Competition can give a lift to cab service


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by Bruce Schaller

Atlanta Journal-Constitution, Dec. 19, 2001

Run-down cabs, rude drivers, reckless drivers slipping through licensing reviews and frustrating taxi court procedures create important problems with taxi service that affect residents, visitors and the city's image.

What is the solution? Certainly, procedures for checking driving records need to be tightened. But just clamping down on drivers and taxi operators is not sufficient, not efficient and not effective. When cities try to improve cab service through stricter regulations and more enforcement, they start to take on the management of the taxi industry. The city has neither the resources nor the powers to manage the daily decisions made by cab drivers and owners that lead to excellent service or lousy service.

A better approach is for the city to focus on making sure the cab companies manage their businesses to provide the best possible cab service. The city can also use competition among cab companies to weed out the weak from the strong cab operators.

How have other cities done this? One approach is to convert from a certificate-based system (as in Atlanta) to a franchise system. Under franchising, all the cab companies have to compete with each other on the quality of service. Companies proposing the best-quality service are awarded franchises, which are rebid periodically. Los Angeles has long used franchising and several other West Coast cities recently adopted this approach.

Another approach is to focus responsibility for regulatory compliance on the cab companies. Each company is held to a clear set of standards for the quality of drivers, vehicles and response times to customers' calls for service. Through a point system, companies are penalized if drivers misbehave, if the vehicles are unkempt or if cabs arrive late or not at all. In other words, the cab company must manage its own business -- drivers, vehicles and call center. Seattle successfully implemented this approach. The hospitality industry, once extremely upset with cab service, is now quite happy.

These approaches can be combined with various other steps to solve specific service problems. For example:There is no reason that every cab should serve the airport. Orlando and Las Vegas issue geographically restricted taxi permits so that some cabs only serve residential neighborhoods. Drivers who want to work the airport pay higher taxi lease fees for the privilege. Drivers willing to spend their days taking the lady next door home from the grocery store get a break on their leases.

As part of the franchise, Los Angeles makes the cab companies responsible for handling complaints and holds them accountable for resolving each complaint satisfactorily.

Whatever the exact solution for Atlanta, I am sure it includes more than simply stiffer regulations. Effective policy still relies on regulation, but of a different sort than used in the typical crackdown on cabbies. Innovative solutions can reward operators that manage well and provide good service and penalize or eliminate operators who do not. Choosing among these solutions is the best strategy for remedying Atlanta's taxi problems.

Bruce Schaller is a transportation consultant living in New York.