Taxi companies across the United States have been shedding drivers, filing for bankruptcy and closing up shop as a result of competition from app-based, ride-sharing services such as Uber and Lyft.
“Since the ride-hailing services began operating in Southern California three years ago, the number of L.A. taxi trips arranged in advance has fallen by 42 percent, according to city records, and the total number of trips has plummeted buy nearly 30 percent,” the LA Times reported in April 2016.
And in San Francisco, where Uber and Lyft are based, the largest taxi service, Yellow Cap Co-op, announced in early 2016 that it was filing for Chapter 11 bankruptcy, according to theverge.com.
“The rise of Uber and Lyft has left cab owners across the country feeling the pinch,” the article states. “Drivers are flocking to the app-based enterprises, lured by the promise of more riders and a flexible schedule.”
A January study concludes that while Uber doesn’t necessarily put cab companies out of business, taxi drivers earned less per hour because of a “sharp reduction in capacity utilization in traditional taxi services … presumably due to increased competition from Uber.” Self-employed drivers, however, had an increase in wages.
Anecdotally, plenty of cab companies are having trouble.
Barwood Inc. operated the largest fleet of taxis in Montgomery County, Maryland, when it filed for bankruptcy protection in December of last year.
It was the second go-around in bankruptcy court for Barwood in the past ten years, but this time its ability to sell personal vehicle license for owners to operate taxies in the county had “depressed dramatically since the entrance of Uber and Lyft in recent years,” according to bethesdamagazine.com
The bankruptcy filing city the unwillingness of the Montgomery County Council to regulate Uber, Lyft and other similar operations.
And in Massachusetts, Red Cab went out of business in 2015, amid “competition from app-based transportation companies like Uber,” according to brookline.wickedlocal.com.
Joe Bethany, who owned Red Cab, “said the immediate reason Red Cab went out of business was because it couldn’t pay its insurance bills. But he said the fundamental reason the company closed down was because companies like Uber and Lyft, which have taken away fares from taxis,” according to brookline.wickedlocal.com.
The owner of the Yellow Cab Co. of Cleveland isn’t blaming Uber and Lyft for putting him out of business, but he acknowledges that the upstart services have created an uneven playing field when it comes to transportation services.