Risking a taxi revolt: business survival in Brookline

Dawdling over medallions: Brookline’s government leaders could soon regret dawdling over taxi medallions. Had they acted seven years ago, when first presented with a taxi-medallion plan, they might have set a program in motion and already collected revenue. Instead, they left their work exposed to risks of business changes. Changes have been rapid, and they are accelerating.

Imagine being in business ten to ninety years, like the Brookline taxi companies. A change no business expects is for someone to come in and demand millions of dollars: “Pay up, or your business will be shut down.” Situations likely to come to mind are “protection” rackets and “shake-downs” by gangs. Businesses that have been threatened will likely be trying to figure out–not how to prosper–instead, how to survive. They will look at their alternatives.

Livery vehicles are a common alternative to taxis–particularly strong around New York City but also making inroads across New England. Fares for trips are agreed in advance rather than measured by meters. They can’t pick up passengers from street hails or taxi stands, but they don’t need local licenses. Like the taxis in Brookline and most other suburban markets, until recently they have usually been summoned by telephone.

Summoning rides via the Web became popular over the past several years, particularly with software running on “smart phones.” Uber of San Francisco now operates such services in about 30 countries and has attracted over $1 billion in venture backing. Hailo of London has recently been setting up operations in North America. Both firms operate in the Boston area.

Fighting progress: Cambridge tried to block Uber, and William Evans, the police commissioner in Boston, has been seeking more public regulation of “gypsy cabs,” as he called them. However, the state’s Division of Standards found Uber operations were allowed under state laws.

With emergence of technology, Brookline’s government leaders lost leverage to impose high-priced medallion licensing on taxi operators. One alternative for taxi operators is to set up livery services, equip them with technology and promote them to customers. Boston Cab has set up its own Web-dispatch, competing with Uber and Hailo using licensed taxis.

Switching sides: A few former Brookline taxi drivers are rumored to have switched sides, driving livery vehicles with contacts from Uber, Hailo, Lyft and Sidecar. They might not get as many fares right away but have lower operating costs. With their longstanding business patterns and name recognition, Bay State Taxi and Red Cab may not be able to change as quickly–but then they might not need to.

A deal approved by the Board of Selectmen in 2013–still not implemented–allows current taxi operators some medallions with low fees and other medallions with what might have been seen as outrageous but fixed fees, if there were going to be business as usual. According to the deal, the fees for the latter group of medallions are due three years after the program starts, or those medallions have to be turned in.

Brookline taxi operators would need to start with a livery fleet of about 75 vehicles, if maintaining the current quantities of vehicles. Initially, they could keep 106 of the current 182 vehicles running as licensed taxis for $45,000 in medallion fees, spread among them. The others could be repainted and fitted with technology to work as livery vehicles.

Taxi operators would need to convert most of their taxi business to livery in just a few years, so as to end up with 45 licensed taxis–the ones with low-priced medallions. Otherwise, Brookline would be demanding about $4.6 million in medallion fees to keep an additional 71 vehicles running as taxis. Four small taxi operators might be out of luck here; no low-priced medallions were slotted for them.

After the revolt: Could Brookline get by with only 45 licensed taxis? Although that might seem far-fetched, the town provides taxi stands for only about 30 vehicles. They are found in and near commercial areas, where most flag service begins–from stands and street hails. That comprises less than a quarter of taxi trips now starting in Brookline, so it probably could be maintained with only a quarter of the current taxi fleet.

The rest of the business–now coming mostly from telephone orders–could be served by livery vehicles that don’t need licenses from the town. Today, there are many ways to coordinate vehicles other than telephones and radio rooms–based on modern computers, data communications, wireless, GPS and Internet.

Pipe dreams: Brookline’s government leaders seemed to think they owned the market. Selling and auctioning medallions, they would rake in millions. If they tried that now, they might find no buyers at high prices. Since technology offers other ways to do business, it’s unlikely Brookline’s taxi operators will simply let the town strong-arm them into forking over a fortune, just to keep doing business the same way.

Taxi operators are likely to find it worth substantial efforts to escape the town’s clutches. With such a development, Brookline would stand to lose most of its influence over service quality, quantity and safety. It might not be able to sustain wheelchair-accessible vehicles or special services.

In the first Brookline taxi-medallion plan, Bruce Schaller, now a deputy commissioner in the New York City Transportation Department, tried balancing: (1) service to Brookline residents, (2) prosperity for the taxi business and (3) revenue for the town. Later, service and prosperity were neglected, while money took over. Today, years of sluggish management have left Brookline peddling buggy whips, in an age of jetliners.

– Craig Bolon, Brookline, MA, July 26, 2014


Mike Beggs, Hailo’s black car service like ‘stabbing taxi drivers in the back,’ Taxi News (Toronto, ON), July, 2014

Joe Shortsleeve, Boston police commissioner questions safety of Uber, WBZ (Boston, MA), February 25, 2014

Geoffrey Fowler, Testing UberX, Lyft and Sidecar against a cab in six cities, Wall Street Journal, March 12, 2014

Brookline, MA, Board of Selectmen, Minutes, September 24, 2013, see “TAXI MEDALLION PROGRAM”

Kyle Alspach, Taxi-hailing app startup Hailo gets 1,200 Boston cabbies on board, Boston Business Journal, April 4, 2013

Scott Kirsner, Test-riding Boston Cab’s mobile app, Boston Globe, March 19, 2013

Michael B. Farrell, Cab drivers irate as ban against livery app reversed, Boston Globe, August 16, 2012

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