Three of Philadelphia's taxi companies are merging, with PHL Taxi and Freedom Taxi joining ranks with 215-GET-A-CAB to become a single branded entity. The three taxi firms will share a single look, with each car being redesigned and repainted at the tune of $1000/car. There will also be a "revamped smartphone app, upgraded technology in cars and updated fleet interiors."
It's an inspired effort from an industry that has been less than innovative over its history. In addition to the changes mentioned, the taxis are:
Of course, the reason for these changes are due to the pressure being put on the industry by ridesharing services Uber and Lyft. The ultimate question though, is will any of this matter?
The short answer to that question, in this author's opinion, is yes, this merger does matter - but not in the way you're probably thinking. What does matter in this unification is the reduction in the transportation diversity that adds to Philadelphia's uniqueness as a place, and the strengthening of of a local brand.
What doesn't matter? All of those fancy changes without a new pricing strategy.
It is very unlikely that these changes will ultimately stave off the decline of cab companies unless both Uber and Lyft go broke (not impossible at the rate they're losing money). In my humble opinion, the taxi industry is too far behind technologically and their years of being a protected industry left them ill-prepared to deal with unexpected competition.
Not long ago, taxis and taxi drivers served a real purpose. They provided point-to-point transportation services, drivers were typically far more knowledgeable about their area than the average local, and the cars themselves provided a bit of local flair that could help identify a place. While no city did this better than NY with its iconic yellow taxis or London with its black cabs, other cities like Philadelphia did offer some uniqueness in its cab fleet.
Today though, anyone with a Toyota Corolla and a smartphone has just as much road knowledge as the most seasoned cabbie, with a likely newer car, and in better condition than the average cab. With the barriers to entry virtually eliminated, cities far and wide now have replaced Crown Victorias with Camrys as the defacto cab fleet; and while Uber and Lyft do have some branding, the driver's car is ultimately unchanged while it functions in its role. Your Uber driver's Honda Civic doesn't look any more like a taxi than my car does.
Its well known that the taxi industry has been hammered since Uber and later Lyft came onto the scene, with the value of a medallion in Philadelphia losing over $500,000 worth of value since 2014. Combined with car-sharing services like ZipCar, taxi companies have had to grapple with the very real threat of extinction. Their apparent response to modernize is a great step in the right direction - but as an industry, they're taking a small step when they need to make a giant leap forward.
Transportation is essentially a commodity, as air travel has shown in recent years. People may say that they care about service - and everyone does care about service to some degree. But at the end of the day, the thing that people really care about when it comes to transportation, is cost. This is why Spirit and Frontier and Jet Blue (and even United) keep getting fare after fare, despite dismal customer service ratings, because they win on price...and route monopolies but that's a discussion for another day.
When one is going from point A to point B, and the difference in service is essentially negligible, the average consumer will choose the cheapest option almost every time. When one can get an entire ride on Lyftline for $2.50 and the flag-fall (price to start the journey) for the cab is $2.70, which option would you rather take?
This is the terrifying proposition for the taxi companies that they seem to be willfully ignoring. Philadelphia Freedom owner Everett Abitol was even quoted saying "[O}ne thing I can’t ever adhere to is sending someone to the airport for $13, $14 because it doesn’t cost that to do that job. The driver’s time can’t be duplicated, the cost of fuel." The combined fleet is considering flat rates between zones in an effort to be more price competitive, which could be somewhat valuable; but the cab companies are mistaken if they think their issues will be mostly resolved with improvements in passenger amenities and a marketing push. Initially, when Uber Black was the only option - this may have been a viable strategy. It's far too late for that now.
With public transport increasingly feeling the pinch from rideshare options, city transport options are becoming increasingly privatized through Uber and Lyft - and the jury is out on whether this is a good thing. Cities need viable cab companies, not only because increased competition drives down prices and improves service, but because the uniform appearance of cabs provide a local character that the national rideshare firms don't seem interested in matching.
The challenge now will be if the taxis can find a magic combination of pricing and amenity to stay competitive. If they fail, it will be a loss that we will all be poorer for. After all, is there anything really special about a Honda Accord?
General thoughts and musings about the work SSC Solutions does and other things happening in and around Philadelphia