We have fewer cabs in Vancouver and we pay more

Post by Vince Houmes in

27 comments

taxis-graphs.png
If you've ever tried to get a cab in Vancouver, you'll find this post of interest

What if the Northwest’s cities legally capped the number of pizza delivery cars? What if, despite growing urban population and disposable incomes, our Pizza Delivery Oversight Boards had scarcely issued new delivery licenses since 1975? Pizza delivery would be expensive and slow; citizens would rise up in revolt.

Substitute “taxicab” for “pizza delivery” and you have a reasonable facsimile of the taxi industry in Portland, Seattle, and Vancouver, BC: tightly restricted taxi numbers, high fares, and low availability.

Plentiful, affordable taxis facilitate greener urban travel. They help families shed second cars, ride transit more often, and walk to work on could-be-rainy days. They fill gaps in transit systems and provide a fallback in case of unexpected events.

In the Northwest’s largest cities, however, local ordinances enforced by taxi boards suppress the entry of new cabs onto the streets. They impose arcane and ultimately farcical management principles reminiscent of Soviet planning. Imagine teams of pizza regulators pawing through discarded receipts and pizza boxes to determine whether demand for pizza delivery markets are “oversaturated,” and you won’t be far from the truth. Restricting taxicab licenses undermines passengers’ mobility, local economies, and—by encouraging driving—our natural heritage; uncapping cabs would allow market competition to bolster all three.

As shown in the figure above, at present, the Northwest’s largest cities have fewer cabs per capita, and higher fares, than many US cities. Seattle’s 1.4 cabs per 1,000 residents is twice Portland’s 0.7, and well above Vancouver’s 1 cab per 1,000. But all our cities lag. Washington, DC, has more than 12 cabs per 1,000 residents; Las Vegas has almost 6; and San Francisco has 2. Meanwhile, the cost of a typical, five-mile trip is $16.50 in Portland, $17.25 in Seattle, and $21.57 in Vancouver. Washington, DC’s typical fare is just $11.50.

Consider the efforts of Portland’s Transportation Board of Review, which has the power to issue new taxi licenses but is also charged by city law with monitoring “market saturation factors.” It is supposed to avoid market oversaturation, something every other market—from pizza delivery to home remodeling—manages to do just fine on its own, without benefit of a board. In Portland, the rules actually require applicants to prove that a new taxi license is needed. Imagine if Pizza Hut had to demonstrate to the Pizza Delivery Board that it needs another driver for the Super Bowl.

In Vancouver, the Passenger Transportation Board‘s rules are slightly more flexible than Portland’s. They have allowed a trickle of new cab licenses over the years, but they have screened out many applicants, too. A Vancouver cab company seeking a new license is supposed to prove the taxi market isn’t already too full, and that can be a complex question to answer. In other markets, entrepreneurs figure out the answer to their own satisfaction, then see if they’re right by risking their own time and money. New pizza parlors do not have to show city regulators that their delivery service is needed.taxicabs.jpg

Worse, in Vancouver, cab companies may petition against a competitor’s new license. When Pizza Hut applies for an extra delivery license for the Super Bowl, in other words, Domino’s has a right to challenge the application. In 2010, the board rejected some 43 percent of requests for new permits, despite the city’s high taxi fares and paltry cab numbers.

Seattle’s Department of Executive Administration, like taxi boards to the north and south, tries to divine the number of taxicabs Seattle can support without oversupplying the market (whatever that means). Its method is to comb through an enormous database of “weighted average taxi response times” to look for signs that wait times are getting worse. Making the heroic assumption that Seattle’s status quo of long waits and fruitless cab hunting are acceptable, it looks for signs of further deterioration before considering new licenses.

A better test would be whether anyone is willing to pay for a taxi license. Guess what? Seattle medallions currently trade for $100,000, when they’re for sale at all. When the city offered 15 new licenses for wheelchair accessible taxis in 2009, 723 drivers applied. Vancouver taxi licenses have sold for up to CDN$500,000. (In New York, taxi medallions were selling for close to $1 million in June.) The explanation of these bubble-like prices is economics: restricting taxi supply increases the profitability of each cab. Holders of taxi licenses can fill their cabs more of the time and keep the meter running.

