ITHACA, N.Y. — Two local cab companies have responded to the possibility of Uber and Lyft moving into Tompkins County and their main takeaway was the same: the sparkle behind ridesharing services likely won’t last long.
John Kadar, who has owned Ithaca Dispatch for 22 years and has about 30 drivers on the road in Ithaca and about 50 in Elmira, said, “I think frankly we’re going to be the David that beats Goliath.”
He said that the business model in place isn’t going to allow for drivers to make enough money to make the job worth it, something ridesharing services rely on to keep rates low.
From customers’ perspectives though, generally cheaper fare is a solid reason for using ridesharing companies.
Kadar, along with local ASAP Cab Company owner David Moore, say the low prices come at an expense to workers, though.
Moore said he spends about $3,800 a year per cab on liability insurance because commercial insurance is more expensive than personal insurance.
With eight cabs on the road in Ithaca, that adds up to be about $34,000 per year for him. Kadar said he spends at least $200,000 a year on insurance alone.
In comparison, Uber passes that expense down to its drivers, who are independent contractors. It costs Uber drives between $1 – $1.50 per ride for insurance.
The insurance isn’t the only expense for ridesharing workers. For instance, drivers also pay a 20 percent commission to work, a $10 phone data fee, and have to keep up with the costs of vehicle maintenance and gas. Drivers without vehicles also pay for car rental fees.
For cab drivers, a lot of these fees are usually covered by cab companies.
The companies pay for the vehicles, gas, and upkeep. In addition, cab companies pay government mandated expenses to drivers, such as workers compensation, disability, and social security.
“We have all of these costs. Uber and Lyft don’t and it gives them a tremendous competitive advantage, and we believe that’s unfair,” Kadar said.
Kadar said his drivers keep 35-40 percent of their total sales. He employs about 230 people in Ithaca and about 40 in Elmira, most of whom he says make at least the Tompkins County Living wage of $14.34 per hour.
The jury is still out on how much Uber drivers make. But The Washington Post estimated that in some places in the country, Uber drivers average making less than $7 per hour.
Related: How much Uber drivers actually make per hour
Other estimates put the cost at $15 per hour, but cite noticeable disparities in pay based on a driver’s age, gender and race.
Related: Uber drivers earn about $15.68 an hour but disparities are significant, survey finds
But regardless of how workers are treated, the cab companies still have to adapt to the change.
“They (ridesharing companies) are going to affect the bottom dollar a little bit,” Moore said. “It’s already an overcrowded market, to be honest with you… There’s not enough business to go around with everybody.”
He said he remembers a time when hundreds of students waited in the Ithaca Commons on weekends for cabs and would get into fistfights trying to snag one. But times have changed.
In terms of riders, Moore said, “Now it’s hard to find them.”
There are currently about five cab services in the Ithaca area, more than there were when Moore started his company about five years ago.
But Moore also said that Tompkins Consolidated Area Transit, or TCAT buses, have also dipped into cab business.
Cab companies used to be able to hit it pretty good on the bar rush (around 1 a.m.) but TCAT is pretty much wiping that out,” Moore said, with late-night buses on weekends.
“Does it make me a little nervous. I mean, yeah, it does,” he said.
Moore expects new changes when ridesharing services come, but maybe not an insurmountable change.
For instance, about 90 percent of his business comes from Medicaid — taking people to hospital visits, etc. — and those calls for service are made on a rotating basis.
But he said he stays competitive in other ways. For instance, he charges a dollar less than the city of Ithaca set-rate. He’s also expanded to cover the Elmira area and has been given approval to move into the Cortland area.
For Kadar, staying competitive means upping his business game.
His company now has a mobile app so people can quickly order a pick-up, and getting a cab via phone call now involves some automation to speed up the process.
I did realize that we had to adapt some of that technology…I do realize that’s the future of cab companies,” he said.
After the ridesharing services move into the area, he said a new fleet of drivers will be hitting the road driving their own vehicles and working for the company. He said he hopes these new drivers, who will likely primarily operate during peak weekend hours, will help keep wait times down. Long wait times are the most common complaint he hears from customers.
In the mean time, the Tompkins County Legislature will be taking a look at whether to allow ridesharing services in the county.
Legislator Mike Lane, who chairs the Transportation Committee, said legislators have been discussing whether they should opt out, an option permitted in counties with 100,000 or fewer residents. Lane said earlier this month that they need to take a serious public safety look at ride-hailing services.
“We don’t want any unsafe situations for our residents,” Lane said.
The issue will be discussed further at the next Transportation Committee meeting June 26.
Related: Uber and Lyft may be here in time for July 4
Update 9:37 a.m. June 1 — This story has been updated with more accurate numbers regarding the size of Kadar’s taxi fleet and the number of people he employs.
Featured photo courtesy of Flickr.