Op-Ed: Postpone the Taxi Congestion Surcharge

National expert Charles Komanoff says the added fee on cabbies is premature before full congestion pricing.

Congestion pricing could solve part of this problem, but our expert says it should not be implemented on cabs first. Photo: Aaron Naparstek
Congestion pricing could solve part of this problem, but our expert says it should not be implemented on cabs first. Photo: Aaron Naparstek

SB Donation NYC header 2New York State should postpone its January 1 surcharges on taxi rides until the startup of congestion pricing.

The surcharges on fare trips south of 96th Street by taxis and app-based services like Uber and Lyft are intended to bring in $400 million a year for the MTA. Delaying and/or reducing the surcharges until the rollout of full congestion pricing could cost the authority a half-a-billion dollars, maybe more.

Like everyone who fights for affordable and reliable mass transit — the lifeblood of our city and region — I want to help the MTA become solvent.

But I am convinced that the new surcharge will deal a brutal blow to the people who drive and own yellow cabs. And I’m worried that the unfairness of a “congestion surcharge” that balances the MTA’s budget on the backs of taxi drivers will be so palpable that it will tarnish congestion pricing’s “brand.” This, I fear, could jeopardize the push to solidify public support for congestion pricing — support that is needed in order to pass it in the state legislature after the New Year.

Throughout my years advocating and modeling congestion pricing, I’ve insisted that all for-hire vehicles — yellows, Ubers, Lyfts, etc. — be surcharged in tandem with private cars and trucks. With for-hire-vehicles now accounting for close to half of all vehicle miles traveled in the Manhattan Central Business District (roughly 22 percent by yellows, 25 percent for the app-based vehicles), charging them for occupying the district’s scarce street space has never been more essential.

But that is just as true for private vehicles — serving less of a public purpose than the for-hire vehicles —that make up the other half of CBD traffic. And I have been steadfast in insisting that neither toll element be done without the other. In particular, yellow cabs must not be surcharged for servicing fares in the Manhattan taxi zone unless and until cars and trucks pay to enter the CBD.

A central premise of congestion pricing was that all of its elements would kick in at the same time. With congestion pricing synchronized — autos and trucks paying to enter the central charging zone; taxis and Ubers paying for time traveling in or occupying the zone — the for-hire drivers can win back through faster travel the fares they stand to lose from surcharges boosting the price of a ride. 

But that arrangement breaks down if the taxi congestion surcharges are implemented alone. Without cordon pricing, demand for Ubers and yellows — especially yellows — will diminish.

The threat is most dire for the yellows. The state-mandated surcharges are 100 percent loaded on the up-front “drop” part of the fare that will hit taxi users like a punch to the jaw. The surcharges also guarantee Uber Pool or Via customers a 70% lower surcharge than a yellow (75 cents vs. $2.50) simply for requesting a pooled ride, even if no other passenger shows up. 

And if that gaping loophole isn’t invitation enough to game the system, there’s always the monopolists’ time-honored tactic of lowering the price to kill the competition — a luxury that yellow drivers and owners can’t afford. 

The congestion surcharges won’t shrink the various for-hire vehicle services equally. Rather, almost the entire shrinkage will be borne by the immigrant-dominated yellows as the combination of the price impact and cutthroat competition decimates what’s left of the taxi industry.

What is to be done? Here are six steps toward a fair and economically sustainable congestion surcharge:

  1. Get Albany to defer large-scale congestion surcharges on yellow cab rides until congestion pricing’s cordon charges take effect.
  2. Also cut the Uber/Lyft surcharges while requiring those services to implement universal digital connectivity no later than April 1, 2019.
  3. With universal connectivity in effect (the yellows already have it), toss out the app-based vehicles’ lump-sum congestion surcharge, and base it instead on time with a passenger in the zone — a  charge that corresponds closely to congestion causation.
  4. Expand the app-based surcharges to include a supplemental charge for “trawling” — Uber and Lyft drivers sitting in the zone (and snarling traffic) while waiting to be pinged.
  5. Replace the 75-cent surcharge for pooled rides with a surcharge that reflects their lesser congestion impact without giving away revenue and unfairly undercutting yellow rides.
  6. Introduce a time-in-the-zone-based surcharge for yellows; but no trawling charge, insofar as the yellows are limited in number and their business model requires them to cruise for street hails.

