MTA Board Tables Gate Increase, OK's Cancellation Fee

The SFMTA Board under the direction of President Tom Nolan (photo) put off a proposed meter increase of $9.75 per shift but authorized dispatching services to charge a cancellation fee of up to $10 for no-goes and allowed cab drivers to charge a flat fee of up to $11 per person for shared rides. The Board also amended several sections of the transportation code with the aim of putting an end to illegal brokering.


The Gate Increase ...

... was the most hotly debated item on the agenda. Its presence there was also a little weird.

Director of Taxi Services Chris Hayashi, Dr. Dan Hara, Luxor Cab's Charles Rathbone and (maybe) Hansu Kim of Desoto spoke in favor of the item but they all stated that nobody would be raising the gates now. The reason? Taxi companies are losing drivers.

Then, why raise gates? Director Hayashi said that it was part of the process that Dr. Hara and Taxi Services had been working through and that its time was now. She said that it would give owners the flexibility to make future changes – an idea concurred with by Dr. Hara and Mr. Rathbone. Hayashi and Hara pointed out that the gates had not been raised when the meter was raised in 2011 and an increase thus was long overdue.

The Director apparently has a short memory. The reason that the gates were not increased along with the meter was hardly an oversight. It was a quid pro quo to the drivers for charging credit card fees to them instead of the the taxi companies as it had been done before. And, this deal was brokered by Director Hayashi herself.

In my opinion she deserved kudos for this. It was a job well done. The drivers were charged 5% for the credit cards. The companies ate the gate increase. My math showed that the drivers were much better off under this arrangement than they would have been if the companies had continued to pay the credit card fees and upped the gates. Many drivers didn't agree and stopped taking credits cards in protest.

Tuesday's attempt at legislation started out as another quid pro quo thought up by Director Hayashi. This time she intended to balance things up by finally giving the companies their meter increase at the same time as she removed credit card fees from the drivers by passing a fee onto the riding public.

Fine – except for the ancient wisdom that "you don't raise the price of gas during a gas war."

In the end, Hayashi understood that and nixed the idea of out of raising the drop on the meter but she somehow missed out on a few other cliques.

Raising the gates would be like throwing gasoline on the fire of the drivers' frustration and adding insult to injury from a city whose mayor has slapped cab drivers in the face by embracing illegal taxis.

I don't how the Director failed to see the despairing effect that the mere mention of a gate increase would have on the drivers at this time. Maybe she needs to broaden her circle of advisors.

In any case, several drivers, including myself, expressed our frustrations at the meeting. The general opinion was that raising the gates would chase cab drivers out of the business at an even faster rate then they are leaving now.

The SFMTA Board – especially Director Cristina Rubke and President Nolan – discussed the subject at length with Director Hayash and Dr. Hara before finally deciding to go ahead with the rest of the agenda and putting off a possible gate increase for another six months.

Wise choice.

In my humble (Ha ha – have you ever met a humble cab driver?) opinion, any gate increase should be another quid pro quo. When passengers are ready to pay an electronics fee to cover credit card charges, the companies can get their gate increase ... assuming of course that the arcane and antiquated gate system is still around.

How can this come about? How can we compete? Complicated questions? The cancellation fee is a step in the right direction. The universal app will be another. With 2,000 taxis on the same system we can start taking back the business we've lost.

Meter Increase??? Gate Increase??? No-Go Fee. Technology Fee. ETA.

All the above and more were discussed at a recent Town Hall meeting.

On May 31, 2013 Dan Hara will be handing in his final recommendations, which will include whether or not there should be gate and/or meter increases. There will be Town Hall meetings to discuss the issues on June 11th and the MTA Board will look at and possibly vote on the proposals on June 18, 2013.

Not to editorialize but:

 1. No businesspeople in their right minds would raise their rates when they are being successfully underpriced by their competition.

