Comments – Request for Taxicab Rate Change

By • on January 15, 2010


Austin Office – 4920 N. IH-35 – Austin, TX 78751
Telephone (512) 374-2700 Toll Free (800) 369-9270
Fax (512) 447-3940

Urban Transportation Commission
301 W. Second Street
Austin, Texas 78701

January 12, 2010

RE: Request for Taxicab Rate Change

Dear Board Members:

Before you for consideration is the second request for rate change submitted by the three local taxicab franchise holders. A transportation staff member, without bringing the request forward to this body, informed the franchise holders that he would not support the requested increase. Consequently, the franchise holders submitted this reduced-fare proposal with the understanding that city staff would recommend the smaller increase in rates. Unfortunately, both of the proposals simply do not meet the current need of taxi drivers.

In Austin, there are 660 taxicab permits. Some drivers lease their car to another taxi driver, so there are approximately 750 taxi drivers in the city. While a fare increase may look like theoretical numbers to you and city staff, to these drivers, it is significant. A fare increase that results in just four extra dollars a ride times 5 rides a day puts $20 extra dollars in a driver’s pocket that day. Currently, drivers work 10-12 hours a day at least 6 days a week and clear only $150-$200 a week. This amount of income is not close to a living wage and considerably less than minimum wage.

Even using the numbers you have before you in the proposals, the cost of living since 2004 has risen between 12.2 and 13.7 %. Vehicle costs, maintenance, parts and tires, which is of course are significant factors for taxi drivers who own their own vehicles, have risen 16.1- 21.5%. After city staff slashed the increase, the rate increase before you is only 3.6% for this year. Obviously, such a proposal means that taxi drivers will start this year approximately 10-18 % behind previous cost of living increases and will never catch up to future inflationary rises in living costs.

Consider the economic impact of the decision you are about to review. Drivers pay to the franchise holder a “terminal fee”. This fee is an amount over the cost to purchase the vehicle, the $1500 maintenance fee, and the $1500 damage deposit fee. The terminal fees are as follows: Austin Cab $235; Lone Star Cab $200; and Yellow Cab $290. These fees are basically non-negotiable to the drivers because drivers cannot move between companies as a holder of a permit. The city auditor’s report of December 15, 2009 notes that Austin is the only city surveyed that limits the number of taxicab entities so there is also little competition between franchise holders. Any increase in the rate should go only to the drivers who desperately need to earn more. The city, through its detailed ordinance closely controls how the system operated. The city must prohibit an increase in the terminal and other fees, interest rates, or penalties against the drivers or the raise is meaningless.

In addition, the zone rate fee structure is actually a loss of income and not a raise in the rate. The proposal recommends that the passenger pay the meter or the zone rate, whichever is LESS. Clearly, if a passenger pays less than the meter, that means the driver will earn less than the current rate structure provides.

Consider the other decisions you have reviewed and the impact on driver income. The city auditor’s report of December 15, 2009 indicates that the city of Austin has issued more taxicabs permits than are necessary. Using the same formula of need for additional permits as Dallas would result in a decrease of 387 permits in Austin. If half the taxis were not on the road, the income for the other half would correspondingly increase. The city has increased the numbers of super shuttles, limousines, and has adopted an unprecedented policy not to cap the number of pedicabs, which now number 187 licensed pedicabs. Such overwhelming competition from vehicles with unrestricted fares results in significantly less income per taxi driver during the more lucrative earning opportunities such as South by Southwest and the Austin City Limits concerts and causes more cabs to drive longer and longer hours to make up the loss of income.

We suggest the following rate increase:

$3.00 minimum drop fee
$1.00 additional passenger
$17.00 minimum airport fee (not including $1 surcharge)
$0.20 per 1/12 mile effective immediately
$30 an hour waiting time effective immediately
$100 clean up fee penalty (allows a Class C misdemeanor and $100 fee paid to the driver for vomiting, etc in a taxi)

The process for the rate change requires the franchise holders to file with the city clerk a joint application. Austin City Code Section 13-2-369. Next the city manager makes a recommendation to council regarding the application and the council acts on the application within 45 days after the receipt of the city manager’s recommendation. Austin City Code Section 13-2-370. The ordinance does not require a simple up or down vote on the application. We ask the Urban Transportation Commission to recommend the above rate increases to the city manager.

Thank you for your consideration of these critical issues. I am available to answer any questions.