By Robert Stitt
No longer able to charge outrageous fares and force tourists to take their long route around the city, Taxi drivers in New York City have lost huge amounts of profits because technology has brought a rival onto their playing field. Unhappy with the loss of their transportation monopoly, the taxi owners and the firms that finance them have sued New York City and the city’s Taxi and Limousine Commission. Their claim, allowing Uber, the technology-driven ride-sharing system, into the city has destroyed their business and is making it next to impossible to earn a decent living.
The lawsuit says that the drivers of yellow cabs had an exclusive right to the city’s street-side pickup of passengers. As part of this exclusivity deal, they had to meet a number of regulatory burdens that raised the cost of doing business, which forced them to take out loans, and necessitated the increase in fares. Their competition, they allege, uses smartphones instead of dispatch and do not have to follow the same regulations which allows them to undercut fares.
The result has been tens of millions of passengers choosing Uber instead of the yellow cabs. In fact, according to Reuters,” the number of Uber rides in the “core” of Manhattan increased by 3.82 million from April to June 2015 compared with a year earlier, while medallion cab pickups fell by 3.83 million.
Since the cab companies had to take out loans in order to upgrade their cabs to meet regulations, such as having wheelchair accessibility, the loss of revenue has led to an alarming rate of loan default. On July 22, twenty-two of Evgeny Freidman’s cab companies had to file bankruptcy because they could not pay off their loans.
The complaint reads: “Defendants’ deliberate evisceration of medallion taxicab hail exclusivity, and their ongoing arbitrary, disparate regulatory treatment of the medallion taxicab industry, has and continues to inflict catastrophic harm on this once iconic industry, and the tens of thousands of hardworking men and women that depend on it for their livelihood.”
The question for the courts is whether this is the same argument horse and carriage owners used against auto companies or if there is something more substantial. Is this an old, outdated business fighting for survival by refusing to align with the times, or do they have a legitimate complaint about unfair competition?