Published: Jul 17, 2012 07:00 PM
Modified: Jul 17, 2012 04:59 PM
Fair taxi fares
On the heels of their triumph regulating food trucks out of town, the Chapel Hill Town Council members are poised to tackle our taxi drivers. When they are finished, will we have to go to Durham to hail a cab?Last fall, UNC Student Body President Mary Cooper petitioned Chapel Hill to regulate taxi fares. Students had been complaining that rates were inconsistent and sometimes usuriously high. She requested a mandatory flat rate or zone plan.Town staff has presented a new plan that not only imposes price controls, but myriad other costly requirements. Our taxi industry will find it unsafe to operate under the influence of most of these new regulations.Chapel Hill currently has a taxi ordinance. Cab companies need to buy a franchise from the town and have liability insurance. Company principals must pass a criminal background check. Drivers must be licensed by the town, be proficient in English, have clean driving records and also pass a criminal background check. Cabs need to be clean and in good working condition. Information about the driver and fares must be displayed. Drivers cant refuse orderly passengers, nor reasonable destinations, must honor posted fares, offer receipts, and turn in lost articles.These seem to be reasonable requirements to ensure the safe operation of a company carrying others for hire. Otherwise, to its credit, the town until now has stayed out of meddling in running a taxicabs operations. Vehicle, marketing and pricing decisions have been left to the companies, and ultimately the market.The results are a remarkable Chapel Hill business success story. This little town has 41 franchised cab companies, running 71 taxis and employing at least 100 drivers. Taxis offer great entrepreneurial opportunity, and in that tradition, many of the companies are sole proprietorships and most of the larger operations started that way.Unfortunately, the proposed regulations may throttle that success. New franchises will only be available one or two months a year. Too bad if that doesnt fit your start-up timetable. Franchises will have to have at least two cars. Too bad if you want to go into business just for yourself or if you only have one car now. New costs will be added to running a cab. There will now be fees for franchise and drivers license applications. Franchises will have to be renewed every three years and licenses every two years (plus new fees paid). Companies will now have to buy a business license in addition to its franchise. Vehicles will now have to be inspected twice a year (in addition to the state inspection). Cabs will have to take credit cards. While costs go up, income will go down. Metered cabs will have set mileage rates and other cabs will be forced to use a zone plan. The town will determine fares through a survey of other communities. Students and other travelers to campus will enjoy a separate lower flat rate.Of course, no bureaucratic pricing scheme can substitute for the market. In a business where time is money, congested UNC sports traffic kills revenue, but up charges will not be allowed. Prices will be the same for peak times, like weekend nights, and the long slow small town weekdays. If you upgrade your car, you cant charge a premium. If gas prices rise, you eat the cost. Need costly repairs? Price controls incentivize deferring maintenance and repairs.The unintended consequences of these new regulations may hurt cab service for everyone. The new rules would immediately put five companies out of business, limit new competition, and drive up costs while limiting income. The predictable result will be fewer choices, lower quality and less safe travel. As one owner told the council, companies that charge a cheap price dont have good service and pay less for drivers. Cheaper doesnt work.It is not the job of honest, hardworking taxi drivers to subsidize travel for UNC students and, ironically, the abusive overcharging that prompted the petition will probably continue. Carpetbagger cabs from Durham, often illegally picking up fares here on busy nights, are the worst offenders. These new rules wont scare off these scofflaws.Before the town takes over managing the taxi business, it should start enforcing the current ordinance, which requires that fares be posted and receipts given, then crack down on interlopers operating here. If these current rules are followed, cabbies will be able to choose their price, passengers will be able to choose whether to patronize them and a successful Chapel Hill industry will continue to thrive.
Mark Zimmerman owns a small business in Chapel Hill. He can be reached at email@example.com or on Twitter @markrzim