Home Asides Political power and an impending cab fare hike

Political power and an impending cab fare hike

by Benjamin Kabak

The most recent increase to the city’s taxi fare structure arrived in 2009 in the form of a 50-cent MTA surcharge, but New York City taxi fares haven’t been restructured since 2004. Cab drivers, who are fighting higher gas prices and a dollar that doesn’t go as far, have been agitating for an increase, and Taxi and Limousine Commission is poised to oblige. In a vote on Thursday, the TLC is expected to authorize a hike that will raise fares by an average of 17 percent per ride.

The details are fairly simple: The $2.50 pick-up fee will remain the same, but a meter tick will jump from 40 cents to 50. A trip from JFK to Manhattan will cost $52 while the Newark Airport surcharge will rise to $17.50. For the benefit of taxi riders, the credit card surcharge on drivers will shift to a flat fee of $9 from its current five percent levy. The TLC believes this move will lead cabbies to be more accepting of plastic.

Although the fare structure is straightforward, the back-and-forth over the proposed hike highlights the battles that impact that taxi industry. The Metropolitan Taxicab Board of Trade, which represents medallion owners, slammed the proposal as retaliation for their lawsuit against the Outer Borough medallion program while the New York Taxi Workers Alliance criticized the modest increase in lease fees the new fare structure will bring.

As Michael Powell eloquently wrote in today’s Times, these are the battles that shape the taxi industry. Wealthy, centralized medallion owners control the purse strings and our local politicians while drivers who make less today than they did a few years ago garner little respect from anyone. Soon, we’ll all be paying more for cabs, and no one, it seems, will be too happy.

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AK July 10, 2012 - 3:17 pm

While I sympathize with inflation concerns of drivers, I have no patience for them complaining about gas prices. I would say that 95% of cabs I take are driven in the lease fuel-efficient manor possible: punching the gas every time a light turns green and slamming the brake at the very next stop light. They could put a lot of money back in their pockets by simply taking it easy on the brake and gas, especially in those V8 Crown Vics.

Josh July 10, 2012 - 6:02 pm

Sure, but they maximize the fare by driving in that manner.

Boris July 10, 2012 - 6:32 pm

After many years of driving in New York City, I’ve found that racing to the red light gives me only a minuscule time advantage over taking it easy, even if it means I won’t overtake a couple of other cars racing toward the light. Many traffic lights in the city are timed to a certain speed, and going faster does not maximize the time (or, therefore, the fare) unless you overtake the traffic enough to win a whole light cycle. Perhaps those fractions of a second do add up to something, but they are surely less than the extra money spent on gas and maintenance.

Josh July 11, 2012 - 12:43 pm

I’m not saying driving like that gets you from point A to point B faster, I’m saying driving like maximizes the fare for a trip from point A to point B. Think of it this way. Let’s say a taxi is 1/5 of a mile from a red light, which will turn green in 60 seconds. (These are obviously made-up numbers selected to simplify the math, but the same principles apply regardless.) Traveling the 1/5 mile to the light will increment the fare one “tick” for 40 cents, regardless of how fast the taxi travels that distance. (Fare rules here.)

But, the total fare over that interval depends on how fast the taxi gets to the intersection. If the driver drives 12 miles per hour (which is silly, but go with it) and covers that 1/5 of a mile in one minute, the fare is just that one tick. The fare to the passenger to travel that 1/5 mile and continue traveling when the light turns green 60 seconds later is 40 cents.

If the driver drives a reasonable 30 miles per hour, the taxi arrives at the intersection in 24 seconds, running up one tick for the distance, but then the taxi sits at the light for 36 seconds, accumulating another 36/60 = .6 of a tick, equivalent to 24 cents, while waiting at the light. The fare to the passenger to travel that 1/5 mile and continue traveling when the light turns green 60 seconds later is 64 cents.

If the driver is driving some theoretical supercab that can get to the light instantaneously, the fare accumulates one tick over the distance to the light, and another full tick while waiting 60 seconds for the light to turn green. The fare to the passenger to travel that 1/5 mile and continue traveling when the light turns green 60 seconds later is 80 cents.

In other words, even if the light ahead is red, it’s in the driver’s interest (if we neglect to consider fuel efficiency issues, which is more math than I feel like doing) to get to it as quickly as possible.

Kevin P. July 10, 2012 - 4:12 pm

Why are they allowed to impose a credit card surcharge? Not only does Visa frown upon them (and might well prohibit them in merchant agreements), but they also point out that it’s against the law in New York. I believe MasterCard’s stance is much the same.

No seller…may impose a surcharge on a cardholder who elects to use a credit card in lieu of payment by cash, check or similar means…
Statute: N.Y. Gen. Bus. Law § 518 (McKinney)

Any lawyers out there?

Michael July 10, 2012 - 4:55 pm

I think they are changing the merchants fee the taxi drivers pay for accepting credit card charges, not imposing a direct fee on riders paying with credit cards.

Josh July 10, 2012 - 6:14 pm

I’m not a lawyer (well, actually I am, but my field is completely different from this), but my understanding from watching the coverage of the proposed fare hike on NY1 this morning is:

The credit card fees are charged to the cab driver (i.e., the seller), not the passenger (i.e., the buyer). The illegality of passing that surcharge on to the rider in accordance with the law you cited is why cab drivers give people a hard time when they want to pay with a credit card. The proposed change is that rather than the fee being charged to the driver at 5% of every transaction (i.e., if your fare is $20, the driver gets $19 and has to forfeit the last $1 as a surcharge), the driver will pay a flat fee of $9 per shift to cover all card processing fees. That way, there’s no financial penalty to the driver for any individual passenger to use a credit card.

(After looking at the NYT article, it looks like the driver pays that surcharge, whether it’s 5% or the proposed flat $9, to the fleet operator, and the fleet operator then pays the fees to the credit card issuers, but the end result is the same as if the surcharge were paid directly from the driver to the card issuer.)

Terratalk July 10, 2012 - 10:11 pm

Thank you for that explanation! Since I use my credit card to keep track of my expenses I was understandably confused about that $9 dollar charge (and now I have a better idea of how much to tip!)

D. Schoppert July 11, 2012 - 6:46 am

Why are we regulating cab fares and limiting supply? We should scrap medallions and fare regulations and focus on safety regulations. Cab prices would decline and drivers would have incentives to purchase fuel efficient vehicles.

Matthias July 11, 2012 - 10:45 am

Talk to cabdrivers in other cities, and they’ll say that without medallions there are too many cabs and not enough work.

T&LC approves cab fare hike for September :: Second Ave. Sagas July 12, 2012 - 7:16 pm

[…] as I explored on Tuesday, medallion owners were not happy. “What happened today was not a package,” Michael Woloz, […]


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