On May 3, 2023, the New York City Taxi and Limousine Commission (TLC) approved a pilot program to test whether Street Hail Liveries (SHLs) can be used safely and efficiently. Until now, an SHL was known as a green taxicab – similar to a yellow taxi, except that an existing SHL cannot accept a hail in the Hail Exclusionary Zone (all areas of New York City, except in Manhattan, south of East 96th St. and West 110th St., and NYC Airports). While, in theory, a SHL could accept a dispatch from a base, the reality is that the now-existing SHLs only accept street hails and e-hails and not dispatches from bases.
From the get-go, the green taxicab was a disaster. It was costly to get the permit and hack up the vehicle, all while the amount of money drivers/vehicle owners earned by accepting street hails in the outer boroughs were generally insufficient to make ends meet. So, what happened, and why did the TLC create a SHL pilot program?
First, it is important to note that, except for the 1,000 For-Hire Vehicle (FHV) licenses currently being issued to those who purchased a Battery Electric Vehicle (BEV), the cap on the issuance of new FHV licenses remains in place and, in my opinion, it is not likely to be lifted by the TLC anytime soon. Next, to get a SHL permit under the pilot program, a prerequisite is to obtain a BEV, hybrid electric vehicle or a Wheelchair Accessible Vehicle (WAV).
The new SHL pilot program, which started on May 16, 2023, will utilize vehicles that operate as a cross between a livery and a green taxi. The vehicle cannot be green (or yellow). Also, the vehicle will not need to be hacked up because the new SHL will not be able to accept street hails. The new SHL will not look or operate like a taxi. The new SHL will operate more like a limited livery vehicle.
Drivers of the new SHL will only be able to accept dispatches from a licensed base. Also, the new SHL will be limited to accepting dispatches where the trip originates outside the Hail Exclusionary Zone, just like the existing green taxis. This is the traditional domain of the liveries.
On the one hand, perhaps the livery industry should rejoice because, with the creation of the new SHL, the TLC seems to be throwing the livery industry a lifeline. This should, in theory, create more supply of drivers in the outer boroughs to enable livery bases to satisfy the increasing demand for their customers. But keep in mind that there is a limit of 2,500 pilot permits that may be issued to new SHLs. Those permits will help, as more supply helps enable bases to meet existing demand, but a max of 2,500 is a drop in the bucket, considering there are about 96,000 currently licensed FHVs. This equates to a potential increase of approximately 2.6%.
How is adding 2,500 more vehicles going to help the 397 existing black car bases and the 225 existing livery bases? It is something, and something is better than nothing, but how much is a max of 2,500 more FHVs really going to help the industry? I never want to look a gift horse in the mouth, but at the same time, I don’t like when someone comes to me with what appears to be a gift, when in fact, I am only being thrown the proverbial bone.
People interested in joining this SHL pilot program must remember that buried in the TLC’s resolution creating the new SHLs is the provision that deals with the duration of the pilot program. The provision states that while the TLC Pilot Program will last up to 24 months, the TLC Chair can terminate it at any time. Also, the resolution states that if the pilot program is successful for its 24-month duration, but no rules are proposed by the TLC pursuant to the pilot program before those 24 months have ended, then the SHL permits issued pursuant to the pilot will be immediately deemed surrendered to the TLC.
This leads to the inevitable question of who in their right mind will go out and buy a BEV, hybrid, or WAV with the hopes that the TLC Chair won’t arbitrarily terminate the pilot before the end of 24 months. Also, I would be concerned that the pilot program is successful, but no rules are proposed by the TLC pursuant to the Pilot Program before the 24 months have ended, and thus, the SHL permits that were issued will be immediately deemed surrendered to the TLC. Perhaps some people will be willing to take the risk, but the TLC’s track record in creating new categories of FHVs, including the existing SHLs, is less than stellar.
Perhaps my problem is that I simply do not believe that big government, another small class of FHVs with limitations, and more regulation is the key to solving what ails the FHV industry in NYC. Having the city’s regulatory agency determine how many vehicles can be in the FHV marketplace did not work well in the long run for the yellow taxis. It has not worked well with the existing FHV cap. So why will it work now? Is the TLC helping the industry, or is it simply trying to justify the continued cap on regular FHV licenses (the aforementioned bone)?
The fact that the TLC’s online application process for the 1,000 FHV BEV licenses closed after 15 minutes because demand for these licenses was so high indicates that more drivers want to enter or return to the industry. I always believed that the laws of supply and demand worked best in the marketplace. If there is great demand for transportation and an insufficient supply of vehicles, then the consumer’s demands are not being met. If supply is too high and demand is too low, then drivers will make less money because there are not enough jobs to satisfy the supply of drivers.
I say, let the drivers and consumers – and not city government – be the ones to determine when demand outstrips supply and vice versa. So long as the public is treated fairly and in a transparent manner, along with maintaining safety as the top priority, I believe city government should step aside and let the market forces determine who will be on the winning side and who will be on the losing side.
While the consumers of FHV transportation typically determine demand, the fact remains that Uber and Lyft dramatically increased the demand of the consumer for FHV transportation by providing a fast, easy, and cheap means of going from point A to point B. While Uber and Lyft are no longer subsidizing trips for the consumer, and thus their prices have increased, the fact remains that, as a result of the “Uber effect”, the residents and visitors of the City of New York have come to expect on-demand transportation. The days of on-demand transportation being limited to yellow taxis are a thing of the past.
People desire FHV transportation and don’t want to travel in the subways. Ridership in the subways is down to all-time dramatic lows. Hence, the desire of the MTA (Metropolitan Transportation Authority) for congestion pricing. If a congestion pricing plan is approved, I don’t believe it will affect traffic and congestion. It will only put more much-needed money into the MTA’s pocket. Limiting the supply of FHVs won’t necessarily drive people back to the subways. There is plenty of demand for FHV transportation. There is simply not enough supply. If there were sufficient supply then no one would ever be waiting for a vehicle to arrive, and no one would have their request for FHV transportation refused/denied because of a lack of drivers/vehicles.
People will always complain about something. Too much traffic, the car is late, missing flights at the airport, parking… just to name a few. The TLC has, for some time now, been trying to play with the supply of FHVs to decrease traffic, increase driver pay and be more mindful of the harmful effects of the internal combustion engine. While these are laudable goals, when there is too much meddling with the laws of supply and demand, there are and will always be adverse effects. Deregulation may lead to increased prices, or it may simply give livery and black car bases an opportunity to recoup the losses caused by the FHV cap and the effects of COVID.
There will always be regulation in the FHV industry, but overregulation is not the answer. The FHV transportation industry in New York City has been and will always be dynamic, but the goals should be focused on stimulating economic activity, increasing competition, and giving consumers more choices. Twenty-five hundred more FHV’s on NYC streets is simply not enough to satisfy the transportation demands of 8.5 million residents and over 55 million tourists. Domestic tourism has mostly recovered and is back to pre-pandemic levels. Yet, the number of FHVs is still insufficient to meet the demands of the public.
We all have opinions on how best to reinvigorate the FHV industry for the benefit of everyone. It is time for more people to get involved, speak up, and become part of creating a holistic solution, rather than just complaining about the problems and working on piecemeal solutions. I remain committed to doing all I can for the benefit of the FHV industry as a whole.
