In an effort to help Long Beach Yellow Cab (LBYC) remain competitive with rideshare programs that have cut into revenues in recent years, the Long Beach City Council voted unanimously Tuesday to ease regulations on the company and allow it to increase its fleet size in the city.
With the 9-0 vote, LBYC will increase its fleet size by 24 to 199 taxicabs operating in within the city. The move will also allow for the company to offer previously forbidden promotional ride fares and discounts, the same kind employed by its direct competitors Uber and Lyft. The company is also rebranding its fleet with a new logo and will look to implement the use of a mobile app to make their services more accessible.
“Our goal is to have a business model that allows us to serve each and every customer who wants our service,” said LBYC General Manager William Rouse. “The current business model does not allow that. In the end, it’s going to be the customer who benefits from better service.”
Mayor Robert Garcia noted that the action taken by the council at Tuesday’s meeting was the first of its kind, despite an ongoing nationwide discussion of how the sharing economy is changing the taxi industry. The vote swings some momentum back to the cabby side of the industry-wide struggle between ride-share companies and traditional taxi cab operators while providing cab drivers with some wiggle room in charging lower fares to remain competitive.
“This is not about not supporting what’s happening in the sharing economy,” Garcia said. “This is about supporting a community partner [who]’s been with us for a long time and ensuring that those services, that are only provided by taxi companies—the services to the disabled, services on election day, services for seniors, easy access for tourists—remain in the city and ensure that we remain competitive across the country. This is a very important and significant moment and I'm really proud of Long Beach taking the lead on this issue.”
One of the biggest issues at hand in the ongoing battle between cab and ride-share companies is the regulation of the business, or lack thereof. Companies like UberX and Lyft, the most prevalent competitors of LBYC, are able to undercut cab pricing because their drivers, until recently, were not obligated to carry insurance for passengers, their fleets aren’t required to be natural gas powered or hybrid electric like LBYC cabs and its drivers aren’t subject to fingerprint-based background checks. Rideshare companies also allow for price surging, allowing drivers to charge higher fares during peak hours, a practice that has no cap on the multiplier employed by the driver.
LBYC operates under the Long Beach Municipal Code and has been regulated by the council since they granted LBYC exclusive license to serve the city’s taxi needs in September 1998, meaning the fares charged and operating procedures are dictated by the council. The base fare of $2.85, also set by the council, is in addition to a charge of $2.70 per mile when riding in a LBYC vehicle.
Rideshare companies like Uber and Lyft fall under the purview of the California Public Utilities Commission, so the council has no oversight over their fare schedules. Both Uber and Lyft charge substantially less per mile (UberX $0.90, Lyft $1.10) and have a fraction of LBYC’s base fare, if charging one at all. That, combined with mobile technology that allows users to both hail and pay for a ride using a smartphone application, has many in the taxi industry worried they could be rendered obsolete.
However, because the city can control the business that enters into the Long Beach Airport (LGB), the cab companies have maintained LGB as one of their last remaining strongholds in the city. In contrast, cities like San Francisco and Los Angeles have completed steps, or are nearing deals that will allow for ride sharing companies to pick up passengers at their airports.
“We as an industry find ourselves the reluctant participants of one of the great public policy debates that’s going on today,” Rouse said. “Hardly a day goes by that you don’t hear the news cities everywhere are struggling with what to do with their taxi cab companies and how to address issues of the un-level playing field that exists.”
Third District Councilwoman Suzie Price lauded the company for having proven itself time and again as a responsible business within the city and stated that given the long-running relationship between LBYC and the city, the investment in the company was a “venture worth taking.”
“The industry is absolutely changing and there is no question about it,” Price said. “I want to give this particular business an acknowledgement for understanding what it means to stay current and make some significant changes to your operations and your business model in light of the changing industry.”
Rouse said the unprecedented steps taken by the council tonight, as well as the council’s work with the company on a pilot program to expedite the processing of its drivers, would be integral in keeping LBYC relevant when it comes to providing public transportation to a younger and growing demographic.
“I want to thank Long Beach for taking the lead,” Rouse said. “This is the first time a city has looked at constructive ways to relax regulations while maintaining all benefits of taxi service.”