Calling Out Cabs

Despite seriously questioning the need for a taxi demand study in Seattle (we don’t estimate demand for pizza delivery or dentists before deciding how to regulate them), the fact that the city did one anyway and now has interesting data from it does excite my heart a little. And there are some interesting tidbits in the study, which a council committee commissioned to help wrap its mind around what’s happening in Seattle’s rapidly evolving car-for-hire industry.

This matters because the ability to call a taxi or limo or rideshare service on a moment’s notice, and reasonably expect it to show up, makes it easier for people to give up their cars entirely, or at least leave one at home. When emergencies happen or bus schedules won’t get us where we need to be on time, affordable and reliable car-for-hire services are an important part of a city’s transportation ecosystem.

The good news from Seattle’s taxi study is that there doesn’t appear to be any shortage of vehicles-for-hire out there for people who are savvy and plugged in and wealthy enough to take advantage of all the available options. If you’re trying to call a cab on a busy Saturday night, you may be in for a long wait, since weekend nights are one of the few times that the city’s taxi fleet is completely maxed out.

However, if you know about for-hire vehicles (which look very much like taxis but charge flat rates and are only supposed to pick up fares in Seattle by prearrangement), or flush enough to spring for a limo (which get far better customer service ratings), or comfortable enough to ride with a stranger driving for ridesharing companies like Lyft or Sidecar or UBERx, you shouldn’t have too much trouble finding a ride even during those peak times, according to consultants who did the demand study.

The bad news is that taxi service in Seattle—the egalitarian workhorses of the fleet—have far worse response times and serious customer perception problems, according to a survey that asked people about their most recent experience with summoning a cab or other for-hire vehicle.

City of Seattle Taxi Demand Study

And Seattle’s taxi service is rated significantly worse by frequent users such as bars, restaurants, hotels, and hospitals than taxi services in other cities, the consultants told the council committee. As this chart shows, taxis ranked the lowest in every category, from courtesy to safety to ease of booking to willingness to accept credit cards.

Institutional taxi survey chart

What the initial study results suggest is that despite the city of Seattle and King County’s cap on taxi licenses (which we argue here and here should be lifted), a number of other options have sprung up to meet demand anyway. For instance, the number of limousines has exploded in the last year and a half even though limos are regulated by the state, which sets no limit on the number of licenses. In 2011, there were about 600 limos operating and by 2013, there were 1100, according to the taxi survey. So if taxi license caps were put in place to prevent a flood of for-hire vehicles from entering the market, those regulatory constraints clearly haven’t served their purpose.

Some of that growth has been driven by UBER, a newish service that allows customers to summon black-car service—limousines or towncars—with a smartphone app. And even newer on-demand ridesharing services that encourage regular people to turn their personal cars into cars-for-hire have introduced an entirely new animal into the market.

So one might be tempted to say, great, the for-hire market is working and expanding to fill demand, even though the city and county put an arbitrary lid on taxi numbers for the last few decades. And these new options are providing better customer service and making it easier than ever for people to adopt no-car or low-car lifestyles in Seattle.

But two charts from Seattle’s taxi demand study illustrate why the story isn’t so simple, at least for now. First of all, taxis in Seattle are more likely to be used by people of all ages, not just 20-somethings whose smartphones might as well be appendages. And they’re far more likely to be used by people with lower incomes, particularly those making less than $40,000 a year. They’re also far more likely to be used by tourists, and they’re likely one of the first or last impressions that those folks have of the city.

City of Seattle and King County
Taxi, For Hire Vehicle and Limousine Services Demand
Study

City of Seattle and King County
Taxi, For Hire Vehicle and Limousine Services Demand
Study

Whether because of habit, familiarity, or access to technology, taxis still serve some of the most vulnerable segments of our population. This is also by design, given requirements that taxis must pick up everyone. And, based on the conclusions of the city’s taxi study, they’re likely experiencing lackluster to pretty poor service at the moment. If these trends continue, Seattle’s car-for-hire landscape could become even more unequal—with people who can afford to pay for black-car service and smartphones being whisked away on a moment’s notice while people who can’t pay are stuck waiting on the street or in the emergency room for taxi service that continues to deteriorate.

Or, competition from companies that have innovated and embraced new technology could force cab companies and dispatchers to make necessary investments and rise to a new level of service. However, that won’t happen if new for-hire regulations that are likely to be drafted by the city over the next few months continue to protect the monopoly that taxi owners have historically enjoyed. Or if rules for new ridesharing companies make the prospect so unappealing to would-be drivers that the upstart companies can’t survive.

We’ve already laid out some principles for designing a better car-for-hire regulatory system, but here’s an even more basic one: Try not to wreck the parts of the industry that are currently working well, and look for opportunities to help segments that are struggling or operating with no oversight whatsoever become better than they are now.