If Lyft and Uber were banned in Boston who benefits? Part 2

Lyft and UberX drivers currently have a small percentage of the 14,000,000 rides given in the City of Boston each year. However with TNC rules and venture capital fueled marketing the TNC share will balloon in the near future. Medallion owners will do everything they can to stop TNCs from taking millions of dollars from them. TNCs will increasingly offer a better deal to passengers and drivers. Passengers will defect to TNCs unless stopped dead by regulations promoted by the 18 medallion owners who together own medallions worth $438,000,000.

Boston is a bare knuckled town, however by working together with each other and Mayor Walsh, Lyft drivers, Uber drivers and most importantly — consumers will win.

Boston taxi drivers have been described as indentured servants of medallion owners. The driver needs to pay the owner of his rented medallion $100 for every 12 hour shift before he leaves the garage. The owner doesn’t care how he gets the $100. If the owner doesn’t get his money, one of the other licensed drivers will replace drivers who fail. It is estimated that out of the 6,300 licensed Boston taxi drivers about 3,000 are active. The Hackney Unit isn’t even giving out applications anymore. There is a waiting list of over 2,200 who are just waiting to RECEIVE a license application. The number of medallions is artificially limited to 1825. There is an endless supply of taxi drivers. It’s not a mystery why driver incomes have been driven down to $11 an hour.

PR flacks for the medallion owners will emphasize the 453 owner operators with medallions. This is in the same vein as the political experts who created the non-existent family farm owners who pay the “death tax” when they die and destroy the four generation family business. No need to mention that only the wealthiest 1 out of 650 Americans will actually benefit from estate tax repeal.

Owner operators of taxis DO work for a living. When medallions cost $34,000 in 1982, a taxi driver could finance a medallion with a modest monthly payment. Many other owner operators reasonably financed the purchase of their medallions before they passed the $100,000 mark in 1991. Unfortunately, as the medallion price bubbled upwards, many owner operators borrowed the money to pay for them at exorbitant rates. Monthly payments increasingly gobbled up taxi driver income. Just like many Americans tapping the equity in their homes, many taxi drivers borrowed against their medallion’s value.

Are these loans given by mainstream banks? No. “Specialty financing lenders” make these loans, some lost in a web of companies created by medallion owners.

When a driver looking to buy or refinance a medallion has been turned down by more conventional lenders they turn to high interest providers of medallion loans.  One of the more colorful lenders, Ron Rainer’s Tis We Own Ting, made hundreds of medallion loans for two decades.

An owner operator makes high interest payments to a lender.

A shift driver pays medallion rental fees.

Who benefits from the hours and hours each spends driving behind the wheel?

As a Lyft driver, I compete directly with taxi drivers and UberX drivers for prearranged rides. However taxi drivers will always pick up street hails, wait at public taxi stands and wait in lines at hotels and other popular locations. By design, TNCs will never be allowed to serve these markets. Taxi drivers will also always serve passengers who just don’t want the TNC experience.

The TNC model will increasingly be more attractive for many current taxi drivers. Many have already become Lyft and Uber drivers. Equilibrium will be reached as the number of conventional taxi drivers drop towards the level of drivers needed to satisfy the number of passengers who require a non-TNC approach.

The goal is to have the majority of Boston stakeholders perceive TNCs as a route to consumer value, rather than a way to take jobs from Boston taxi drivers and provide unsafe passenger rides. 1 out of every 35,000 Bostonians own 10 or more taxi medallions. These 18 owners of $438,000,000 worth of medallions will pour money into their campaign to reframe the discussion to their advantage.

It will be a tough fight, but Boston has seen a few.

 

 

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