Five steps to quickly fix Las Vegas’ taxi debacle
The decades-long crisis enveloping our city’s taxis can be fixed in five quick steps.
23 May 2011
- How should taxi long-hauling be enforced? (5-16-2011)
- Taxicab Authority plays fast and loose with open meeting law in administrator pick (4-18-2011)
- Cab fares going up as result of increased gas prices (4-6-2011)
- Long ride to Bellagio sparked taxicab long-haul battle (7-23-2010)
- Taxi industry opposes proposal for flat rates (7-14-2010)
For millions of tourists who visit Las Vegas every year, the first person they meet after getting off the plane is one of the city’s unofficial ambassadors to the world—a taxi driver, 9,500 of whom work in Clark County. The men and women who work for the 16 cab companies under nine owners can set the whole tone of the trip.
Will visitors get an informative driver who not only knows the history, all the quirky personalities of Las Vegas, and every great restaurant, hideaway and hot spot in town? Or will they get some dishonest tool looking to make a few quick bucks by driving them to the Golden Nugget by way of St. Rose Parkway? Will they get somebody who is courteous, friendly and doesn’t smell bad, or somebody who neither knows and nor cares that they can’t charge people for transporting their bags?
One of the reasons the taxi business became a regulated industry in Clark County in 1969 is that the state of Nevada wanted to keep tabs on all of these ambassadors.
But over the years, the industry has gotten lost like a wayward cabbie with a busted GPS.
Charles Harvey became the Taxicab Authority’s newest administrator this month, the seventh in a dozen years. Based on the number of regular dust-ups at monthly board meetings, he’s got his work cut out for him. There are issues galore on the board’s future agendas.
But Harvey and his inexperienced authority board can make a huge difference in the functionality and the perception of the taxi industry with a few quick fixes.
Here are four logical, doable things the board and its staff can do to change the landscape. And, as a bonus, I’ll add one more idea that isn’t quite as simple, but could be an effective cure to what ails the local taxi industry.
1. Fix the long-haul problem. Now.
You hear about it all the time, but the problem never seems to go away. Long-hauling. It’s a black-eye symbol of greed. Like 6-5 payouts at blackjack tables and airline baggage fees, they’ve become the kind of thing that makes people not want to come here anymore. Yet it still happens.
For the uninitiated, long-hauling occurs when cabdrivers take passengers on an indirect route to generate higher fares. The most common long-hauling incidents occur when drivers go through the McCarran International Airport tunnel to get to the Strip or downtown Las Vegas. It’s several miles out of the way, but if there’s a lot of traffic on Paradise Road and Tropicana Avenue, it can be a faster route.
Drivers can skirt long-hauling rules by informing passengers of the alternative routes and that they’ll cost more. Once passengers give drivers permission to take longer routes, drivers are no longer in violation. Because the Taxicab Authority is understaffed, it has a hard time riding herd over long-haulers. To help solve the long-haul problem, the authority needs more enforcement officers.
How do you pay for that?
Rewrite regulations to increase fines. Fine cab companies and drivers. In other words, be tougher regulators. Drivers often complain that they are compelled to cheat the public because they’re under pressure to build revenue by cab company bosses. Company executives say drivers undergo training to discourage the illegal practice.
Obviously, something isn’t working. The training would go a little better if cab companies felt the pain of stiff fines in long-hauling cases.
2. Establish a formula for cab allocations for special events and stick to it.
Imagine if representatives of Wal-Mart, Smith’s and Albertson’s figured out how much each would charge for a gallon of milk, and an overseer who has his own thoughts on the price could make all of them stick to an agreed upon price.
Members of the public would cry, “collusion!” and they’d be right.
But that, in essence, is what happens regularly at Taxicab Authority board meetings. When one or more companies ask to put more cabs on the streets for big conventions, every company is there to hear a recommended allocation from authority staff. Then, each company gets its turn to agree or disagree and make a case for more cabs. Companies playing this role of “intervenor” almost always ask for more cabs than the recommendation, and driver unions, which also can intervene, ask for fewer. The authority board then decides what that number will be. It’s almost always higher than the staff recommendation and closer to what cab companies want than what drivers want. Every cab company gets the same allocation established by the board, which works in favor of the big companies that might have an extra 10 cars around, while smaller companies don’t have as many extras.
Drivers don’t want additional cabs because overall revenue is split over more drivers. Cab companies want more vehicles because they’ll make more regardless of how drivers split profits. Although companies argue that some conventions are better cab users than others, there’s no reason why the authority can’t come up with a formula to put extra cabs on the streets for every 1,000 or so convention attendees above the average expected. But don’t let companies ask for more cabs for a boxing match that draws just an extra 20,000 or so people to town.
