The taxi industry has been perhaps the biggest, and unquestionably the most forceful, critic of the emerging ridesharing services like Uber and Lyft. Taxis see the upstarts unregulated competitors who, by competing for the same fares, represent a threat to their livelihoods.
However, if they were to give the subject more than a moment’s pause, taxis might realize the competition between the taxi industry and ridesharing companies has benefited taxis. This shouldn’t be a surprise, because competition often improves the quality of products. Why should taxis be any different?
Here are a few of the ways that traditional taxi services have been improved for their customers.
Taxi smartphone apps
One of the big benefits of ridesharing is that, instead of calling a taxi company and waiting for them to send a cab, you can simply hail an Uber or Lyft from your smartphone. It’s far more convenient to just hit an app and pay for a ride from your phone than picking a cab service at random and waiting for someone to arrive who may not have a credit card reader.
But more and more taxis are finally getting into the game themselves by creating their own smartphone apps. For example, the Carriage Media Group is rolling out TaxiCabApp for cabs in New Orleans and Chicago to use. The app allows users to schedule pickups, while another, Curb, even lets them pay the fare with a stored credit card.
By becoming more smartphone-friendly, taxis should be able to win back some of the business they lost to Uber and Lyft. This should especially be true during times of “surge pricing,” when taxi rates are usually competitive with Uber and Lyft.
Improved customer service
Let’s face it: one of the reasons Uber and Lyft have gained in popularity is the terrible customer service of the taxi industry. In many cities, taxi drivers were known for treating customers horribly and overcharging them. Uber and Lyft gave customers the opportunity to rate their drivers and vice versa. Most taxis do not offer that option to customers, who instead have to complain to the local taxi commission.
The emergence of ridesharing has forced traditional taxis to begin improving their service. More cabs are taking credit cards. Others are beginning to feature interactive entertainment. That latter innovation also has provided another stream of revenue for taxi companies, who can sell advertising on those systems as well. Finally, it has forced taxi companies to instill the culture of customer service in their drivers that exists.
The early signs are that this investment has paid off. Data from Chicago and New York show that, once Uber came to town, customer complaints to taxi bureaus fell. In part, of course, that’s likely because customers who were most likely to complain about taxis have switched to Uber. But there’s no question that taxis have been forced to improve their customer service to rebuild their industry’s tarnished image.
Forced taxi deregulation
Uber and Lyft has forced regulators and city officials to look at how they regulate transportation. Many cities have tried to keep both companies out. Others have sought to heavily regulate the ridesharing companies.
Meanwhile, cities like Sarasota, Fla., have decided to take a more free-market approach. They responded to Uber and Lyft by scrapping all rules for the taxi industry. Even more modest forms of deregulation, like those seen in Washington, D.C., clearly have helped taxis remove some of the burdens that long have hampered their businesses.
True deregulation allows taxis to compete on fair terms with ridesharing, not just on customer service, but on rates as well. In most cities, taxis have their rates set by local taxi commissions and bureaus. These bodies also erect barriers to entry, such as expensive licensing and permitting fees and/or requiring cabs to buy taxi medallions.
There are many reasons to support competition between taxis and ridesharing. Not only does it improve both services, there are many benefits to cities as a whole. By placing downward pressure on pricing and making it more convenient to use other people’s cars, it will lower demand for privately owned cars and take some of them off the road. It has the potential to improve traffic conditions and air quality, while also creating more jobs for drivers.
Competition between taxis and ridesharing can yield many winners, if politicians and regulators let it happen.