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July 2015

Let’s all review Tracey Cook’s Taxicab Industry Review

by Al Moore

In her Staff Report to the L&S Committee meeting of April 21, 2015, Tracey Cook, Executive Director, Municipal Licensing and Standards, stated that the 2011 Taxicab Industry Review included extensive consultations, during which staff:

• received and analyzed thousands of emails, phone calls and written proposals;

• conducted three issue-based surveys which garnered over 3,000 responses; and

• engaged more than 4,500 stakeholders at 100-plus meetings and consultations, one of which was attended by over 2,000 drivers.

• In previous reports the Deputy City Manager stated that the aforementioned information was the foundation for the final report.

The result of those meetings and consultations, as summarized in The Preliminary Report of 2012, were:

1) “There is general consensus amongst the taxicab industry that there are too many taxicabs operating in the City.”

2) “Most stakeholder input indicated that there were too many taxicabs and the City should reduce the number.”

3) “Too many taxicabs shared amongst too few fares were negatively affecting driver incomes and the health of the industry.”

4) “Ambassador Taxis should be eliminated”.

To garner even more information, the City also conducted Demand Surveys of the industry.

Demand surveys (direct observation of the taxi industry) are a very useful tool. They have been conducted in Calgary, Alberta, and they are mandated by legislation in the United Kingdom (P. 26, Preliminary Report 2012).

In their Preliminary Report (2012) the Taxi Review Team wrote: “Over the course of two weeks, researchers were located at seven cabstands across the city at peak demand times. At each cabstand, researchers recorded wait times and length of lines for passengers and taxicabs”. It continues, “…the results of this survey indicated that there were more taxicabs than passengers. Across the city, taxicab drivers waited for passengers on average of 39 minutes, and it was observed that some drivers waited for up to two hours for a fare.”

The Demand Survey concluded that: “These results suggest that the demand for taxi trips by residents and tourists is more than met by the current number of taxicabs operating in the city. The pattern of long waits between fares supports the taxicab industry’s assertion that new licenses would negatively impact driver incomes and add to overcrowding at cabstands”.

More to the point, it supports the industry’s assertion that there are far too many taxicabs for the available business.

That said, the observers had no knowledge of wait times during off-peak hours (which can be much longer than two hours), nor did they know how long the taxi had been empty before it arrived at the cab stand, both of which would make the oversupply much worse than observed.

All things considered, Toronto’s taxi industry was in a very sorry state in 2011, and, with all of the aforementioned information available to her, one has to wonder how Tracey Cook and her staff, in consultation with council, could possibly have come up with a plan that was guaranteed to lower the annual income of taxi drivers by thousands of dollars for decades to come and increase the cost of taxi trips by a very substantial amount.

The claim that stakeholder input was the foundation for the final report is nothing short of ludicrous: When thousands of stakeholders tell the regulator that the biggest problem in the industry is low driver income, and that that problem is the result of a massive oversupply of taxis for the available business, the last thing the regulator should be doing is making recommendations that will:

a) Increase the number of taxis in the jurisdiction by 5.942%; and

b) increase the number of drivers who could be sharing a finite pool of money by 23.684%.

What every resident of Toronto should know about the 2011 review of Toronto’s taxi industry is that:

1) The mayor and council did not pass legislation that was beneficial to the taxi industry, the taxi-riding public, or the citizens of Toronto.

2) The mayor and council did, however, pass legislation that will destroy the life savings of many of Toronto’s cab owners.

3) The mayor and council did pass legislation that will devalue the assets of Standard plate owners by approximately one billion dollars.

4) The mayor and council did pass legislation that will reduce the annual income of taxi drivers by thousands of dollars for decades to come.

5) The mayor and council did pass legislation that will make taxis unaffordable for many of Toronto’s residents.

6) The mayor and council did pass legislation that will be detrimental to the aesthetic and mechanical condition of Toronto’s taxis for decades to come.

7) The mayor and council did pass legislation that will guarantee that the cost of a taxi trip in Toronto will have to be raised by a very substantial amount, which is counterproductive because taxi fares in Toronto are already among the highest in the world as the direct result of other bad legislation passed by council in 1998.

8) The mayor and council also passed legislation that will make them look good on the world stage during the Pan-Am and Para Pan-Am games; which, after all, is the only reason they conducted the 2011 review of Toronto’s taxi industry.

What makes their actions all the worse is that the Taxi Review Team and every single councillor and the mayor were made aware, either verbally or by email, of a recommendation that would have seen 300 wheelchair accessible taxis added to Toronto’s taxi fleet immediately; reduced the total number of taxis in the city by 1,100; increased driver income by thousands of dollars a year; made it possible to lower the cost of taxi fares by a considerable amount; and made it possible to convert the entire fleet to wheelchair accessible taxis within five years if so desired by council

In short, the mayor and council squandered an opportunity that could have made Toronto’s taxi industry one of the best in the world and one of the most affordable in North America, as was the case before Metro councillors started “improving it”, in 1982.

Some background: Between 1999 and 2005 the City of Toronto issued 1,400 Ambassador taxi licences. None of those licences were issued to satisfy any public need in 1999, none of them were necessary to satisfy any public need in 2014, and none of them will be required to satisfy any public need between 2014 and the 2026 census.

As those licences were not issued to satisfy any public need, it follows that every cent that Ambassador owners have spent on operating expenses and every cent that they have earned, since 1999, has been at the expense of the owners and drivers of Standard taxis.

Likewise, it follows that every cent that they are going to spend on operating expenses and every cent that they are going to earn between 2014 and the 2026 census, will also be at the expense of those individuals.

