Taxi businesses struggle to stay afloat in the Uber age

If you ask Bikram Singh what’s happened to most of his taxi cabs, he’ll take out his phone and show you photos of the “Monster Jam” monster truck event hosted at Levi’s Stadium. Singh will swipe through photos of cars arranged in rows, their roofs caved in and trunks completely flattened by the likes of 12-foot-tall monster trucks with names like “Grave Digger,” “Titan” and “Bounty Hunter.”

And if you look close enough at the mounds of crumpled metal and plastic, you can just make out the cars’ original coat of paint — the bright lemon yellow of Singh’s former taxi cab fleet that made up Yellow Cab Company Peninsula.

Singh laughs a little at the sight of this unconventional disposal method for the cars that once roamed the area from Redwood City down to Sunnyvale, but it’s also a sad reminder of what he sees as a bleak future.

He’s in the process of terminating his 20-year-old Yellow Cab franchise as well as a San Jose-based franchise, Alpha Cab, to focus primarily on keeping afloat his last remaining operations, California Cab, and a small paratransit business. In 2011 Singh oversaw 150 cars and 225 drivers. Now he’s got 40 cars and no more than 20 drivers.

“Because of this disaster — that’s what I call it in the taxi industry,” he says.

The “disaster” he refers to is the increased competition from technology-based ridesharing companies Uber and Lyft, which he says have taken more than half the business and lured drivers away with offers of better wages.

“Economically it’s very hard to maintain the two franchises since we are losing our drivers right and left. It’s hard to maintain its cost and the need,” he says.

Like Singh, taxi cab drivers and owners in Santa Clara County cities are struggling to catch up with the evolving ways passengers prefer to get from point A to point B. Sleek apps now allow users to speedily book a ride with the “push of a button,” for cheaper fares and with friendly drivers.

But taxi companies say what’s really to blame for the dramatic drop in business are double standards that required them to adhere to the citywide regulations and fees while exempting ridesharing companies.

As profits plummet and passengers have become few and far between, cabbies are seeking a more streamlined regulation system and a yielding of local ordinances to help them share the road with these new companies that are radically changing the for-hire industry.

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It’s 1:30 a.m. and Kamal Singh, 49, has parked his black Prius at the Mountain View Caltrain station while he waits for the bars to close on Castro Street, hoping to pick up passengers, or “fares” as they are referred to by cab drivers, in need of a ride home.

Wearing a purple sweatshirt and slacks with an earbud glued in one ear, he talks with fellow drivers Balwinder Singh, a tall slender man with glasses, long gray beard and navy blue turban, and Subeg Singh, a man in his 40s with a bushy black beard and cream yellow turban. The men speak in Punjabi about how their night is going and how little business there has been of late.

Balwinder Singh complains that the day before he only made $23 after spending all day at the Mineta San José International Airport, and Subeg Singh mentions he’s only had a few fares since beginning his shift in the afternoon. Kamal Singh shakes his head: He’s feeling the same strain. He says he used to get 10-15 calls on Friday nights, now he says he’s lucky if he gets even five.

“These days there’s like nothing left, honestly,” he says.

After fleeing political unrest and violence in his home state of Punjab in Northern India, Kamal Singh came to the U.S. and sought work as a cab driver. Like other Indian men in the cab industry, he had previously worked for years in the agriculture industry driving tractors and trucks.

He jokes that “75 percent of all taxi drivers that are on the road in Silicon Valley are also Punjabi Indians,” many of them sharing a common middle name of “Singh,” which was simplified to a last name when they immigrated here.

“For Punjabi people, the driving is in their blood,” he says. “We like driving. We are born drivers.”

He’s been driving a cab for the past 15 years, commuting to work six days a week from his home in Tracy and working the graveyard shift to avoid Bay Area traffic. Even though the hours are long, he values the independence and flexibility of setting his own schedule and being his own boss.

“It’s an interesting job; you meet all kind of people from all over the world,” he says.

For the most part, Kamal Singh says he’s had positive experiences with passengers, except for an armed robbery late at night in 2009 when his cash, phone and car keys were stolen after being called to an empty hotel in Sunnyvale. The suspects were easily arrested, though, since their phone number had been logged in when they originally called the taxi’s dispatch center.

