Sean McCue says his family’s business was an institution, and it was booming. Four generations operated McCue’s Yellow Cab of Watertown out of an office on Main Street at Watertown Square.
And then Uber and Lyft came to town.
At first, Sean said he thought they were just transit technology companies. And since they were only operating in Boston, he didn't pay much attention. But in retrospect, he said, he should have.
“Uber found these niche markets that I was (initially) able to hold onto — and they got into those and that's when I saw the writing on the wall,” McCue said.
The ride share business spread to the suburbs around 2013, and McCue saw his business begin to drop off — at first slowly, and then more dramatically. He said he initially noticed the college crowd weekend business was slowing. Then trips to Logan Airport began disappearing, and finally the big corporate accounts that he thought were safe began drying up.
There is no question that transportation companies like Uber and Lyft have decimated the taxi industry. According to the Boston Police Department, taxicab rides plummeted from 8.8 million in 2017 to 4.7 million last year. As recently as 2013, that figure was above 14.5 million. Since appearing on the scene almost 10 years ago, the ride share companies now dominate the market, and as a result, dozens of cab companies have gone out of business.
According to the Massachusetts Department of Public Utilities, ride share companies provided 81.3 million rides in Massachusetts in 2018 — an increase of about 25% from the year before.
McCue found he couldn’t compete with Uber and Lyft. Losing money every day, he reluctantly closed his family’s taxi company in August 2018.
But McCue and other company owners say they shouldn’t have had to face this choice. In 2016, Gov. Charlie Baker signed a law that dedicated a nickel from every Uber and Lyft ride to help taxi companies like McCue's. The taxi companies complained that since Uber and Lyft were not burdened by the same state and local regulations, taxi owners should be compensated in some way to "level the playing field." The law says the money will help taxi businesses to adopt "new technologies and advanced service, safety and operational capabilities" and to support workforce development.
Some taxi owners wanted the law to go further, perhaps banning the start-up competitors unless they meet the requirements taxis do, such as regular vehicle inspection by the police.
The fund accumulated more than $7 million by the end of 2018, but taxi owners haven’t seen any of it.
McCue said he really could have used some of that money.
“I think it absolutely would have helped. It would have enabled us to keep afloat until we were able to reorganize and become more competitive,” he said.
A spokesperson for MassDevelopment, the state agency charged with allocating the ride share fee money, said they have yet to decide how it will be spent.
"Developing a plan for how to best leverage these resources has been a process that has included extensive industry research as well as surveys and focus groups with the taxicab and livery businesses these resources are intended to assist," spokesperson Kelsey Schiller said in a statement. "Investing the time to actively engage the taxicab and livery industry is essential to shaping a viable and effective response plan."
And although taxi owners claim the law says they should receive the money between 2018 and 2022, Schiller said the legislation did not stipulate when the funds are to be distributed.
Joann Thompson, president of Tommy’s Taxi in Framingham, said the fund "is meant to offset the effects of ride share, which has really turned the taxi industry upside down. A lot of smaller companies have gone out of business. It just gets harder and harder to operate in this environment."
Thompson said she and other owners gave consultants their ideas for uses of the fund almost a year ago.
“A lot of us would like to upgrade our digital dispatch, our apps to be more competitive. I think capital equipment expenses is always a need, a low interest or even low interest revolving loan fund. ... I think any way to get some money into the hands of the operators [is needed],” she said.
Like many taxi owners, Watertown's Sean McCue was slow to react to the emergence of the ride share apps and said that when he did, it was too late. Still, though, he blames the ride share companies for undercutting him with ride pricing and how they pay their drivers.
But author and business consultant Roger Dooley said the taxi companies themselves shoulder some of the blame.
“Sometimes people suggest that Uber and Lyft are crushing the taxi business because the ride hailing services are cheaper. That is not the major reason. Uber and Lyft are winning because they offer superior, almost frictionless customer experience,” Dooley said.
He explained that Uber and Lyft’s use of technology made it much easier for people with smartphones and apps to book a ride, know when the ride was coming — know how much it would cost — and to pay for it.
Dooley said taxis can compete, but they have to offer the same consumer benefits. “That means using a mobile app that can deliver a ride as quickly and predictably as ride hailing apps, route tracking, automatic payment, deferred tipping and driver ratings would all be part of that.” And Dooley said he’s not a fan of cities collecting fees from ride share companies to subsidize taxi service. “City administrators would be better off reviewing taxi regulations and eliminating those that increase costs or otherwise disadvantage taxi operators.”
"Taxi companies at first thought they didn’t need the new technology and could survive doing business as usual. But they were fatally slow to adapt," Dooley said, and like McCue, eventually could not compete.
But some were able to adapt, in a way. Cheryl Horan, owner of Somerville's Green and Yellow Cab Company, said she has been able to hang on because she developed a niche market.
It’s known as a non-emergency medical service, Horan explained.
"Non-emergency medical service is for people who do not need an ambulance," she said. "You’re ambulatory, you can get to an appointment, you don’t need a chair car. There’s a lot of independent seniors in our community that need those services. We were providing it for a long time, and we’ve been able to grow because there's a huge demand for people to get to their doctors' appointments."
Horan said these riders are often repeat customers who appreciate seeing the same drivers every day.
Another benefit of servicing this group, Horan said, is that the money for this kind of transportation often comes from the federal government and insurance companies that understand that keeping people in their homes keeps them out of more expensive hospitals.
So far, non-emergency medical transportation has been enough to keep Horan's business afloat, but she said she could also use some of the state money that's been accumulating from those Uber and Lyft fees. She needs to keep current with the technology so she can continue to compete with ride share companies, she said.
“We've had a mobile app since 2013,” she said. “We have 40,000 people who have downloaded it. We offer promotions — $10 off Logan Airport if you book through the app, we offer 20% discount to Tufts students and faculty.”
Joann Thompson of Tommy’s Taxi said the longer companies have to wait to receive the funds, the fewer of them there will be around to benefit.
She has already seen dozens of cab companies go out of business in the last five years, she said, and added that the state money could not only help individual owners, but could be used to develop technology that could create a regional taxi network that would employ some of those out-of-work drivers and help meet the growing need for non-emergency medical transport.