All things considered, if Ambassador taxi licences had not been issued, every Standard plate owner, every shift driver, and every person who drove an Ambassador taxi would have been better off by thousands of dollars per annum since the last Ambassador taxi licence was issued in 2005; taxi fares in our city would not be among the highest in the world; there would have been none of the disharmony that has existed since 1999; and there would have been no reason for the 2011 review of the industry; which, incidentally, went on for three full years and is, once again, under review.

So, for the purposes of this discussion, let’s review the critical changes in the City’s 2014 taxi industry bylaw.

1) In 2014 the bylaw was changed such that Ambassador taxi licences could be sold and that any taxi licence that is sold, be it an Ambassador licence or a Standard licence, must be reissued as a so-called Toronto Taxi Licence (TTL).

On March 10, 2015, during an owner refresher course at the Driver Training School, a cab owner informed the class that he paid $350,000 for his plate. During the course of the ensuing conversation the instructor informed the class that, prior to the announcement of the so-called Toronto Taxi Licence, the peak price paid for a Standard plate was $385,000.

Anyone who is the owner of an Ambassador taxi licence had that licence given to him, and a considerable number of those owners should never have been issued a licence because they were, in fact, the owner of a Standard taxi licence that they had purchased in their wife’s name, which should have made them ineligible to be issued an Ambassador taxi licence. Some of those individuals owned a considerable number of Standard plates that they had purchased in the name of their wife, a child, or a sibling before being issued an Ambassador taxi licence.

Anyone who is the owner of a Standard taxi licence either purchased his licence or drove a taxi for many years before being issued his licence. Either way, they did so with the expectation that when they retired from driving they would be able to lease their licence in lieu of a pension and that the value of their licence would, at the very least, keep pace with inflation.

As a consequence of changes made by council in 2014, Ambassador owners can now sell their licences and gain a windfall profit of approximately $100,000 per plate, which would amount to a combined windfall for all Ambassador cabs of $140,000,000: (former value of zero to an approximate value of $100,000 today X 1,400 Ambassador taxis = $140,000,000).

On the other hand, Standard plate owners have seen the combined value of their assets decrease by almost one billion dollars because any Standard plate that is sold has to be reissued as a so-called TTL licence; so it, too, will be worth $100,000.

A considerable number of Ambassador taxi licences are held by persons who have full time jobs in another field. Those people can now sell their plate and gain a windfall profit of $100,000.

Other Ambassador owners have rarely, if ever, driven their taxis. These people have been waiting for the opportunity to sell them for years. They, too, will be able to sell their plate and gain a windfall profit of $100,000.

Still others, mainly fleet operators, have been hanging on to their Ambassador plates for years in the hope that they would be able to add them to their fleets. Those individuals have hit the jackpot. Instead of having to pay $1,400 a month or more to lease a plate, they have been given a licence that they can add to their fleet and lease for $90-plus, per shift. If that licence is operated 52 shifts a month, which is the norm for fleet cars, they will gain a windfall profit of at least $45,000 per annum from that license, and they can sell it for $100,000 or more whenever they want. Little wonder that fleet operators worked so hard to have Ambassador taxis converted to Standard taxis.

2) The bylaw was also changed such that the City issued 290 wheelchair accessible taxi licences to drivers on the waiting list. Those taxis can be driven two shifts per day.

During the course of the 2011 review of Toronto’s taxi industry, owners and drivers told the Taxi Review Team, over and over and over, that there were far too many taxis for the available business, so why, with that information at hand, would council vote to issue even more. They had to know that doing so would have a negative impact on driver income.

3) The bylaw was changed such that Ambassador owners who do not sell their licence are now allowed to have up to three drivers on their taxi, which is a complete about-face by councillors and their rationale for creating Ambassador taxi licences in 1998.

As a consequence of that bylaw change a considerable number of Ambassador taxis are now being managed by fleet operators, and it is widely held that the owners of some of those taxis are driving for Uber. Once again: little wonder that fleet operators worked so hard to have Ambassador taxis converted to Standard taxis.

As a consequence of issuing 290 wheelchair accessible taxis and allowing multiple drivers on Ambassador taxis, there could soon be an additional 1,980 drivers sharing a finite pool of money. The increased competition for a share of that finite pool of money will reduce the income of the existing drivers by thousands of dollars per annum, which, in turn, will necessitate an increase in meter rates if drivers are to earn a living wage, which, in turn, will lead to a further loss of customers.

4) Any person who has a taxi driver’s licence and is fully employed in another field can now purchase an Ambassador taxi licence for one quarter of what it would have cost him or her to purchase a Standard taxi prior to 2014. Once they own that licence they can arrange to have it managed by a fleet operator or a shift driver, and anyone who thinks that this is unlikely to happen is dead wrong.

Individuals who behave in such a manner are using the same loophole that has allowed fleet operators and brokerage owners to purchase taxi licences in the names of family members or associates since 1998.

The changes approved by council in June of 2014 will do nothing but harm to Toronto’s taxi industry and the image of this city.

Ms. Cook and her Taxi Review Team were made aware of the problems in Toronto’s taxi industry and they were given very workable solutions to same. They, and council, should be asked to justify why they ignored those options and chose to do what they did.

One fact is certain: they did what they wanted to do, not what was good for the industry or the taxi-riding public.

They should also be asked to explain why it took three full years to conduct the 2011 review. The problems in the industry were well known, as were the solutions, and the 2011 review of Toronto’s taxi industry should have been over in one day.

 

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