Yes, these steps will cost the MTA revenue. But the upside of congestion pricing’s revenue promise is orders of magnitude greater. 

At the TLC hearing last week on the surcharges, anguished drivers labeled the taxi surcharges “congestion pricing.” On Wednesday at City Hall, they will unveil a “Stop the Suicide Surcharge” banner, a slogan that reflects the eight taxi driver and owner suicides over the past year. Whether or not that’s fair — and I think in many ways it is — the label may stick, especially if more drivers take their own lives as conditions deteriorate.

All of us in the long campaign for congestion pricing have been committed to making congestion pricing fair — not just to be on the winning side, but to be on the right side. Let’s keep it that way.

Disclaimer: Since Nov. 1 I have been retained by taxi medallion interests to evaluate proposed TLC regulations for monitoring, accounting for, and implementing the congestion pricing surcharge.

Streetsblog comment: The opinion of Charles Komanoff is just that: The opinion of one of America’s best respected experts on pricing the street. It does not necessarily reflect the opinion of Streetsblog.

SB Donation NYC header 2

  • sbauman

    Also cut the Uber/Lyft surcharges while requiring those services to implement universal digital connectivity no later than April 1, 2019.
    With universal connectivity in effect (the yellows already have it), toss out the app-based vehicles’ lump-sum congestion surcharge, and base it instead on time with a passenger in the zone — a charge that corresponds closely to congestion causation

    If time spent moving within the congestion area corresponds to congestion causation, does not the same apply to other vehicles?

  • Rider

    Medallion cabs trawling for fares are a menace to cyclists. The app-based model is clearly superior. While the city and state should be winding them down in a more orderly fashion, I do hope this surcharge hastens the end of the medallion cab and that the drivers can find an alternative means of making a living.

  • Komanoff

    It definitely does. LMK when you’ve come up with a politically feasible way to charge unregulated vehicles (i.e., private autos) for time and/or distance in the zone. Until then, autos have to be charged to enter/leave the zone.

  • Joe R.

    Easy answer-start the charges when you enter the zone and stop them when you leave it. This way we can also charge for time spent parking, which also causes lots of congestion.

  • Joe R.

    Ideally, for-hire small vehicles should be for the disabled only. In a city they’re a space-sucking luxury which we can ill afford.

  • Larry Littlefield

    Good idea.

  • sbauman

    when you’ve come up with a politically feasible way to charge unregulated vehicles (i.e., private autos) for time and/or distance in the zone.

    Singapore does it. They abandoned a cordon toll, after they discovered it did not reduce congestion.

    It’s not difficult to imagine what’s required. Gathering info from the automobile data port makes it easier but it’s not essential.

  • sbauman

    This way we can charge for time spent parking, which also causes lots of congestion.

    One should distinguish between on and off street parking.

  • Joe R.

    If you have a receipt from a parking lot, then those hours spent in the lot shouldn’t be billed.

  • xospecialk

    no different than a for-hire vehicle doing the same

  • ohnonononono

    Should note that the London Congestion Pricing scheme exempts taxis and for-hire vehicles (including Ubers) from the charge altogether, but they’re currently discussing abolishing their exemption through some different proposals.

  • Komanoff

    It’s not a tech problem it’s a political/cultural problem. Can’t imagine how you can believe that requiring data connectivity for private autos wouldn’t strangle c.p. prospects in the cradle.

  • sbauman

    Can’t imagine how you can believe that requiring data connectivity for private autos wouldn’t strangle c.p. prospects in the cradle.

    Isn’t an EZ Pass tag a form of data connectivity to the infrastructure? One problem is that the primitive EZ Pass tech doesn’t permit measuring congestion’s causation.

  • walks bikes drives

    I would assume an exemption for people who live in the area? I can people not putting up too much of a fight about a one time roll as they are heading home, but if the clock is constantly running while they are parked, at home, you are creating a system that works for the anti-car idealogues but not for residents. Especially residents who predate any congestion pricing system. To charge them the same as bridge and tunnels would be simply unfair. In fact, with a standard congestion pricing scheme, residents, to be fair, should be charged a lower rate, because they cant avoid the cordon when they live inside of it, the way someone passing through could.