2. It's time to get rid of gate fees and replace them with a split of the meter. I've been saying this ever since I was first hired by Yellow Cab and saw the corruption and incompetence that the gates & gas system caused. And I repeated my ideas to the MTA the moment they took over. The bottom line is that a gate system makes leasing to drivers the business of cab companies - not picking up customers.

There are companies like Desoto, Luxor and Green who consciously try to give good service but they are in the minority. I won't rant about the details. I've already done this enough. The primary problem is simply that the profits and losses of the companies are not directly linked to the amount of business that they do. If the meter were split, the MTA wouldn't have to conduct arcane studies to find out which companies were good and which were bad. All that would take care of itself - and service to the public would drastically improve.

I've said this so often that I sound like a crank but the future lies with me. (See Uber. It might also be a good idea to take a Business 101 course along with a double dose of common sense.)

Electronic Taxi Access (ETA) et al.

I didn’t catch the entire meeting and Director Chris Hayashi (photo, hand) was still presenting the proposals when I left so I can’t give definitive summary. The final plan won’t be presented until May 31^st but the following covers what little I do understand of the system.

1. All available taxis will appear on the map of a customer’s smartphone.
2. The MTA itself will create no app but rather will co-ordinate hails from Flywheel, Uber's taxi app and other legal apps.

3. All the information from the individual apps will be routed through a central system in order to appear on the smartphone.

3. The exception will be calls to dispatch services and e-hails from single company apps like Luxor or Desoto’s.

     A. However, these calls and e-hails will be integrated with the ETA system so that only one cab will be sent to each order.

In other words, this will be the centralized dispatch system that drivers have spent thirty years lobbying for.

In addition:

1. The App Fees will be paid by the customer.

2. There will be a Technology Fee to be paid by the customer instead of credit card processing fees paid by the drivers.

3. A $10 No Go fee also will be automatically deducted from customers’ credit card if they aren’t there.

4. The “Response Time Fee” listed on the white board above is being renamed a “Premier Service Fee.” It will be paid to a driver if his or her taxi gets to a customer within a promised time like under ten or fifteen minutes. Yes this does mean that a driver will get a bonus picking up a ride in time.

Needless to say there are criticisms:

1. ETA won’t improve service because taxi drivers will take a flag before they will take a dispatched call. As the saying goes, a bird in the hand is worth two in the bush.

Well, that depends upon the birds in question doesn't it? Seriously, if you think about it, you are often closer to dispatched calls - unless you spend all your time in Union Square.

Take my situation for instance. I start driving from the inner Bayview at 4 pm. It takes me five minutes to get to the area around Zynga and Adobe where I can pick up flags, and another three to five minutes to get to either Market Street or the cabstand at Cal Trans. All that time I'm within five minute or less of dozens of businesses where people might want taxis.

The unwritten rule is that a driver shouldn't take dispatched calls during rush hour because most of them will be No Go's. The reasons for this are that you don't how old the orders are and the people have probably called three or four companies.

With ETA both these problems disappear. Your cab will be the only one sent to the order and you'll get the No Go fee if the party isn't there. In addition, with all hails going through one dispatch system, you'll have at a minimum of three times more orders to choose from.

2. This will discriminate against people without smart phones or with Paratransit cards.

The orders will be dispatched in such a way that a driver can’t tell what type of order it is.

3. If so, drivers won't take the hails because they might not get a No Go fee.

This comes from the meeting. Cab drivers, man. So many of us look only at the empty side of the hourglass. Eighty per cent of the people in S.F. have smart phones and people who don't have them don't take as many taxis as people who do. Furthermore, No Go's on Paratransit rides are rare. 

The percentage of No Go's will be extremely rare on with ETA and the odds of getting the fee if the customer isn't there are better than 90%.

The Age of the Dinosaurs...

... reputedly passed over 65 million years ago but a few survivors are hanging on in the taxicab business in the personas of John Lazar and the management of Yellow Cab.