In the Northwest as across the continent, taxi regulation is dominated by license caps and fixed rates, but that isn’t the only way. Washington, DC, has no limit on the number of cabs. It has plenty of taxis and low prices. The capital city does regulate taxis, insisting, for example, that drivers and vehicles meet safety criteria, that fares be clearly posted, and that meters be accurate. But DC law imposes no lid on taxi licenses. That’s good sense. When we import that approach to Portland, Seattle, and Vancouver, we’ll have more-robust urban taxi fleets and we’ll be able to leave our own cars home more of the time.

Sources of charts: Data from the Chicago Dispatcher, with updated city populations (from Wikipedia) and updated numbers of Seattle and Vancouver taxis. An “average trip” is 5 miles long, with 5 minutes of waiting. Per-capita numbers are for city, not metro, population. Vancouver cab prices vary slightly, but a reasonable estimate may be found here.

Editor's Note: I also think we need to seriously look at why taxis are not given the same privileges on our roads as buses. Why are there special left hand turn provisions for buses, but cabs are excluded? Why can't cabs be permitted short stops in some no parking zones?

If you liked this post, you may want to review a few other CityCaucus.com posts on this topic:

- Post by Vince Houmes. Vince is also a guest blogger at www.siteline.org where this post was originally published.

27 Comments

The problem is due to the licensing system. Licenses (AKA shields) should be way cheaper, not be allowed to be resold, and should be renewed annually. Way too many licenses are in the hands of a few old-school characters, who have collected them over the years. They hold drivers, customers and the cities to effective ransom. Driving a cab, or owning one should not be so capital intense.
The solution is to gut the licensing system and redistribute them nm more fairly. They are license to perform a service, not a license to control the whole industry.

That said, the chart at the top only compares Vancouver to US cities. Not a particularly useful comparison, without major Canadian cities included.

I agree. The article wanted to achieve too much with too little in a long-short version. Not clear, but still interesting.

I was very pleased to come across this article. I would now like to see similar charts comparing taxis in major Canadian cities.

I have felt for a long time that it's time to review the 'one size fits all' approach to taxis that we have in Vancouver.

I wrote about this in the Vancouver Sun in July 2007 http://tinyurl.com/3k68v27 and hope that the conversation will continue. We must find better solutions to create additional and more affordable taxis in the city.

In setting forth this proposition, I am the first to admit that it's essential that taxi drivers can make a decent living. I often wonder how this is possible when some drivers have to line up for extended periods of time before picking up a fare at the airport, or some hotels, or the cruise ship terminal.

I believe a significant problem in our city is that we don't have a 'taxi culture'. People don't think of taking taxis...they would sooner drink and drive, or walk, or maybe take the SkyTrain or bus. I think this will change, especially if taxis can use bus lanes and get to destinations faster and at a lower cost; the rules related to pick up and drop off are modified; and the police continue to enforce drinking and driving regulations with stiff penalties.

It will also help if there are more cabs on the road...and prices can come down....and drivers know where they are going, and take the best routes.

So thank you Vince for this comprehensive look at the taxi industry...now let's continue the discussion, hopefully with the full paticipation by the taxi industry and present and past drivers...since they really know how to fix the problems we currently face.

Michael, you continue to ignore that the problem of taxi licensing has gotten way out of hand resulting in taxi licenses worth hundreds of thousands of dollars. Like any bubble where asset prices are artificially pumped up, there is financial loss when the bubble bursts which is what will happen if licensing is opened up to significantly increase the number of taxis on the road. Who is going to eat this loss?

That graphic you feature at the top of the article needs a citation. Where does it come from?

Yes, I'd be VERY interested in a comparison of Canadian Cities, say the top three cities by size in each province.

