Need a Taxi? Drivers Want To Expand Demand for Cabs

They're usually considered either a luxury or a necessary evil belonging to America's older and larger cities, where traffic is insane and parking nonexistent. But some observers believe taxi cabs could become an important and much more visible part of the U.S. transportation landscape in the near future.

The growth of the taxi industry, however, isn't anticipated by everyone. A group of veteran taxi drivers in Denver, who have worked for several of the city's established cab services, now want to start their own company. But the proposed, employee-owned company, Mile High Cab, recently had its application rejected by Colorado's Public Utilities Commission, which oversees the state's taxi industry.

Tom Russell, the attorney representing Mile High Cab, says the judge in charge of the ruling concluded the company was financially and operationally sound -- but that the additional competition would hurt metro Denver's existing cab companies and, by extension, the public interest.

Mile High Cab is appealing the ruling. "The term the experts in this case ... and the judge used is 'derived demand'," says Russell, "that there are only so many people who are going to want cabs, and that that number is a more-or-less fixed demand. Mile High Cab very specifically believes, and has as a part of its business plan, efforts to expand the demand for cab services. We think that if there's better service, then more people will want to use taxi cabs. Our point is, competition benefits the public in all sorts of ways."

Short Fares Won't Pay for High Leases

Russell says Mile High Cab is also looking to reduce a cost that is the source of constant complaint and worry for many taxi drivers across the U.S.: their weekly lease. Most taxi drivers contract cabs from their companies and pay the company a weekly lease fee. In some cities like New York -- and even in Denver -- that lease fee can cost a cabbie $800 or more per week -- or over $40,000 a year. The result is that many taxi drivers work long hours and sometimes seven days a week, trying to eke out a profit.

For many cab drivers, "you work six days for the company and one day for the job," says Edem "Archie" Archibong, a cabbie in Denver for 15 years and chairman of Mile High's board. "The first six days you are working for the company, the last day you work for yourself." Archibong says the need to make the weekly lease means cabbies spend much of their shifts looking for big fee rides -- particularly to and from airports. "Drivers who have to pay the really high lease rate are disinclined to take short fares," says Russell. "If the driver's been waiting at a cab stand for a long time hoping for an airport ride, and you just want to go a mile-and-a-half, it creates a disincentive for the driver."

There's a movement among some cab companies like Mile High to establish lower lease rates for their drivers -- and to take their business outside of the traditional airport, hotel and downtown markets. Eric Morris, a researcher at UCLA's Institute of Transportation Studies, says taxis provide desperately-needed mobility for three important but underserved groups: the elderly, the disabled and the poor.

Breaking the Cycle of Suburban Car Culture

"People believe mass transit is an option, but taking mass transit is very physically demanding for the elderly," says Morris, who also writes a column for The New York Times Freakonomics blog. "Taxi service is a really important lifeline for people unable to use the transportation system. And taxis are surprisingly important for poor. Once in a while they have to take a trip via taxis. It's also a lifeline service for them."

Archibong, who has a steady clientele of children and elderly he takes around Denver, says low leases would allow cab drivers to reconsider the smaller calls and to still be profitable.

"You make money from smaller fares because once you start responding to them, they keep coming," he says. "You work for eight or 12 hours, and by the end of the day you make about maybe $130, you give $30 to the company and keep $100. It's that simple. But right now everyone is queuing for $50 [airport fares]. If you're lucky you'll get a couple, and even if you get a couple, you won't make your lease."

An influx of taxis could also help break the cycle of the U.S. suburban car culture. "People don't think, for example, 'Oh I can go out and if I drink too much I'll just take a cab home,'" says Russell. "People think instead, 'Well, I'd like to go out, but it's going to be so hard to get a cab, so I'm not going to try it.'"

"I think there's definitely a need for cab service in outlying areas, especially as time goes on and the population ages," says Morris. "There's a huge role for cabs and other transportation-for-hire services. It's especially important in the suburbs, where you have very few options to driving."