New York City has always been congested. And in just a few days, for-hire drivers in Manhattan were about to pay a hefty price for that.
Until yesterday, that is, when a Manhattan judge brought the program to a screeching halt after weighing arguments from drivers who said in a lawsuit that state lawmakers passed the new fees without thinking through the consequences to the transportation industry.
The new fees would have gone into effect on Jan. 1. But Supreme Court Justice Martin Shulman will now hold a Jan. 3 hearing to further understand the issue.
Under the proposed plan, for-hire vehicles—including yellow taxis, black cars, and Uber and Lyft vehicles—would have to pay the State of New York a congestion fee on every trip from 96th Street to the southern tip of Manhattan, no matter what time of day or night, 365 days a year. The fee would range from $2.50 per taxi trip to $2.75 for Uber and Lyft rides.
For yellow taxis, that means a base fare of $5.80 before a taxi even travels a single inch ($2.50 base fare, plus the $2.50 congestion fee, plus 80 cents for other city-mandated surcharges). The congestion fee was created by Gov. Andrew Cuomo, with the $2.50 charge aimed at funding the state-run Metropolitan Transportation Authority (MTA) which runs public transit bus and rail lines in and around the city.
Ironically, it was Uber’s and Lyft’s cheap fares, subsidized by venture capitalist investment, that have contributed to driving people away from public transit in the first place. A 2018 study by noted transportation expert Bruce Schaller placed the decline in NYC subway ridership squarely at the feet of increased reliance on rideshare companies.
Now, those same companies will pay to support the public transit system it helped to put in decline, while at the same time gaining a competitive edge over its competition from yellow cabs.
Even the city’s own taxi czar has warned the congestion fee will be “devastating” to the taxi industry because its fares are set by the city. By contrast, Uber and Lyft could simply lower their opaque surge price amounts to cover some or all of the $2.50 fee, giving them an enormous—and unfair—price advantage over their competition.
“They’re not bound to a metered fare, so they can reduce the price of the trip so that the passenger doesn’t feel the effect,” said Taxi and Limousine (TLC) Commissioner Meera Joshi in a media statement this month.
Others have also voiced strong skepticism that New York City’s plan will work. Former TLC Commissioner Matthew Daus stated flatly last month, “I don’t think congestion pricing is going to work.”
“This is basically going to be a fare increase for the yellows,” Daus said on an Oct 22 episode of Fleet Forward, the podcast of the national Taxicab, Limousine & Paratransit Association (TLPA). “Everyone is going to be clogging the streets and working more hours to try to make up for the fact there is going to be a ridership loss. And Uber and Lyft have the money to cut their fares and drive people out of business.”
One of the plaintiffs in the suit that brought the temporary stop to the plan yesterday, pending a hearing set for early January, was the bother of Kenny Chow, a taxi driver who killed himself earlier this year.
“My brother Kenny killed himself because of the chaos in the industry caused by the failure of New York City to properly regulate Uber and the other FHVs,” Chow said, according to the New York Post. “Now comes this unfair and discriminatory surcharge that will be the nail in the coffin for 6,000 immigrant medallion owners like myself.”
The congestion pricing in New York City would be a first in the United States, although cities around the world have instituted similar plans. London, perhaps the most notable of all, has reported a reduction in vehicles by some counts and yet still ranks among the 10 most congested cities on the planet.
“Fleet operators and city officials from around the country are going to watch New York very closely to see how this works,” said Alfred LaGasse, CEO of the TLPA. “And this new ruling signals that New York needs to address the glaring additional unfair competitive disadvantage that will be felt by taxi drivers. Whether that increased disadvantage was intentional or not, it needs to be fixed.”
Will LA Congestion Lead to Free Public Transit?
Meanwhile, the city of Los Angeles is considering an aggressive congestion pricing plan to fund free public transit. The head of LA’s Metro has even set a potential goal of accomplishing this within 10 years, when the world’s attention turns to the city.
“We think that with congestion pricing done right, we can be the only city in the world to offer free transit service in time for the 2028 Olympics,” Metro CEO Phil Washington said. Los Angeles Mayor Eric Garcetti says the idea is worth considering.
The city already has express lanes that drivers can use for a fee. The new plan has not been finalized, but one option could be charging drivers in what amounts to traffic jams. Another option could be to charge people who simply drive more.
How much could this funnel toward public transit? That depends on the plan put in place. Estimates vary between $12 billion to $104 billion over the next 10 years, according to a Metro report.
What free public transit could mean for the for-hire fleet industry remains unknown. Clearly, if more people take the subway, it could pull business away from fleets. But at the same time, city officials are concerned that free public transit leaves lower income communities, which are not as well-served by buses and subways, behind higher income neighborhoods. But at the same time, an increase in public transit would also increase the need for “last mile” service between, say, homes or businesses and the local train station.
One thing is for sure: Cities across the country will be watching closely to see how—and if—the congestion plans in New York and LA will ultimately work.
—John Boit is a senior partner at Melwood Global, the public relations firm of record for the Taxicab, Limousine & Paratransit Association. To learn more about the national trade association and how a TLPA membership can help your fleet, visit www.tlpa.org.