Mr. Lazar reputedly killed Open Taxi Access a few years back and is out to waste ETA as well. The problem for him is that it's not as easy to buy politicians as it was back in the day. With Lyft and Uber on the scene the price of corruption has sky rocketed.

On the other hand, maybe Lazar is getting a kickback from Uber and Lyft. The balkanization of the dispatching services in this town is what opened the floodgates for the illegal apps in the first place. The adoption of an ETA system would be the best weapon we could possibly use against them.

But the President and General Manager of Luxor Cab is still living back in the Jurassic Age when the companies with the most medallions necessarily made the biggest profit. If he succeeds, all he's likely to win today is a large cut of a dying industry.

SFMTA Board Okays Meter Increase and 87 New Taxis

The threatened honkathon was a non-event yesterday.


Tariq Mehmood claimed that he called off his taxi strike to give the SFMTA to make changes he liked. But, I think he was really reading the same tea leaves I was. I had lunch in the plaza across from City Hall at 12:30 P.M and, in the half hour I sat eating, only 3 cabs came by looking for a protest.


But on to the business that was.


1. The Meter Increase


The topic for a vote by the SFMTA Board was actually whether or not to increase the flag drop by 40 cents to $3.50. The MTA had already okayed a meter increase of 10 cents for every 1/5th of a mile and 10 cents per minute of waiting time.


The measure was a slam dunk. Not only did the board pass it with a unanimous voice vote but hardly anyone spoke against it. A few people expressed fears that the raise would lose business and others asked for cost of living reviews every couple of years but that was it.


The raise of both the meter and the drop will equal about a 24% increase in the cost of a fare.


2. The second vote was on whether not to put out 50 new Single Operator part-time medallion permits, 25 new medallions to drivers on the List, 2 temporary electric vehicles and to sell 10 new medallions to drivers on the list.


The measure passed 6 to 1, but the ideas of the MTA selling medallions and leasing the  Single Operator Permits proved controversial.


Mark Gruberg  and Barry Korengold both attacked the idea of the SFMTA setting a precedent by selling medallions saying that the organization had a conflict of interest. Possibly - but neither of these speakers addressed the fact that the 10 new medallion would be part of the 60 medallions that the Pilot Plan allows the MTA sell - more than 20 of which have already been sold.


 The 50 Single Operator Permits, on the other, took a lot of flak.

• Rebecca Lytle of the San Francisco Federal Credit Union and Desoto Cab owner Hansu Kim both experssed fears that allowing the MTA to lease taxis would undermine the value of taxicabs as well as lead to a future takeover of the taxicab business by the MTA.
• Desoto manager Athan Rebelos thought that the idea of the permits was not sound from a business standpoint. 
• Medallion holder Christopher Fulkerson expressed fears that the drivers of these vehicles would lose money.

The most entertaining objections, however, were put forth by John Lazar  of Luxor Cab and Jim Gillespie of Yellow Cab. 

First, they tried to delay the measure by claiming a legal technicality that the MTA's attorney noted but thought unimportant.

Then, the owners claimed that they hadn't had time to study the plan for Single Operators and said that the permits should not be put out without PC and N hearings. Gillespie also claimed that the subject hadn't been discussed at Town Hall or TAC meetings.

Tara Housman, John Han and I all pointed out that the measure had been debated at several Town Hall meetings in addition to being debated, voted on and passed by the Taxi Advisory Council, of which Gillespie is a member.

The idea of Lazar and Gillespie asking for PC and N hearing is comic. This dynamic duo has spent much of the last year knocking on back-doors trying to get 500 cabs put on the street WITHOUT PC and N hearings.

President Nolan of the MTA Board said that both PC and N hearing and cost of living meter increases should be done on a regular basis.

John Han (photo) was praised by members of the board for his efforts to make the Single Operator Permits a reality.

A Review of the Protests: A Unified Front?

