Analysis, Part 3: What About the Poor Taxi Drivers?

This is the third of a series of stories looking into the severe failings of taxi service in the territory; how the wildly out-sized influence of the taxi lobby has brought us here, and what needs to happen. The first two parts can be read here and here.

Taxis line up for business on St. John. (Photo from the V.I. Taxi Association website)
Taxis line up for business on St. John. (Photo from the V.I. Taxi Association website)

If Uber and Lyft are allowed in the territory, what happens to the taxi drivers? What happens to the value of a taxi medallion?

First, the move should ultimately help taxi drivers. After all, taxi drivers could also sign up to be Uber drivers or use a locally-based app. Instead of sitting around playing cards at the airport or in Christiansted or Charlotte Amalie, hoping someone walks up and asks for a ride, they could be anywhere and get a notification that someone out at Emerald Beach or Cane Bay or Cruz Bay needs a ride. And if tourists could use these apps, they would, greatly increasing the amount of rides being purchased.

Everyone would win.

In some places, New York City for instance, the taxi industry really has seen financial pain due to competition from Uber and Lyft. Taxi medallions lost value as a vehicle for financial speculation. Some studies say ride-share drivers cannot make a living. Although the tens of thousands of people voluntarily choosing to be ride-share drivers in a booming, low-unemployment economy seems to fly in the face of that assertion.

Still, there has been some suffering in the adjustment. V.I. government officials say as much as 80 percent of V.I. taxi drivers lease their medallion from a speculator. Those speculators might see the value of their investment go down.

Speaking of pandering: not long ago, senators made it easier to speculate on taxi medallions, claiming it would help valorous veterans hurt in war, and bolster the “industry” of renting medallions out to drivers.

Someone will try to delay or prevent ride-share apps coming to the territory by arguing it is unfair to taxi drivers or by raising the specter of a lawsuit. We will likely hear that medallion speculators are valorous, patriotic veterans who might have seen combat. That they are hard working, good, decent people.

Yes, taxi drivers are fine people. They, like everyone, need jobs. But the change will likely help, not hurt them. They too can get more passengers by being Uber drivers too. And taxis will still have some special privileges. Only taxis can pick up fares off the street.

On St. Thomas, taxis already compete with hundreds of unlicensed gypsy cabs. That underground and sometimes sketchy market would promptly dry up if visitors could use phone apps to arrange safe rides by certified drivers.

More importantly, the taxis’ special interest needs to be weighed against the urgent need to bring this vital service that every other tourist destination is able to provide and the pathetic failure of V.I. taxis to provide anything close to a normal level of taxi service.

Medallion owners and taxi drivers in New York, Minnesota, Massachusetts, Georgia, Illinois and other states sued to stop Uber and Lyft, arguing that allowing ride-sharing apps illegally takes some of the value of their medallions. They lost. Court precedent is very much on the side that those speculating on taxi medallions do not have a right to government support of the value of their investment and taxi drivers do not have a right to protection from competition.

In 2016, the U.S. 7th Circuit Court of Appeals ruled against Chicago taxi drivers and medallion owner and in favor of ride-sharing services. The U.S. Supreme Court declined to take the appeal, making that decision the final say, at least for that part of the country.

“Taxi medallions authorize the owners to own and operate taxis, not to exclude competing transportation services,” the court wrote.

The plaintiffs in this case cannot exclude competition from buses or trains or bicycles or liveries or chartered sight- seeing vehicles or jitney buses or walking; indeed they cannot exclude competition from taxicab newcomers, for the City has reserved the right (which the plaintiffs don’t challenge) to issue additional tax medallions. Why then should the plaintiffs be allowed to exclude competition from Uber? To this question they offer no answer,” the opinion continues.

These arguments apply perfectly well to the local situation. Clearly the Legislature could act to clarify that ride-sharing apps like Uber and Lyft are legal in the territory without any hurdles beyond taxi driver opposition.

But senators will have to buck the taxi drivers. It will be interesting to see what is more important to senators: the good of the entire territory and its economy, or the narrow, short-sighted wants of one small interest group.

Tourists not being able to reliably get from one place to another or get back to their room after a night on the town is stifling the crucial tourism economy. For the good of the territory, it is crucial the Legislature act.