City wants to keep taxi franchise system

The city of Austin doesn’t want to give up on traditional taxicabs, but it acknowledges that they need to adapt to survive in the face of competition from cheaper ride-hailing apps such as Uber and Lyft.

On Thursday, City Council will take up a measure recommended by city transportation staff that would maintain the current “franchise” system for traditional cabs. Under that model, which was first introduced by the city in 1952, the taxi business is strictly regulated by the city, which only grants a certain number of cab franchises.

In exchange for exclusive access to that market, those franchises must submit to a number of mandates, such as providing service all over the city, access for the disabled and strict fare limits.

Jacob Culberson, a division manager for the Austin Transportation Department, told Council members during a Tuesday work session that cab drivers he has met with in recent months have almost unanimously said that they do not want to do away with the franchise system, which they view as crucial to maintaining their already-diminishing share of the private transportation market.

“They really expressed their concern about the potential of the market being flooded,” said Culberson. “Already their rides-per-day has fallen significantly. They’re worried about more of that happening if there is the potential of more taxicabs forming.”

But under the proposed measure, there would be one big change to the franchise system: Cab companies could charge whatever they want.

“Allowing them to set their own fares and flat rates we think will give them a competitive edge,” said Culberson.

A couple of Council members expressed concern about rates that will not only differ between companies, but potentially regularly change. Council Member Ora Houston wondered whether customers hailing a ride on the street would know what they’re going to be charged before getting in the cab, as they do currently.

Transportation staff said that while the proposed language requires cab companies to notify the Transportation Department when they change fares, the language does not specify how much notice – if any – they would have to provide for a price hike.

Mayor Pro Tem Kathie Tovo expressed discomfort at the prospect of a company potentially changing fares from one hour to the next, as is frequently the case for ride-hailing apps. She noted that there are people who rely on cabs to get to medical appointments.

The new ordinance would require companies to post their fares on their websites, but Tovo suggested that the city could put all of the different fares on its own website as well.

Asked if there were other cities that have championed the model that staff is proposing, Culberson said that Atlanta has allowed its eight cab companies to set their own fares for several years. Other cities, he said, are exploring the model.

Council Member Greg Casar said that he was comfortable with the language in the measure. The only change he proposed was related to allowing any vehicle with at least three doors and rear seats, including trucks or hatchback cars, to operate as cabs.

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