 Ursula, "He's got go anyhow."
Gudrun, "I know - ccertainly he's got go. Unfortunately, where does his go go to?"
                                              D. H. Lawrence Women in Love

Cab driver and medallion holder Brad Newsham (photo, center) has been charged up by the protests at City Hall and by Yellow Cab driver Tariq Mehmood's ability to organize demonstrations.

"Tariq ... has at least tapped the passion of the larger driver body in ways that I, and others, have hoped to do over the years, but at which we have failed miserably," Brad wrote to me in a comment.  "I hope we can use this moment of passion to throw off the MTA's yoke, to reject and demolish their plan to use the cab industry as a cash cow ... And I hope we can find some unity of purpose as we move forward."

Judging from the above and other statements he's made, Brad appears to think that if enough drivers passionately unify to "strike" often enough and loud enough the "yoke" and the "cash cow" will somehow magically disappear.

You'd think the unity of purpose would have to come first. But here are few things more addictive than an adrenalin rush.

I couldn't help but notice, for instance, that a great deal of that "passion"of the last "strike" was directed, not against the SFMTA or their policies, but by one group of drivers against others. Newsham himself (along with fellow protesters like Mark Gruberg and Rua Graffis of the United Taxicab Workers and others) was slammed by Mehmood and his followers for supporting Deputy Director of Taxi Services Christiane Hayashi whom Tariq pathologically hates.

Other drivers were booed by some taxi drivers at the MTA Board meeting following the protests for supporting a plan that had been negotiated by taxi drivers (including a few of the one's doing the booing) at a series of Town Hall Meetings.

In addition, Mehmood and Newsham have diametrically opposed ideas of how the cab business should operate. Brad wants a return to the days of Prop-k when medallion were not sold but given to drivers on a waiting list. Tariq wants open auctions.

A Divided Industry

This is not a business where a word like unity makes much sense. The normal divide between owners and workers is but a hint how split this industry is. There are divisions between:

• Large cab companies and small cab companies.
• Medallion holders and companies.
• Medallion holders who bought their medallion prior to Proposition K (Pre K's) and those who "earned" their medallions (Post-K's).
• New medallion holders who've recently bought their medallions and other medallion holders.
• Medallion holders and non-medallion holding drivers.
• Non-medallion holders who are on the Waiting List to either get a medallion or buy one and non-medallion holders not on the list. 
• Drivers who work for companies with good dispatching services and those who don't.
• Yellow Cab driver Ivonne (photo) and the rest of us.

And none of the above takes into account the interests of the City, the MTA or the general public.

A Short Study in Complexity; or, How Not to Negotiate

MTA Director Malcom Heinicke wanted Peak Time Permits that were run by the taxi companies to be part of a compromise plan to add more cabs to the taxi fleet. This has been talked about for 30 years because it makes sense. There is way too much business for taxis to handle on Friday nights and way too many cabs on the street on Monday nights.

But at the Town Hall Meetings nobody wanted such permits - least of all the taxi companies. Instead the idea of Single Operator Permits (SLP) held sway. The SLP's would serve the same purpose except that they would be operated by cab drivers instead of companies  - specifically drivers who had worked in the industry for a long time but were not yet eligible to earn or buy a medallion.

It seemed like a win win win. More drivers would become their own bosses, there would be no more cabs on the street during slow times and the public would be served by having more taxis when needed.

A group of non-medallion drivers on the Waiting List presented some opposition because they wanted all new cabs to go to them. But the SLP concept was liked by most people at the Town Hall Meetings including Tariq Mehmood. There were different ideas, though, concerning how the SLP's should operate.

Mehmood and his disciples wanted the cabs to be run at fixed times. Most other people at the meetings like the ideal of a more flexible time frame. 

I won't go into the details but the logical thing to do would have been to try one solution and, if that didn't work, to try the other.

What Tariq Mehmood did instead was to take his clique into another room, come back, claim that all nine of his people favored his plan and that they were the majority so the majority should rule.

Other people at the meeting disagreed with them so Mahmood included an attack against Single Operator Permits as part of his "strike."

