Quarter 3, 1998
by Jonathan Church

Cab Standstill

The number of taxicabs serving Boston has been fixed since the 1930s. Meantime, office space in the city has tripled; the number of passengers coming from and going to Logan Airport has risen by over 700 percent since 1960; and hotel rooms have doubled since 1980 and continue to grow rapidly.

What has kept the number of cabs stuck in time is a 1934 law which fixed the maximum number of cabs allowed to operate in Boston at 1,525. Since then, only once have people appealed to the Department of Public Utilities to raise the cap. The result was a 1990 decision to add 300 cabs to the force. The first 40 medallions — tradeable taxi licenses — were sold for handicap-access taxicabs in 1992, and there are currently over 2,000 applications for the remaining medallions.

Alternative means of transport have helped pick up the slack. At Logan Airport, for example, 30 companies provided limousine or sedan service in 1985; now there are over 700. The presence of "black cars" — pre-arranged, for-hire vehicles such as executive sedans and shuttle services — has escalated as companies like Boston Coach attract clients who previously relied on taxi service. Still, at Logan Airport alone, over 8,000 "black cars" compete for about 65,000 trips out per month, while the 1,565 taxis compete for more than twice that many.

Passengers may find this frustrating, but not everyone is complaining, least of all medallion owners. Over the last 18 years, when demand exploded relative to supply, the value of a medallion soared from $25,000 to $140,000.

Is There a Taxi in the Town?

How do small-town taxicabs survive without big-city demand for taxi service? The trick is to be more than a taxi company. While 240,000 people work downtown in Boston, small-town taxicab companies cannot rely on areas of concentrated and steady demand. Many are family-run businesses with fleets of between one and 15 cars. Without a large and constant stream of phone calls and street hails, they must tap the local niches.

One ubiquitous source of business is contract service. Champ's Taxi, a one-man operation in Essex Junction, Vermont, has a contract with Vermont Railway to pick up conductors and engineers stranded at train stations because a law setting a maximum number of hours per shift requires them to get off the train. Wakefield Taxi, with three taxis serving Rhode Island's South County, has package delivery and student shuttle contracts with South County Hospital and the University of Rhode Island. And a cab company from Brattleboro, Vermont, runs parts for a local tire company. Small-town taxi companies often cannot survive if restricted to one small city, so many apply for business licenses in adjacent cities. Eagle Cab of Westerly, Rhode Island, is licensed in adjoining Connecticut, which allows it to take passengers to and from Foxwoods Resort and Casino.

Not all strategies are equally fruitful. Airport Harbor & Taxi, serving coastal Maine in the Mount Desert Island's tourist area, began an on-line reservation system in April. The web page has added only a few customers, but it shows another way in which this small-town species, like its big-city sisters, fights hard for its feed.

No Time to Shop

Most U.S. cities fix taxi fares, but some places give a little more room for price competition. In Rhode Island and Portland, Maine, companies are free to charge less than a given maximum to attract more customers.

When Portland increased the maximum rate in June of 1997, most companies and independents raised their fares to the new maximum: $1.40 drop charge and $2.25 for each successive mile.

Not so Old Port Taxi. By sticking to the prior fare of $1.10 drop charge and $1.80 for each additional mile, the company claims to have doubled the number of calls it receives per day, most of them from repeat customers who ride taxis to local shopping centers. Old Port Taxi has also added six contracts with hotels, hospitals, and railroads to its repertoire.

Competitors don't seem worried. Most customers hail or call a cab for fast, non-fixed-route service. Shopping for the best deal defeats this purpose. Many do not use taxis frequently enough to make it worth their time to find the best rate, observes Mike Collins of ABC Taxi. Indeed, 40 percent of city passengers use taxis once a month or less. And many other customers are out-of-towners who know little about local fares, says Kim Winslow of C&J Taxi in Portland. So companies may not fear customer backlash when charging the maximum.

The taxi stand is one place where customers could more easily choose the lowest-priced cabs - especially since cabs in Portland are required by law to paint their rates on the door. But the cabstand "first-in, first-out" rule, in which customers are pressured to take the first taxi parked at a stand, undercuts price competition.

All this may explain why Economy Cab of Johnston, Rhode Island, one of the very few companies that had been charging less than the maximum rate, raised it this past August. Now passengers in Central Rhode Island have even less recourse if they wish to shop for the lowest cab prices.