New York City has been home to yellow cabs for more than a century, but that may yet change. Their cartel grasp over New York automobile transportation has been challenged by rideshares, like Uber and Lyft. These companies have had a noticeable effect on the revenue of yellow cab taxi drivers and taxi medallion resell values. Despite the lack of easy access to important, statistical NYC taxi cab data, the effect of rideshare on taxi cabs can still be observed. To see this impact, we must observe the specific loss experienced by taxi drivers to make a conclusion on the state of the yellow cab taxis of New York. Marked down below is YellowCabNyc’s 2013-2015 graph of 5 month average taxi revenue in New York.
That is not the only sign of decline for NYC YTC drivers, as they had not had success in selling their business either. Taxi medallions, issued by the city of New York, controls the supply of cabs, and can be freely resold by their purchasers. As can be seen in the following screenshot image of a public taxi medallion list, taxi medallion prices have reached a low of $400,000, far from their lofty prices of 1.3 million on the same site in 2014. Furthermore, as reported by Danielle Furfaro of the New York Post, to numerous taxi drivers, these medallions were investments that looked very lucrative in the not so distant past. Their sudden dive has caused monumental issues not only for taxi drivers, but also for numerous medallion-lending businesses.
While these allegories and figures bear merit, there is another side to the argument. Fortune magazine reported in July 2016 that NYC cabs are still maintaining their grasp over the New York rides market. Madeline Farber, writer of the afore mentioned report, stated that
“There were 11.1 million taxi trips in April, compared with 4.7 million Uber trips. Rival ride-hailing company Lyft provided about 750,000 trips during the month.
Those 11.1 million taxi rides represent a 9% drop from a year earlier, however, as Uber’s rose 121%. Taxi drivers gave twice as many rides per week as Uber drivers with 91 vs. 44 respectively, per the research.”
This proves that, although Uber and Lyft’s growth were indeed impressive, they were much behind the precedent set by NYC cabs.
The Economist also contended that Uber could be working as a complement service to the incumbent cabs. “Assuming a steady compound growth rate over the two years to June 2015, that yields an estimate of 333,000 Uber rides in June 2013. Adding that to the 14.4m yellow-taxi trips that month, plus a handful of green-cab rides, produces a sum of 14.8m. In contrast, the total this June was 17.5m. This 18% increase makes clear that the market is not zero-sum.” This insinuates that Uber had caused a rise in ridership that would otherwise be foregone without their inclusion in the ridership market.
Despite this evidence, it is hard to see that Uber, Lyft, and other ridesharing apps will not become bigger substitutes to NYC cabs as they gain more market share in the future. They already sport a few advantages enjoyed by customers that their yellow car rivals lack. One such advantage is the use of a pre-existing ridership app, for the convenience of countless riders. This has caused numerous taxi companies to scramble and create their own ridership apps to hopefully gain back some of their consumer base. Perhaps the biggest advantage is the lack of regulation behind these ridesharing companies. Rather than rely on a medallion system to set an artificial supply, the process to become an Uber/Lyft driver is relatively simple and barebones, but it is very effective. Uber drivers usually work part time and set their own hours to their convenience, while still netting a decent profit. These advantages could lead a further decline in taxi ridership in NYC, and significant future market gains in ridesharing companies.