Jan 20, 2020
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Los Angeles Rethinks Taxis as Uber and Lyft Dominate the Streets

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This article is part of our continuing Fast Forward series, which examines technological, economic, social and cultural shifts that happen as businesses evolve.

LOS ANGELES — The cars flow into Los Angeles International Airport in an endless stream, and in this loosely organized chaos, for-hire vehicles self-segregate at a new pickup terminal, called LAX-it.

On one side, fast-moving lanes of app-hailed cars jockey to pick up their passengers. On the other, cabs inch along the curb, waiting for a fare.

“I’ve never taken a taxi,” Heather Brandon, 36, of Arizona, said moments before she was whisked away in an Uber on a recent Sunday morning to catch a Carnival cruise. Taxis are more expensive, and the Uber app is more convenient, she said.

Nowhere is that reality clearer than at the airport known widely by its code letters, LAX: Ride-hailing businesses have ravaged the city’s taxi services, whose drivers were picketing last week to protest the airport’s pickup system. According to Los Angeles World Airports, which operates LAX, taxis handled just 22 percent of pickups at the airport for the first three quarters of 2019; ride hails claimed the rest.

The numbers were similarly bleak for cabs throughout the city. The Los Angeles Department of Transportation estimates that taxi business is down 75 percent since 2012, when Uber first rolled into town.

This year the city is changing the system. Instead of calling an individual company to request a cab, passengers will be assigned rides through a centralized dispatch that connects all the cabs in the city. The taxis can be requested with an app, as well as with a phone call. Passengers will know the cost of their rides before getting into the car.

Meters will be modernized, and cabs’ garish colors will be optional. Instead, they could simply sport a decal and registration number.

If that sounds more like ride-hailing, that is exactly the idea.

“We want to give them an opportunity to be able to retain and add customers, to be innovative and nimble,” said Jarvis Murray, an administrator with the city Transportation Department.

For decades, taxis in Los Angeles have operated under a franchise system. Unlike New York City, where cabdrivers operate with a limited number of expensive medallions that are bought and sold on the open market, Los Angeles issues contracts to nine independently operated cab companies. The same nine operators have held those contracts since 1990.

“It was almost a disincentive to change,” Mr. Murray said.

So the city is forcing the issue, hoping to spur innovation by doing away with its franchise system. Instead, it will issue permits. It will also lift the cap on the number of taxis — and taxi companies — to whatever the market will bear. Right now, Los Angeles limits the number of cabs to 2,364 vehicles — a pittance compared to the city’s 100,000-plus Ubers and Lyfts. By comparison, New York City has 13,587 taxis, and has capped the number of ride-hail registrations at roughly 80,000.

Press officers for Uber and Lyft declined to provide information on the number of drivers who operate in Los Angeles, but both described the market as “important.”

Los Angeles is unusual in that many taxis are summoned by passengers calling a dispatcher, not by waving one down. So the shift to a centralized dispatch alone is significant.

“Revising the franchise system is a dramatic change,” said Anne Brown, who compared taxi and ride hail services in the city in 2018, when she was a researcher with the Institute of Transportation Studies at the University of California, Los Angeles.

As part of her research, Dr. Brown had 18 U.C.L.A. students take 1,700 trips between the same two locations. They hailed cabs from 9 a.m. to 9 p.m. seven days a week, alternating among taxis, Ubers and Lyfts.

The average cost for the two-mile trip using a taxi was $12, compared with $6 for an Uber or Lyft, she said.

Pricing was not the only factor. In 10 percent of the taxi trips in Dr. Brown’s study, the driver traveled twice as many miles as necessary, adding $5 to the trip’s cost.

Interviewing the students afterward, Dr. Brown said: “They felt the unreliability of taxis did not end when they got in the car. They didn’t know how much the trip would be. There wasn’t always a recourse if they were unsatisfied with the driver. Uber and Lyft, they could complain and get their money back.”

It is these issues that Los Angeles is trying to address with its new taxi permit system.

Taxis have tried to innovate, Dr. Brown said. Many cab companies have developed their own apps, but they work only for that individual fleet, and that fleet might not operate in the area where a customer needs a ride. While at least one app developer has tried to bring all the cabs’ apps under the same tent so they can operate in a manner more like Uber or Lyft, that app does not work well, she said.

And that raises the question: If Uber and Lyft offer superior service at a better price, and if taxis’ attempts to emulate ride-hail technologies are not working, why not just let the taxi system fail?

“Taxis are this legacy service,” said Dr. Brown, now an assistant professor at the University of Oregon. “They’re a really important mode for so many travelers.”

Specifically, they are important for travelers who do not own a car, or who may not have the necessary smartphone or debit or credit card to use a ride-hail app.

Dr. Brown said taxis were used most often by the city’s lowest-income people, who pay with cash.

Taxis serve another purpose, according to Mr. Murray, of the city’s Transportation Department. As part of the Americans with Disabilities Act, the Federal Transit Administration requires cities to provide complementary paratransit service to people with certain disabilities. The Los Angeles Transportation Department saves money by subcontracting 65 percent of those rides to its taxi companies, he said.

California law prevents local jurisdictions from regulating ride-hail businesses like Uber and Lyft, so Los Angeles is not able to mandate wheelchair access in their vehicles or even charge them a fee that would help fund such a service.

What the city can control, however, is its taxis. And that control, many cab companies say, is what has stopped them from effectively competing with Uber and Lyft.

“It’s excessive rules and regulations that the city has had for many years to control every aspect of our business,” said Simon Momennasab, the general manager of Bell Cab, which operates 200 taxis in Los Angeles.

Those regulations include things like the colors of a company’s cabs and the colors of their drivers’ shoes and socks, as well as background checks and permitting processes.

It often takes weeks for a new driver to get a permit, Mr. Momennasab said, whereas a Lyft or Uber driver can sign up and be working within a few days.

Mr. Momennasab said cab companies had been lobbying Los Angeles for at least five years to ease its regulations and level the playing field. Among their suggestions: speed up the permitting process for drivers, allow them to charge a flat fare, get rid of the exterior color requirements.

The city’s new rules do all of that. Still, Mr. Momennasab has mixed feelings. “A lot of it is going to fail,” he predicted, because some of the biggest plans, such as centralized dispatch and flat fares, have already been tried.

“Everybody says they want to help us,” he said, “but I don’t think we’re going to get the help that we need.”

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