first place and has done so for too long and far too deeply. The TLC failed to regulate Uber and Lyft when they entered the market. Then they made unwise decisions that led to the yellow taxi medallion market to bubble and subsequently explode. The Commission’s introduction of the green cab was an utter failure. And finally, they failed to place a cap on FHVs when it was needed the most back in 2015. The TLC can’t seem to get out of its own way. They are like kids in the playground who can’t seem to stop causing trouble.
Overall, the FHV market is based on the laws of supply and demand. Like any industry based on those laws, there are times when it goes through painful corrections. This is one of those times when the market must correct itself before we return to normalcy.
I am hoping that the TLC keeps its nose out of the mix, at least until the effects of the pandemic go from a period of waxing to waning. I hope the riding public understands that the livery industry is doing its best to satisfy the travel demands of its loyal customer base during this trying time. I also hope that livery drivers know that livery base dispatches are steadily on the rise and livery base owners are doing all they can to survive this brutal pandemic and want to get them back on the streets and busy working as soon and as much as possible.
I am hopeful that in due course, the industry will go back to normal… or at least the new normal. I will continue to do all I can to make and keep the FHV industry in New York City vibrant once again.