I’d say “disappointment” would be an extreme understatement to describe how I felt when I heard NYC will continue its cap on new licenses for ALL segments of the FVH industry, aside from wheelchair-accessible vehicles and battery electric vehicles (not including hybrids). I reported several months ago that traditional Black Car and Livery bases, along with the vendors who serve them, were being hurt financially by the cap, even though they had no hand in causing the troubles that the cap was intended to alleviate.
What logical reason could anyone have for telling a 50- or even a 500-car base they can’t add new vehicles to accommodate a new client? It not only prevents bases from actively pursuing new business, it’s a loss for the dealership that would have sold vehicles to the drivers and the companies that would insure them.
These bases have already been devastated by the inaction of government to contain the out-of-control growth of app-based companies, whose business model is “volume, volume and more volume,” with no consideration for the profitability of the people who perform their work. In fact, Uber literally loses billions of dollars each year, and it doesn’t seem to bother anyone at the company or their investors that there is no clear path to profitability for them.
If they’d been allowed, they would almost certainly have kept adding more and more vehicles, regardless of the consequences – but traditional bases are constrained by the need to earn a profit. Historically, if a traditional base was unable to provide the work needed to keep their drivers happy, those drivers would move to another base. Now that there are 120,000 FHVs on the road, options are extremely limited. The pie has simply been sliced into too many pieces.
Part of the problem, initially, was the fact that app-based companies were lumped into the Black Car category at the NYC Taxi and Limousine Commission (TLC), even though their business models were completely different. The app-based companies have made headway into the corporate market in recent years, but that wasn’t their initial intention and their bread-and-butter is still retail work. Black Car and Luxury bases, on the other hand, have almost exclusively served corporate clients.
Separating high-volume app-based companies into their own category (High-Volume For-Hire Vehicles or HVFHVs) was of course the right move for this reason, and – I thought – also to allow the city to better regulate them, specifically, without doing more damage to the traditional segments of the industry that continue to serve an important role in NYC’s transportation system.
Now that there is an HVFHV segment, I submit that it is the only segment that needs a cap – and they need it because of the aforementioned business model (volume, volume and more volume), the fact that they are not constrained by long-established laws of supply and demand, as well as their historical unwillingness to do what’s right for the city and its citizens – simply calling it “disruption.”
On June 12, the TLC and the NYC Department of Transportation (DOT) issued a report which recommended a cap on “cruising” and the continuation of the cap on new FHV licenses. The report (https://www1.nyc.gov/assets/tlc/downloads/pdf/fhv_congestion_study_report.pdf) was part of a mandate to study traffic congestion and review driver income over the course of 12 months, following the effective date of the FHV license freeze, which began on August 14, 2018.
The “Cap on Cruising,” which is currently being considered, seeks to create vehicle utilization standards for HVFHVs, attempting to reduce the amount of time app-based cars roam the streets between jobs. I applaud these efforts. Combined, the caps on cruising and new FHV licenses could greatly reduce unnecessary “vehicle hours traveled” in the Manhattan core, and hopefully help increase driver wages. The cruising cap – like the FHV license cap – would last for one year, with semi-annual reviews every six months after that. The goal would be to make sure cars aren’t driving around empty more than 31% of the time in Manhattan, south of 96th Street during peak hours (weekdays from 6:00am to 11:00pm and weekends from 8:00am to 11:00pm).
The logic of these new rules is undeniable when it comes to HVFHVs, but as I mentioned, I think the city should exclude all other segments of the FHV industry from the cap on new FHV licenses, as it does far more harm than good to the industry at large. I would like to add that the TLC should change the rule that allows cross-dispatching between segments. Otherwise, HVFHV companies could encourage drivers to get licenses in a different segment, then switch over to an HVFHV base.
On a final note, I would like to welcome the TLC’s new Commissioner and Chair, Jeffrey Roth, who will serve as Meera Joshi’s “permanent” replacement. Bill Heinzen stepped into the role of “acting Chair” when Ms. Joshi recently stepped down, and I hope that he returns to his previous role as TLC’s Deputy Commissioner for Policy and External Affairs – a job he held for more than two and half years.
Mr. Roth is known for being both smart and approachable, and I hope he lives up to his reputation – most notably by soliciting input and accepting advice from industry leaders on policy matters. According to a recent Crain’s New York Businessarticle, Mr. Roth’s specialty is “data and analytics, which he oversaw in a previous role as deputy commissioner for policy and external affairs for the TLC.” These talents will come in handy as the industry continues to face a difficult road ahead.