“You meet every kind of people — the good, better, best, bad, worst — every kind. But mostly people are good,” he says.

Bikram Singh’s career began similarly. He moved to the U.S. from India in 1991, first starting out as a cab driver for Yellow Cab Menlo Park until he saw a business opportunity to purchase the fledgling company that would eventually become Yellow Cab Company Peninsula.

“We all came with a dream to make lots of money,” he says. “I saw an opportunity that money could be made in the taxicab business because you can put in as many hours as you can. I worked day and night from 1994 until now. That’s all I did: work, work, work — day and night.”

Long hours and long weeks seem to be part of the job, attracting a “workaholic” mindset according to Tommy Steele, 66, a driver for 29 years.

“You name your own hours, although that’s sort of a misnomer because to make a decent living, you know, you’re free to choose your own 80 hours a week any way you like. … You can make a decent living if you put in long, hellacious hours,” Steele says.

It’s not uncommon for drivers to work from eight to 14 hours per shift, six days a week. And recently as the number of fares has gotten slimmer, drivers say it’s become harder to make a profit since costs have remained high.

Most drivers prefer to own their own cars, working as “owner/operators” and paying taxi companies weekly fees to license the company’s name and color scheme. Depending on the company and added features like a dispatch service and a required $1 million commercial insurance plan, the weekly fee can range from $200 to $450.

For drivers who use company cars, that rate can go upward of $500 per week.

But beside the “gate fee,” as it is referred to in cabbie vernacular, drivers are also responsible for myriad other fees and expenses. This includes gas, vehicle maintenance and car payments but also the costs of getting licensed in each city in Santa Clara County where they do business.

Costs include annual driver’s permits, business licenses, annual vehicle inspections, annual taximeter inspection, annual drug and alcohol tests plus upfront fees for fingerprinting and background checks.

Larry Silva, president and general manager of Yellow Checker Cab Company Silicon Valley, broke down these expenses recently while making a presentation to the Cities Association of Santa Clara County in February.

For a cabbie to work in Palo Alto, Mountain View, Sunnyvale, Santa Clara and San Jose, it costs $2,129 per year in fees, licenses, inspections and fingerprinting, Silva says. Annual permits at San Jose and San Francisco airport range from $55 to $200. If a cab driver only wants to work in Palo Alto, it’s $186 annually.

Palo Alto has three licensed cab companies — Yellow Checker Cab Company Silicon Valley, California Cab and A Orange Cab — and 131 drivers are licensed. Any other companies that wish to do business in Palo Alto must fill out an application, wait 60 days, then go before a public hearing and make a case that they provide a “public convenience and necessity.”

Only licensed cabs are legally allowed to pick up passengers in each city. If a cab driver drops off a passenger in a city he’s not licensed in, he’s not allowed to pick up a new passenger there.

“Each city decides they’re going to run the cab industry their way, which is fine,” Silva says. “But unfortunately they (drivers) can’t … take someone back. … They have to drive back empty. That’s crazy.”

This often leads to frustration and anger when so called “bandit cabs,” or cabs from unlicensed companies that are typically based in unregulated cities, poach business.

But the biggest source of contention has been with the ridesharing companies like Uber and Lyft, officially classified in 2013 as “transportation network companies” (TNCs), which are immune from local municipalities’ rules as they are controlled by the California Public Utilities Commission.

Such drivers use their own vehicles, covering gas and vehicle maintenance plus a 20-25 percent commission fee that Uber and Lyft collect from fares. They are largely free to pick up passengers in any city without paying the same expenses or heeding the same regulations that apply to cabs. These ridesharing companies conduct their own background checks for free and offer low-cost annual-vehicle inspection stations and visits with vehicle-inspection “mentors.”

Many taxi drivers are angry that the transportation network companies operate under such little regulation and say that the inconsistencies make them feel like they’ve been cheated out of a fair chance to compete.

Steele has praise and scorn for the ridesharing companies.

“My view of Uber and Lyft is twofold. … Because there’s only an app that you need to summon your drivers … that in itself was very innovative,” he says. “However, their whole business model has been built on cheating the rules, undermining the rules, lobbying against the rules and finding all the nooks and the cracks and the crevices in the regulations and exploiting that.”

