In NYC, every taxi has a medallion, but I understand they fetch in the hundreds of thousands and even over a million now. Do the medallion owners run a fleet of taxis or is it 1 medallion per taxi? Or then do some owners own many medallions? It also doesn’t like a good investment that someone would pay a million dollars for a medallion with fares and then having to pay drivers, compensation, etc but I guess over time it’s worth it.
There’s one medallion per cab.
The medallion is the right, or franchise, or whatever you want to call it, to operate a yellow cab in New York City. Yellow cabs are the only cabs that can pick up fares on the street in the borough of Manhattan (and, until recently, anywhere in the city, until the creation of the so-called “green cars,” which can pick up fares in the boroughs other than Manhattan, but not in Manhattan).
Fares are regulated by the City’s Taxi and Limosine Commission, which also sets the rules (and enforces them) for cab operation in the city. The TLC also requires and issues a special operator’s license. You can’t drive a yellow cab without a hack license from the TLC (in addition to a regular driver’s license, of course).
Cab fleets own any number of cars, and each car must have a medallion. Owner/operators own their car, and their medallion. Fleet medallions and owner/operator medallions are, I believe, not exactly the same, and an owner/operator can’t buy a medallion from a fleet owner (or vice versa).
I admit that I don’t get the economics of the business. The going rate for a medallion seems awfully high when compared to the revenue a cab can bring in.
Former NYC cabdriver here (way back in the 80s).
Presumably the medallion can be sold at some point, so the profit from using just has to support the opportunity cost, interest, whatever you call it. The price is increasing, so there is probably an aspect of speculation to it. Just don’t be the one left holding the medallion when the killer app drastically reduces the need for cabs.
This article calculates that at a realistic estimated amount of revenue per year, and factoring in depreciation of the car and other expenses a $1m medallion represents around a 7.5% yield investment. That basically makes it seem pretty worthwhile for an investor, it’s a lot of worker for a driver-operator, but if you’re a fleet owner and have a few of them that’s a pretty stable income stream. The fact that NYC is very conservative about creating new medallions (thus limiting total number of legal yellow cabs) your income stream is fairly protected.
But of course “black cabs” (and services like Uber) don’t need medallions since they are not picking up fares off the street. But with the Uber app making it so you can “virtually” hail an Uber cab it’s pretty close, and I believe because of that there have been legal wranglings in most major cities over services like Uber.
Uber and Lyft and the like are shaping up to be serious competition to the controlled-access taxicab business market, and cab owners or corporate taxi fleet owners are up in arms. Perhaps y’all have been seeing some of the articles about it. It’s become a major shitstorm.
Medallions are a semi-monopolistic taxi racket run by municipalities, to keep a lid on the taxi market. The people who own medallions, OTOH, have a big investment in the same, and the outfits like Uber and Lyft threaten to devalue that asset.
A sampling of some articles:
[ul][li] Taxi medallions have been the best investment in America for years. Now Uber may be changing that.[/li][li] The Tyranny of the Taxi Medallion[/li][li] Is Uber Undermining New York City’s Taxi Medallion Racket?[/ul][/li]In several cities in several states, the police are not only ticketing Uber and Lyft cars, but impounding them. Uber car impounded, driver ticketed in city sting. This isn’t exactly news: This article is dated January, 2012. A quick google search finds other cities doing this too.
It is happening everywhere where there is a regulated taxi authority.
London, Paris and in Germany. Companies like Uber are seriously disrupting the monopoly that exists as a result of regulation and there are regular battles in the courts.
The Taxi drivers are fighting back, but the authorities are reluctant to hold back competition and innovation. Uber is about as popular with taxi drivers as AirB&B is with hoteliers and Amazon with booksellers, and these innovative companies have well funded legal teams to explore every legal avenue towards getting the freedom to operate. If they don’t get traction in one city they try another. They are playing the long game and the taxi trade has to get smarter.
So, maybe the future is not looking very bright for regulated taxi licenses and the value of these medallions.
Sad to say, it seems to beyond the wit of taxi drivers and companies to support their own app in competition with Uber. In London there was an attempt to do this with a service called Hailo, but it faced a near riot when they tried to open it up beyond the regulated taxi trade.
Yes, there’s been a lot of grumbling about services like Uber seriously disrupting, if not supplanting, taxi cabs in large cities. I sincerely hope not. This surge pricing nonsense can blow me.
In NY, the situation is that you can hail a taxi in Manhattan, but you cannot call for one. In the outer boroughs, you still cannot call a taxi and it is almost impossible to hail one either, since they want to return to Manhattan as fast as they can. Some drivers won’t even take you to Brooklyn, although they are legally obligated to (they always have some excuse like that they are going off duty and live in upper Manhattan). So you order a car service, which seems to be legal, but they cannot pick up on the street. Seems like a system designed to be dysfunctional. I haven’t had any experience with the green taxis.
Yeah, the last time I was in NYC was last fall and I had heard about Uber, so installed it on my iPhone. When I needed a cab i tried it and it said something like that…“surge in demand” and anyway the fare was obscene, like 3x as much as it’d cost to hail a yellow cab and since I was in Manhattan that was easy enough to do. I’m guessing sometimes it must be more convenient/price competitive but at that point you were paying a massive premium to use the service.
Yellow cabs (hack cabs) and Car Service (“black car” or for-hire vehicle or FHV) are both licensed and regulated by the TLC. FHV isn’t metered, you pay a flat fee assigned by the dispatcher. A green cab (HAIL cab) is a car service jointly licensed to take dispatched rides from their base station AND take street hails in the outer boroughs only.
I don’t know where you got the idea there’s no car service/FHV in Manhattan. There most certainly is.
In London, the regular taxis of the traditional style are the only ones which are allowed to stop on the street and pick up a fare (they are known locally as black cabs). While they don’t have to buy an expensive license, they do have to study the streets of London for a couple of years, which represents a huge investment in time. This is called ‘The Knowledge’ and they are rightly proud of their professionalism. They seldom need to refer to a map or a GPS. They are well regulated and have a special license plate attached to the cab. The rules are well known. They are obliged to accept a fare if it is within 6 miles of the centre of London and all the fares are standardised.
However, they are very fussy. Often they like to stay in the centre of town picking up tourists and business folk going between the business and entertainment districts. If you stop them and have the temerity to ask them to go ‘South of the River’ there will be a sharp intake of breath. Then they come up with manner of excuses to wriggle out of the fare. You have to be very firm confront them with the possibility of a complain to the Public Carriage Office which enforces their code of conduct. London has some of the most expensive taxi fares in the world and this is a major bug bear. These guys make a VERY good living out of this monopoly, their wages are up their with many professional jobs.
There are private hire companies that operate a taxi service by appointment (minicabs) and these are also licensed, as indeed are the drivers. Many of these drivers are beginning to use Uber. It was the prospect of allowing these rivals to use the regulated taxi drivers own app (Hailo) that cause the drivers to storm the office.
For the smartphone generation these car sharing apps like Uber make a LOT of sense.
However…I don’t doubt that they too would like to dominate the market once they have seen off the vested interests. Any government or city hall interested in promoting fair competition in a free market has to decide on its position. Uber seems to have cracked the London market and have fought off the latest legal challenges.
If Uber can do it, so can a lot of other companies. It ain’t rocket science and there are potentially lots of opportunities in market segments that are currently poorly served.
Hopefully the city will get a better taxi service as a consequence.