Enough Protests Already

A major reason for having a protest is to have the Powers-That-Be negotiate with the workers. The SFMTA has indeed done this with a series of Town Hall Meetings.

A more important reason is to get the Powers-That-Be to change their policies. The MTA has done this by: 

• Granting a 20% meter increase.
• Putting an end to the need for waybills.
• Putting Open Taxi Access on the agenda.
• Trying to reduce the 5% credit card fees.
• Re-examining their policy on back-seat terminals.

 On the other hand, it's not realistic to expect anything more than a compromise. The City and the public have their interests too. It's also childish to expect complicated issues to be solved immediately. It might take months to negotiate lower credit card fees, for instance, and (partly because of the constant protests) there hasn't been time to complete a study on the effects on the public of back-seat terminals.

The most recent protest was probably already one too many. The MTA was (and is) already negotiating with the drivers - which is more than any other Power-That-Be has done in the twenty-seven years I've been driving taxis. The one positive - looking into 3% credit card fees - could have been achieved without a protest.

There also were negative aspects to the "strike" that people like Newsham choose to ignore (see next post.)

I have a simple question. In an environment of "passion"as opposed to compromise or thought, in a world where people"strike" over petty details, how does one decide which group of strikers and which policies to support? 

The truth is that it's simply not possible to balance the various interests and solve the complicated problems in this business by honking horns and shouting. 

Next: Perpetual Strikes or the Fine Art of Shooting Yourself in the Foot.

Review of the Protests: Successes

Friday, July 8, 2011

As entertaining as I found the recent protests, I'm a believer in real politics. Fun is fun but was anything accomplished?

If the purpose of the protests was to give drivers a chance to vent about injustice and create a feeling of empowerment, the demonstations were a resounding success.

If the purpose was to bring the SFMTA to a bargaining table, they were also successful.

If the purpose was to change certain working conditions, they were successful in some ways, not so successful in others. For this post, I want to look at the successes.

Tuesday, July 12, 2011

I actually started this post last week but got sidetracked. I forget to take it off the blog and I've already got comments from people who apparently think that I don't see any successes. Not True. Sorry.

Town Hall Meetings

The most successful aspects of the tumult were the Town Hall Meetings themselves which gave drivers a chance to give their opinions on credit card charges, back-seat terminals, electronic waybills, etc.

It could be said (and was) that Taxi Services should have held these meetings before legislating major operational changes but such criticism is a little unfair. The subjects were discussed at a couple of TAC meetings and there was at least one previous Town Hall Meeting concerning various PIM choices and credit card fee options but almost nobody showed up.

This is typical. In addition to the other meetings, Taxi Services also recently held a Town Hall Meeting concerning the future of the Pilot Plan (potentially much more important than anything currently being discussed by protesters and there were only ten or twelve drivers in attendance). In this town, most cab drivers don't pay attention to taxi politics unless they're traumatized.

But I digress ... every protest (and the ensuing meetings) did stimulate at least one positive result for the drivers.

Protesta Número Uno

The major proposal that came out of the first series of Town Hall Meetings was a meter increase that should work out to around 22%. This was already in the works but there is no doubt that protests speeded up the process - possibly by several months.

Many in the taxi industry (including myself) have said that NO GATE INCREASE should accompany the rise on the meter. The Taxi companies have already been given a quid pro quo by the passing on credit card fees to the drivers.

If you do the math (assuming that half of a driver's rides are credit cards) this means that cab drivers should be getting a 19% or 20% raise - even if they are charged a 5% fee on credit cards.

Protesta Número Dos

As you may recall, some companies, supervisors and others were pushing to put as many 500 taxis on the street while these Town Hall Meetings took place. Coming up with a compromise plan was one of three proposals that come out of the discussions and the following TAC meeting

1. 25 Single Operator Permits, 2 Electric Vehicles should be added to the taxi fleet and 25 Medallions should be given to drivers on the Waiting List. This has since been magically changed by the SFMTA to 50 Single Operator Permits, 2 EV's, 25 to the List and 10 medallions to be sold by the MTA.
2. There was a major compromise on Electronic Waybills proposed by Hayashi.
3. A recommendation that the MTA Board reconsider Open Taxi Access.