Save the special allocations for big events—such as CES and ConExpo-Con/Agg, or instances in which multiple events are happening simultaneously.
3. Establish a formula for rate increases and stick to it.
Rate increase requests, especially on fuel surcharges, should be treated the same way as allocations. This was actually done once, but the volatility of fuel prices has resulted in the policy being forgotten.
So, here’s how you fix it:
Set a baseline gasoline price. When the price exceeds the base by, say, 50 cents a gallon over a one-month period, a fuel surcharge is triggered. The rub on automatic price triggers is that it costs $14,000 to change meters on every Las Vegas cab. The industry should pay for that, not the Taxicab Authority (i.e. state taxpayers). If the industry wants the fuel increase badly enough, it should be willing to fork over the money needed to change the meters in its fleet. If the charge is set on a per-cab basis, the big companies would pay their fair share for the changes.
Oh, and one more thing: If fuel cost drops by 50 cents a gallon over a one-month period, the companies would have to change the meters to the lower rate.
4. Modify some antiquated rules, such as metered rates for Strip trips.
It takes an advanced mathematical degree to figure out how much a cab ride costs. It costs $3.30 to hire the cab (known in the industry as the “drop”), $2.40 per mile (20 cents for each one-twelfth of a mile traveled) and $30 an hour in wait time. The wait time is calculated at 20 cents every 24 seconds that the cab is traveling less than 12 mph. If a trip originates at McCarran, there’s an additional $1.80 surcharge. One suggestion to address the long-haul issue is to charge flat rates for trips between the airport and the Strip, which is effectively done in many large US cities. That makes a lot of sense, considering that the highest percentage of taxi trips involve the airport and a Strip or downtown hotel.
It would be easy to develop a chart outlining the cost of a trip. The Taxicab Authority website, in fact, has a chart listing the approximate cost of a trip from the airport to 70 destinations. With a flat rate, it wouldn’t matter whether a driver long-hauls or not—it’s always going to cost the same amount from the airport to a particular property. Because metered rates are part of state law, changing to flat rates would have to be approved by the Legislature.
Another rule that Las Vegas visitors don’t understand is that regulations forbid pedestrians from hailing cabs, although many of us have seen cabdrivers violate the rule. Customers can only hire cabs at cab stands or by requesting a pickup.
5. Blow up the system and deregulate aspects of taxi operations.
All right, you knew that at least one of these quick fixes wasn’t going to be easy, and this is it.
The state jumped into the taxi regulation game to put an end to the fistfights and shenanigans of four decades ago. Though some of the industry’s biggest problems can be solved with better management and a clean slate of rules, the time has come for changing the whole taxi business model.
Cab companies aren’t going to like it because under the existing system, they’re making plenty of money. Taxi company books aren’t open to the public, but it doesn’t take a CPA to figure out that cab companies are a lucrative business—if you’re an owner, not a driver.
Last year, cab companies took passengers on more than 25 million rides. Drivers collected an average $13.50 a trip. Wage and fuel costs are variable by company, but most pay employees around minimum wage. Some companies split the cost of fuel with drivers, encouraging them to drive more economically. Some cabs use alternative fuels, skewing the average fuel cost. Like most businesses, cab companies have their share of overhead, insurance, legal costs, etc.
But that $337 million revenue pays for an awful lot of those expenses.
Las Vegas is one of a few big cities nationwide that uses the regulated taxicab industry model. In most cities, companies lease cabs to independent contractors who benefit by working quickly and efficiently.
An extreme makeover of the taxi industry would have to be generated at the legislative level, even though Clark County is the only place where the Nevada Taxicab Authority has any jurisdiction whatsoever. The Nevada Transportation Authority, which regulates the state’s limousines, buses, towing and moving van companies, oversees cabs in the state’s other counties.
Vocal critics of the system say there will never be an overhaul of taxi regulation because cab company executives donate to legislative campaigns to maintain the status quo.
But status quo for the cab industry is a bad thing for the riding public, which often has a hard time getting a cab to show up at a residence when there are more lucrative customers to serve on the Strip and at the airport.
A deregulated cab industry would encourage more competitive pricing. Companies would have to bid for the right to pick up at McCarran and the Convention Center. And resorts might want to have exclusive contracts with the best cab companies.
Regulators would then be in charge of enforcing some crucial rules of operation and not get bogged down in monthly fights over cab allocations for special events.
Las Vegas is the greatest resort destination in the world. It deserves the best taxi service in the world.
The only way to get that is to fix an industry that has been broken for years.
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