Bikram Singh says he is most frustrated by how quickly ridesharing companies were given the TNC classification and legal green light by the state without it first studying the impact on taxis, limousines and other existing for-hire services — something he considers an “injustice” to companies like his that “aren’t valued at a billion dollars.”

“The lawmakers should have kind of at least brought these TNC companies to the same level where the taxi companies are,” Singh says, “and then given enough time to drivers or the cab companies to either compete with those guys or come up with an equal model so we can stay in business.”

Since transportation network companies are regulated by the state, local governments have limited options on altering how those drivers can operate in cities.

“We’ve seen this before where a loophole is generated because of new technology or some company that’s done something that’s never been done before and the legislation just hasn’t caught up, and so in the short term, it’s chaos,” says Officer Sean Downey, a spokesman for the Palo Alto Police Department. “Sometimes technology has advanced faster than our laws have.”

For a while, Palo Alto was issuing citations to rideshare drivers without commercial license plates until the DMV declared commercial plates weren’t necessary in January 2015.

Last week in San Francisco, City Treasurer Jose Cisneros announced that about 37,000 drivers will be required to pay the city’s business-license fees since the companies consider them independent contractors.

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Some city officials in Santa Clara County say they are actively listening to taxi driver’s concerns and are working to take steps to amend municipal codes and ordinances to better help level the playing field while preserving public safety.

Last October, Sunnyvale’s council unanimously approved staff recommendations to lessen fees, conduct an annual vehicle inspection rather than a quarterly one, and remove requirements of cab drivers such as a paper map test and wearing uniforms after a study session on the issue.

“They (cities) need to take a look with these regulations: Do they serve a public good? If not, those regulations should be removed,” says Jim Griffith, City of Sunnyvale councilman and chair of the Cities Association of Santa Clara County’s executive board. “Taxi drivers should not be burdened with these types of obstacles to compete with 21st century technology.”

During his presentation before the board members of the Cities Association of Santa Clara County, Silva of Yellow Checker Cab Company Silicon Valley argued that a better system for cab drivers would be for cities to adopt a uniform permit program countywide, in which one driver’s verified background check, vehicle-inspection certificate and driver’s permit could be accepted across all Santa Clara County cities.

“Most cities that have an ordinance, they have done some amendments over the years, but they’ve never really just looked at it like we’ve asked them to do now,” Silva says.

Also, he says, “The taxicab industry needs to develop some kind of flexible fleet through a reciprocity system. To create a larger region for the drivers to work so they don’t have to double back. We’re being regulated to death.”

Raania Moshen, executive director of the Cities Association of Santa Clara County, says the organization sent a letter to the Santa Clara County City Managers Association and the Santa Clara County Police Chiefs Association asking the groups to look into a more streamlined countywide system.

Mark Linder, chair of the Santa Clara County City Managers Association, says that the managers and police associations are working together and currently studying the proposal.

“I do believe cities shouldn’t be the obstacle to equalling the playing field,” Moshen says. “Cities should at least explore in terms of changing the process and make it easier for them to operate across the county.”

Palo Alto Vice Mayor Greg Scharff, vice president of the Cities Association of Santa Clara County, wrote in an email that he intends to work on a proposal to address the issue.

Another difference for rideshare companies that cab drivers and companies are targeting are background checks. When cab drivers apply in Palo Alto, their fingerprints are scanned and their records are checked with the Department of Justice and the DMV and continuously monitored.

In the wake of recent assaults on rideshare passengers, Bikram Singh wants to know why the drivers aren’t held to the same standards as cabbies.

“Where are our lawmakers now?” he asks. “There are horrible incidents … and nobody’s putting a stop to it? That is disturbing, that is something I cannot swallow.”

According to California Public Utilities Commission guidelines, ridesharing companies must check drivers to ensure they are neither sex offenders nor have been convicted in the past seven years of “driving under the influence of drugs or alcohol, fraud, sexual offenses, use of a motor vehicle to commit a felony, a crime involving property damage and/or theft, acts of violence, or acts of terror.”

Uber spokeswoman Laura Zapata cited the safety features of the company’s technology, which “eliminates nighttime street hails, allows riders to see their route in a map in the app, enables you to share your estimated time of arrival and location with friends and family, and eliminates the need for cash.”