Protesta Número Tres

The great time out protest - which was planned at least three weeks before it took place - lead to exactly one accomplishment.

1. SFMTA Board President Tom Nolan asked Hayashi to see if the credit card fees could be lowered to 3%. 

He also said that it was time for the Board to take another look at Open Taxi Access but that was the result of the previous TAC.

That's it kids!

Next: Not so positives.

Meter Increase - Yes, Gate Increase - Nyet, Nine, Buyao, No Way Jose

Traditionally cab companies have waited for a few months after a meter increase to implement a gate increase so that their drivers could a make a little extra money but John Lazar, President and General Manager of Luxor cab, isn't one to stand on custom. He's calling for a gate surcharge the instant the meter raise goes into effect.

Lazar and some other company owners argue that they need more money in order to provide services like computerized dispatch. But companies like Luxor have been relieved of millions of dollars worth or credit card charges that are already being passed onto the drivers.

 In addition, taxi companies have also had two gate increases of $5 and $7.50 since the last meter hike.


Hybrid Surcharge


The $7.50 is supposed to help cab companies cover the extra charges of purchasing hybrid cars. However the price of hybrid vehicles declined to the point where the cost was about equal a few years ago. And, although hybrid prices have gone up again, the difference is only $2,000 or $3,000.

Time for a little math:

• $7.50*2 per shift = $15 per day *365 = $5,475 per year.
• This means that this surcharge pays the companies from $15,000 to $18,000 over life of the vehicle.
• If the car is new - subtract the $3,000 extra cost of the hybrid from the surcharge and you can see that companies are making $12,000 to $15,000 per cab off the last $7.50 gate levy.
• Owners like Lazar, who buy their cars used, are basically paying for the entire cost of the cabs simply from this hybrid jack up. 

Unconscionable 

This is a big word. My dictionary defines it as "not right or reasonable, excessive, wrong, unethical, unfair."

All of which accurately describes taking a much needed wage raise away from drivers - in terms of both a gate increase and credit card charges - and giving it to taxi companies who've already taken more than enough relief.

Thoughts on the Meter Increase

The SFMTA Board okayed a meter increase of ten cents for every 1/5th of a mile and 1 minute of waiting time. They will take up the question of an increase in the drop from $3.10 to $3.50 at the next meeting. For more complete coverage see John Han's blog.

Here I'm simply going to expand on the short talk I gave to the SFMTA Board.

The Need for the Meter Increase.

• Many people have pointed out that the cost of living has gone up 19% since the last meter increase.
• The increase the Board passed (including the additional 40 cents on the drop) would equal 22%.
• Therefore - it's simply a matter of catching up.  

After the meeting, I went to work and discussed the increase with my customers. Of course nobody likes the idea of paying more for anything but the people I talked with accepted the raise without much complaint - making me think that the amount we settled on was just about right.

Nix on a Gate Increase.

The vote hadn't even been taken before John Lazar, President and General Manager of Luxor Cab, stood up and pushed for a gate increase of just 75 cents a hour so that Luxor could keep on giving it's full service including computerized dispatch.

What a salesman? 75 cents an hour doesn't sound like much does it? Let's take a closer look. That means:

• $7.50 a shift or  $15.00 per day = $5,475 per year per driver profit for Luxor.
• $7.50 a shift paid by drivers * 5 shifts per week = $37.50 *52 weeks = $1,950 per year out of the drivers profits - off the top.
• If non-medallion drivers average $25,000 per year, a 20% meter increase = $5,000.
• Meaning that almost 40% of the income boost would be eaten up by the gate increase.
• Meaning that they've already more than lost their cost of living increase.

More later.