I'd be willing to bet that Victoria is at, or near, the top of the price-per-mile chart... for both Canada and North America.

Want people to not drink & drive? Make taxis affordable AND have enough available at peak periods, like at New Years and Halloween.

Ever seen the Taxi drivers in Vancouver? They don't care about "rules of the road" they will drive pretty much wherever they want when they want. They will also come close to running down pedestrians on legitimate cross-walks. Let alone they (the drivers) also do not wear seat-belts etc. So for them to get the same privileges as buses I dont think will make a difference.

But yea, in my experience when you need a cab there are none available. Just wish the drivers were better drivers and not scare the crap out of their passengers

The current cab situation is flawed. We already have far to much government control over enterprise. We would be paying prices in line with the US for milk & eggs etc., if it were not for the current quota system in place on farm commodities. This has resulted in the quota being worth more then the livestock & property. We pay too much for taxi's and many things due to the lack of open competition. Small government = healthy sustainable economy, the other option is pay way more so the system can profit and goods cost way more then they should.

As much as I agree that the current situation is flawed, so is the presentation of the data.

Different social and economic factors contribute to the demand for taxis in a particular city. In Washington, perhaps the high number of politicians and government employees who come to the city on business creates an inflated demand for taxis compared to the official population.

In Las Vegas, there is no doubt that the population is not representative of the demand due to high tourism.

Or you could make a reverse comparison: Why does NYC have so few taxis in a city where so few people own cars? And yet that city seems to get by just fine with only a few more taxis than Vancouver.

Overall, I think we need more taxis and that competition should dictate the price. But this data is incomplete.

"Small government = healthy sustainable economy"

Prove it.

"The advantage is that the city could keep the value of a taxi licence, but tone down the service if there are too many cabs on the road," Vancouver City Councillor Geoff Meggs said on Oct 28, 2010 CTV. In return Taxi companies give hefty elections funds to politicians for maintaining the price of taxi licenses by not issuing more taxi licenses or changing the licensing policy.

I discovered there is another kid of taxi service when I was in Washington. I was leaving the airport and needing to go downtown to my hotel. I encountered a neatly dressed man in a suit that was standing near the door that could obviously see that I was puzzled about where to go. He asked if he could help - told him I was looking for a cab to downtown. His response 'follow me'.

He took me out to an immaculate large, black sedan and opened the trunk to put in my bags. I freaked out a little because I automatically assumed this cab ride was going to cost me a fortune. He assured me no, it was the same as every other cab ride - flat fee from the airport to downtown, regardless of how long it took. I knew how much I way paying before I even got in the vehicle. Seemed good to me.

The car was as clean inside as outside. A nicely folded newspaper was on the seat for me to read. Classical music was on the radio and I had the choice of it being on or off. Quite honestly, I was more interested in taking to the driver to learn about the Washington taxi business. He was an immigrant, earning enough to live comfortably, and put his kids through college.

My ride was as promised, for the price promised and I had such a lovely chat that I arranged for him to take me back to the airport when I was done with my trip.

I would take that type of taxi any day. I am not interested in paying $7 for a 5 minute ride in a stinky, dirty cab with music blaring and a guy talking on the phone. I will pay $5.00 for a parking meter instead.


That's like asking someone to "prove" that 2 + 2 = 4. Either you accept the rational conclusions of the last 6000 years of failed tyrannous states, or you live in emotionally driven denial. It's up to you to eventually come to grips with reality and history. No one owes you an explanation, or a living. But if you continue to simply refuse to take any personal responsibility for your own education, may I suggest talking to someone who's lived in Eastern Europe? I'm sure they would be happy to explain to you why centrally planned economic fantasies destroy everything they come into contact with.

Back to the topic, I find it odd that no one is questioning the way Yellowcab/Blacktop openly pay for Vision Vancouver's little picnics. Is that not a conflict of interest?

Respectfully, Birdy, that is a lot of strawmen for a single paragraph.

