Introduction

The congestion surcharge has been in place for well over three months now – since February 2, 2019. It is applicable to taxi and for-hire vehicle (FHV) trips starting, ending or passing through Manhattan south of 96th street, but is limited to intrastate trips. In this month’s article, we will evaluate the efficacy of the surcharge in reducing trip demand.

Based on the most recent trip records from the New York City Taxi and Limousine Commission (TLC), there has been no discernible decline in taxi and ride-hailing app ridership. In fact, there have been increases reported in the initial data. Specifically, the number of trips for taxis and ride-hailing apps has increased between February and March 2019 – the first month the surcharge went into effect.

It is also important to note – and a bit ironic, indeed – that the percentage of shared rides for Uber and Lyft has actually decreased in the first month the congestion surcharge took effect. The only tangible outcome thus far from the implementation of the congestion surcharge has been the significant revenue collected to support the Metropolitan Transportation Authority.

Background

As a recap, the congestion surcharge was implemented owing to the extremely high concentration of for-hire trip generators in Manhattan, despite the fact that the number of vehicles entering Manhattan has declined over time. Based on data obtained from the TLC, in December 2018, 88% of taxi pickups and 57% of ride-hailing pickups occurred below 96th Street (see heatmaps below).

Of great concern is the fact that pool vehicle trips only constitute a small percentage of the total rides in the congestion surcharge zone, rarely exceeding 26% of all trips in 2018. Worst of all, ride-hailing vehicles spend 42% of their time “cruising” without passengers. Overall, the trends toward more vehicle miles and less transit use have accelerated since 2017.

These images show trip origins, Dec. 2018 (clockwise from top left: medallion taxi, Uber, Lyft and Via)

The Plan

The congestion surcharge was implemented in the 2018 New York State legislative session with the stated hope of reducing dependence on for-hire services – and to encourage New Yorkers to use more public transit or pooled rides. The surcharge amount is $2.75 for each FHV trip, $2.50 per trip in a medallion taxicab, and $0.75 per passenger for rides in a pool vehicle.

All revenue from the surcharge will be collected for the Metropolitan Transportation Authority (MTA) and is expected to generate $1 million per day in revenue, or $365 million in 2019, if it were to have started on January 1 as first planned. Based on this revenue projection and the initial findings that congestion has not been reduced, this surcharge plan has thus far demonstrated it is nothing more than an MTA tax.

The Outcome

Based on the data obtained from the NYS Department of Taxation and Finance (DTF), the total net revenue from the congestion surcharge in February 2019 was $34,356,664. This initial amount would produce projected annual revenue exceeding $400 million for 2019, surpassing the year-end goal. Based on the data from the DTF, there were 5,740,070 total yellow cab trips subject to the surcharge in February 2019, which was approximately 82% of all taxi trips for the month. The total number of FHV trips subject to surcharge was 6,663,552 for February 2019, while the total pool vehicle trips subject to surcharge was 2,503,369 – roughly 12% of all ride-hailing trips.

The most pressing question, however, is whether the surcharge has had any real impact on congestion.

The early answer is, quite unfortunately, no. In February and March 2019, the average trips per day for both yellow cabs and ride-hailing vehicles for these two months have actually increased based on our analysis. Currently, the most recent data available for traditional FHVs (the Livery, Black Car and Luxury Limo sectors) is from February 2019. Green cabs trips have decreased by 6%, but since they operate largely outside the congestion surcharge zone, this would have little or no impact on congestion in Manhattan.

The following chart sets forth these trends in ridership.

The same trend is observable in the charts below for the number of unique vehicles/drivers. For yellow cabs and ride-hailing services, the numbers have increased, while green cabs have decreased. Note that the term “unique” refers to the number of vehicles/drivers that recorded at least one trip per month.

The congestion surcharge offers a significant discount on pooled rides, and this should encourage more shared trips. Has this been effective? The early answer is, once again, no. As shown in the chart below, the percentage of shared trips has actually decreased by more than 3% post-surcharge.

In sum, it is “business-as-usual” for traffic congestion in New York City. Based on the data available thus far, congestion is unlikely to be mitigated by the new law. The only goal achieved that has been met to date is the collection of the dedicated funding for the MTA.

There are other data that may shed some light on the traffic conditions post-surcharge – namely vehicle miles traveled (collected by the TLC) and transit ridership and average bus speeds for routes within the congestion surcharge zone (collected by the MTA). Also, pursuant to Local Law 149 of 2018, since January 2019, the TLC has begun to collect wait time data from ride-hailing vehicles affiliated with the four largest ride-hailing apps (categorized as High-Volume For-Hire Services). None of this data is available at the time of this writing but will prove useful in ascertaining the impact of congestion surcharge. More to come…

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Article by Matthew W. Daus, Esq.
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