  • Joe R.

    You probably should do something along those lines, where the clock is running all the time if you’re a nonresident, but residents just pay a certain amount when entering the cordon. Given the small percentage who own cars in the cordon area, it’s a concession worth making if that’s what you need to get it passed.

  • spikex

    The congestion charge per ride for taxis is a heavy toll on short trips- it is a toll on the elderly or others who can’t walk well who need to use taxis for short trips. It would much better to have a distance based charge. On a unrelated note: the big problem with the proposed congestion pricing is the boundary at 60th st. It will make the neighborhoods just north of 60th St a nightmare. Everyone will be circling trying to park. Start off just tolling the bridges. There are many people who can park for free in the city (teachers, cops, other civil servants). They have no incentive not to drive. Putting tolls on the bridges would incentivize then to car pool or take the subway more.

  • John Smith

    Agree with the fact that it will destroy the yellow business, but the idea that yellow cabs should have to pay a ‘congestion fee’ for any reason makes no sense at all. Yellow cabs HAVE TO drive in the ‘congestion zone’ to make a living, period. That is where the business is. If they avoid the ‘congestion zone,’ they won’t even cover expenses. All of the taxi lines are in that zone. As of today, roughly 2000 Medallions are sitting on the shelf, so yellows have actually decreased in numbers as Uber et al added 130,000 cars. they added ALL of the congestion.

  • Vooch

    maybe it more ( politically )feasible to introduce more pedestrian zones :

    1) Times Square
    2) Chinatown
    3) Wall Street
    5) Fifth Avenue around Trump Tower
    6) 8th around PABT

    There could also be expanded seasonal pedestrian zones such as 12th Avenue ( aka west side highway ) on Summer Weekends

  • Rider

    I disagree. Medallion cabs are much worse. The drivers work in a constant, heightened state of anxiety that clouds their judgment, and the reason is simple to understand. They never know where the next will be or what route is best to take, so they are constantly tempted to make jerky and dangerous movements. I regularly witness them back up on one-way streets to avoid congestion and dart into bike lanes in response to an outstretched hand. Besides trucks, yellow cabs are the most dangerous vehicles on the roads.

    The app-based cabs have intelligent GPS that tells them the exact, safe route to take to collect and deliver the fare. It’s much calmer. Try riding in the two types of cabs and you will feel the difference. I never take yellow cabs anymore because the app-based cabbies have better driving habits. And it’s not because they have better training; it’s because they have better technology.

  • constant state of anxiety that cloud their judgment”
    How would you know ?
    the app based service do exactly the same, they roam constanttly the same and I find them much more aggressive towards pedestrians that yellow cabs are ..

  • Lewis

    How soon do you think they could implement the cordon pricing package? Tarnishing the brand is a real issue.

    Also, why was the ride hailing charge a “per trip” charge in the first place? In SF they are enacting a net fares tax which, since the fare scales with distance and time, at least scales with the externality and is quite easy to implement.

    How much would it cost to buy out all the medallions owned by drivers? My understanding is the driver-owners have a special type of medallion.

  • Agreed that timing is bad… What about removing the limit on the yellows and treating them like Uber? Create a level playing field …and limit the total number..better fix the real problem than compensate on a different issue.

  • AnoNYC

    “Yellow cabs HAVE TO drive in the ‘congestion zone’ to make a living, period. That is where the business is.”

    If this were the case they would not be getting destroyed by the app based for hire companies. There’s plenty of potential ridership citywide, they just never figured out how to tap into it.

    More potential ridership outside the Manhattan CBD in the boroughs than there is in any other US city by far.

  • AnoNYC

    Yellow cabs can level the playing field by providing ridesharing and better marketing their app based pickups.

    I personally hate yellow cabs and avoid using them at all cost. I want my fair up front and I don’t want reluctance on my destination. Accountability is nice, and shared rides is my go to for the vast majority of my trips via for-hire.

  • AnoNYC

    The city is already doing this though it should be faster and more aggressive.

ALSO ON STREETSBLOG