If you remove the obvious exceptions of military or theocratic dictatorships (I don’t think we want to live in one of those, do we?), and compare all the functioning democracies of the world, those with the higher government expenditure as a proportion of their GDP seem to mostly be well-governed, prosperous northern European nations with a relatively healthy and satisfied populace. Alternately, those with low government expenditures relative the GDP are mostly third-world states. By your argument, sub-Saharan Africa, with it’s unfettered markets and non-functioning governments, should be the most prosperous part of the planet.

Further, government spending per capita correlates positively with heath index, reduced poverty, life expectancy, lower crime, higher overall incomes, and other social well-being factors. Of course there are exceptions (the US and it’s unaccountable health care failures, Petrostates of the middle east, etc.)

dave,

good lookie lookie throwing out vague insinuations!

I've got one too:

Yellow Cab gave the NPA $2625. Hmmm.

PatJ,what world do you live in,Im not sure if you have noticed the west is in a financial meltdown.


The Thought Of The Night

"The Power Of @glissandoremmy ... Just Had A Cab Driver Tell Me He'll Never Vote VISION & Didn't Charge Me For A Ride."

Now May I Get A Job @ VSB?
And I don't mind paying for my Taxi this time.

We live in Vancouver and this keeps us busy.

…which is apropos of nothing. I guess if you could demonstrate that those countries with larger, more proactive governments, relatively high taxes, and tightly regulated business environments are causing the crisis.

But that doesn't seem to be the case:
http://en.wikipedia.org/wiki/File:Income_Taxes_By_Country.svg

I’m still trying to find any data anywhere that suggests "Small government = healthy sustainable economy" I just can’t find any. Anyone?

These huge western governments are no longer sustainable,we cant afford all these pensions now that people live so much longer,if you start a government job at 20yrs old and retire at 45 you could collect a pension for 45 years.Its the debt that is causing us to fail.http://www.dw-world.de/dw/article/0,,15313533,00.html

Which is an interesting side note. Demographic shifts are not limited to governments, as many people in my father’s generation are now living on generous pensions offered by their private-sector employers, both union and non-union. Outside of police, fire services, and the military, I don’t know any public service folks who retire at 45.

But, again, this does not address the thesis that “small government = healthy sustainable economy”. Try again.

PatJ,are you going to have a party today.http://www.dailymarkets.com/economy/2011/08/12/happy-cost-of-government-day-august-12/

Nope. I'm not American.

Interesting graph, the difference in trends between Republican and Democrat administrations is shocking. Looke like the most "economically conservative" presidents thay have had were Jimmy Carter and Bill Clinton...

P@J this is happening all over the world,big gov is not sustainable.Sorry dont know why my links dont work,Im old and tech challenged. http://m.knoxnews.com/news/2011/aug/13/spanish-towns-face-funding-crisis-rack-up-debts/

Im afraid I was sidetracked from the original post,I would like to say that I have friends who own cab licenses and that is their pension,they hope to sell it for their retirement,thats all they have.These people have worked very hard in a very tough industry and I would hate to see a kneejerk reaction by government that would certainly destroy their lives.Im not saying we dont need more cabs,but if anytthing is done it has to be done in a responsible manner.

To answer your question; "Why can't cabs be permitted short stops in some no parking zones?"

Taxi's and in fact everyone can make up to a 5min stop in a No Parking Zone to P/U & drop a passenger. That's what these zones are for. The zones are everywhere all a professional driver (AKA taxi driver) has to do is open their eyes and take some time to obey the parking law.

The problem you are referring to is stopping in a NO STOPPING zone. No one is allowed to stop in these zones, and for good reason. Safety is at issue or the good order and flow of traffic is blocked when a taxi uses these zones.

The real issue is that the taxi drivers put their profit before safety and good order when they use any and all spaces that they see fit to use. And they get parking tickets tickets when they serve their pocket books first, then the community second by ignoring their duty as a professional driver.

And looking at the number of parking tickets they get it is quite clear that they ignore their duty often, but as drivers we already knew how bad a driver taxi drivers are in this town.

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