Wednesday, May 25, 2011

New York yellow cabs in practice

Regular commenter Helen "Trainstar" Bushnell's reaction to my post about taxis made me realize that I hadn't been entirely clear. The medallion "yellow cabs" are allowed to pick up street hails anywhere in the city, but they normally don't cruise anywhere other than Manhattan below 96th Street or the airports.

Yellow cab drivers are also known to refuse to take passengers outside of this zone, even though they are required to by law. There's an old joke about a guy who hails a cab in Midtown and asks to be taken to London. The cab driver says, "sure, why not?" and drives onto a cargo ship bound for Southampton. After a few days at sea they disembark and drive to Trafalgar Square, where the passenger pays and leaves. A few minutes later someone flags down the taxi and says, "Boy am I glad to see you! Can you take me back to New York?" The cab driver says, "What address?" and the woman says, "Eight Prospect Park West." The cab driver's face turns sour and he says, "Lady, I don't go to Brooklyn."

I usually get in the cab before I tell the driver where I'm going, but that doesn't always work. So why don't yellow cab drivers want to serve these areas?

Some say that there is too much crime in those areas, and there's definitely some truth to that (but not in places like Park Slope). The main reason is that they make a lot more money in Manhattan below 96th Street. The density of people without cars is much higher, and the people tend to be wealthier.

Okay, you may be thinking, but then why aren't there other yellow cab drivers to cruise the outer boroughs? Surely there's still money to be made there? The problem is that there are no other yellow cab drivers. The city limits the total number of medallions, and rarely increases that number. The medallions are also mostly owned by absentee rentiers who lease them to drivers, and these leases skim off a large percentage of the income.

The drivers could charge more to serve the outer boroughs, but they are forbidden by law from charging anything other than the meter rate. That leaves a vacuum in the outer boroughs, which has been filled by the car services. Because the number of car service licenses is virtually unlimited, there is not the same problem with rent-seeking that you find with medallion owners. This brings the cost of a trip to the individual driver way down, allowing him or her to charge a lower rate to reflect the lower demand in the outer boroughs, and still make a profit.

Sounds like a good system. What's the problem? We'll see...


Alon Levy said...

The crime argument is especially specious in light of the fact that taxis do take people to and cruise in Harlem. I had not much less trouble taking taxis when I lived in Central Harlem than when I lived in Morningside Heights or the Upper East Side.

NYC taxi photo said...

you are correct with this blog post sir.

but you see, you are explaining here that an abundance of for hire vehicles is bringing the cost of a ride down. drivers can do this because the fees to purchase and maintain a regulation car is lower.

if the fees could be lowered for yellow cab drivers, then all is well. however we both know, that the big owners of medallions wouldn't want such a thing to happen. more medallions, more drivers, the rates will stay the same or continue to rise. the economy continues to fall.