Downey says that these are the factors consumers must think about when considering services like Uber and Lyft.

“They’re a private company operating within the law and they’re doing their own background checks. If citizens are concerned they need to figure out what their best options are,” he says.

Back in Mountain View, around 1:45 a.m., Kamal Singh gets a call to pick up a passenger at the front gate at NASA Ames. When he pulls up though no one is there. He circles a few times before giving up then heads to Castro Street, where women dressed up in sequined skirts and tall heels and men in dark button up shirts and jeans come spilling out of the Monte Carlo nightclub.

He points to the line of about five cars all double parked on the street.

“Those are all Uber drivers,” he says.

“The first group of taxi riders to go were the 20-somethings and the bar crowds,” Silva says. “I would say probably 75 percent of that business is no longer. We don’t see the late-night bar rush now until, you know, much later and it’s much slower.”

Kamal Singh does manage to pick up one passenger: a woman being escorted on the sidewalk by Mountain View police after a vocal altercation with a date. The cabbie drops her off in Santa Clara and heads back, hoping to pick up another fare for the night.

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On a recent sunny afternoon Steele sits in a tangerine orange Prius in the shade near the MacArthur Park restaurant in Palo Alto as he waits for his turn for a fare downtown. Donning a fedora, round tinted glasses, denim shirt and bluetooth device in his ear, he’s hoping the line won’t take longer than an hour (cabs operate on a first-come, first-served basis for fares).

Cabs rarely get hailed on the street in Palo Alto anymore, also known as getting a “flag drop,” and drivers instead connect with passengers through a company’s dispatch system. Many also have built a base of regular clients, called “personals.”

Originally from Colorado, Steele came to the Bay Area in the Summer of Love and began pursuing a career in music. When that didn’t quite pan out as hoped, he began working as a cab driver in Palo Alto.

He’s driven Joan Baez, Joe Montana and Stan Getz in his cab and met his wife 20 years ago when he ferried her to a dentist appointment. He still plays music with his band “11 Wails” and wrote a song “Babylon Driver” about his chosen career: “I’ve been driving this cab so long, up and down these streets. And deep down in Babylon I watch it all in my seat. I’ve been drifting through dreams so long, flirting with defeat.”

“The cab industry is not dead, and I don’t anticipate it to die; however, it’s under heavy attack,” Steele says.

Uber’s Zapata wrote in an email that there are an estimated 40,000 drivers working for Uber in the Bay Area. Most of them work for the company’s low-fare UberX service. The company also offers its original black town-car service, UberSelect, and a carpool service, UberPOOL.

Lyft didn’t provide specific numbers of drivers in the Bay Area, but company spokeswoman Mary Caroline Pruitt stated in an email that there are 315,000 drivers nationwide, or about 80 percent the number that Uber has. Recently Lyft announced it is also now offering a carpool service called Lyft Line.

According to rider surveys, Zapata and Pruitt say, a majority of their drivers are part-time, signing up with the company to earn extra cash. Sixty-nine percent of Uber drivers say they have other part-time or full-time work; half drive 10 hours or less per week. Eighty percent of Lyft drivers drive 15 hours a week or less. Nearly 70 percent of Uber drivers say they had never worked as drivers before.

And Uber and Lyft aren’t the only transportation network companies out there. Others that received permits to operate in 2016 include HopSkipDrive, Kango and Zum, the so-called “Uber for kids” apps; and Summon and Wingz, which offer flat rates to airports. Chariot for Women, which will provide rides exclusively for women, was founded this year.

City officials say they are appreciative of the growing transportation options because they see it as a way to help reduce the number of cars on the road, ease congestion and encourage public transit ridership.

“If you look at it first glance, simply having an Uber drive you around isn’t really getting cars off the road,” says Jessica Sullivan, transportation planning manager for the City of Palo Alto. “However, companies like Uber and Lyft, and some of the other ones that are out there, what they can do is facilitate what we call the ‘first mile’ or the ‘last mile’ connection between someone’s house and transit or work.”

“We’re very interested in encouraging those types of services for the purpose of getting people onto other forms of transit or out of their … cars,” Sullivan says.

“We never set out to provide a better taxi or black car service; our vision has always been to reconnect people and communities through better transportation,” Pruitt wrote.

Still, it is the business model, rather than the feel-good companies’ philosophies, that is in large part driving their success.

Cab companies in Santa Clara County charge about a $3.50 flat rate plus about $3 per mile. UberX charges a base fare of $2, with $1.15 per mile plus minute charges and a service fee. Lyft charges a $1.30 base fare at $1.16 per mile plus minute charges and service fee. Calculating a ride from Cambridge Avenue in Palo Alto to San Francisco airport shows that a trip in a cab would cost roughly $70. For Uber it ranges from $28 to $36 and for Lyft it’s $37.

“When you sit there and watch Uber doing all of this now for 1/3 to 1/4 of the price of the cabs, and you’re sitting there watching those guys … taking all that business, it’s pretty disheartening,” Steele says.

“Nobody ever becomes rich driving a taxi; we all know that right?” Bikram Singh says. “But now they’re not making them poor; they’re making them go bankrupt.”

These low rates have acted as a kind of an entry-point to convince cautious riders they should give the ridesharing options a try, though rates have also been known to fluctuate widely during peak demand hours with “surge pricing.”

Cab companies’ rates, on the other hand, are heavily regulated. In some cities, like Palo Alto, to make any adjustment of rates, taxis must declare a “schedule of rates” to police departments. They then have to wait 30 days before rates can be changed again. This prevents them from setting daily or weekly prices that could be lowered in off hours for consumers, cabbies say.

In December, the City of San Jose took a step to help taxi companies by deregulating taxi-meter rates if rides are booked through online apps. Passengers not using an app are still subject to the same $3.50 base fare and $3 per mile fee, though.

Silva says he’s actually eager to start offering lower fees and will be updating his company’s app in June. He’s hoping to reconnect with former passengers, since he estimates that Yellow Checker Cab Company Silicon Valley has lost about 40-50 percent of its business since rideshare companies came on scene.

Back in Palo Alto, 24-year-old University of California, Berkeley, student Devon Washick-Ortega hops off a southbound Caltrain at the downtown station and flags down Steele. As she puts on her seatbelt, Steele introduces himself, and she tells him she’s headed to the Hilton Garden Inn to meet a friend.

Steele strikes up a conversation and Washick-Ortega mentions that she normally takes Uber most of the time but was running late today and had heard that Uber was “a mess to use” at the train station. Steele smiles a little bit and asks her about the app’s appeal.

Washick-Ortega mentions that she hardly carries cash anymore and had a few bad experiences in San Francisco where she previously lived. When she tried to use her credit card, cab drivers gave her a hard time about it.

“I’m not a confrontational kind of person,” she says.

Plus, she says, taking a cab across the bridge to San Francisco is too expensive, and one doesn’t have to tip Lyft or Uber drivers.

Sullivan points to these types of examples as to why rideshares have beaten out some of the cab’s competition.

“Part of the reason that these companies have been so successful is that interface, right?” she says. “Not having to pay cash or credit card or anything — to just be able to jump into the car and jump out of the car — that’s attractive for people, and I think that’s one of the challenges taxis have to face.”

And like Washick-Ortega, other passengers have had similar interactions with cranky cab drivers: Complaints range from cabs refusing to travel short distances or to less desirable places in town or failing to show up when a reservation was booked.

“That’s part of why the cab industry is jaded and old-fashioned and antiquated is because the drivers are notoriously fickle and picky,” Steele says. “There’s always been good and bad eggs in the taxi business.”

Silva also agrees that there have been drivers lacking good customer service who have pushed clients away.

“Had everybody received good service, there really wouldn’t be any room for TNCs,” he says.

But Silva has hope, and he says he envisions a future in which taxi companies will unite together and form a more cohesive system with self-policing on drivers and operators who might harm the industry’s customer service.

“I think the cab industry, we need another shot at rebuilding ourselves,” he says.

Photographer/Videographer Veronica Weber can be emailed at vweber@paweekly.com.

Photographer/Videographer Veronica Weber can be emailed at vweber@paweekly.com.

Photographer/Videographer Veronica Weber can be emailed at vweber@paweekly.com.