Summer Of Uber Deals Painful Blow To Taxi Industry

East End taxi drivers say that the spread of ride-sharing companies like Uber and Lyft devastated their bottom lines in the second half of the summer of 2017.

Taxi company owners said that the rates ride-sharing companies are able to charge create unfair competition for taxi companies that spend $8,000 to $10,000 a year in insurance, licensing fees and maintenance for each car they put on the road.

“It’s been catastrophic for us,” said Juan Munoz Sr., a cab driver for SuperTaxi, based in East Hampton. “I am a driver, but I see the sacrifices that the owners of the company are suffering as well. We are facing dishonest competition. It’s not fair that Uber has private drivers with private plates—they don’t have to pay insurance, they don’t have to pay for licenses or an office.”

State laws, amended by state legislators at the forceful urging of Governor Andrew Cuomo, allowed ride-sharing companies to begin operating statewide just ahead of the Fourth of July holiday. After a slow start—which left some riders staring in frustration at their mobile phones for ride confirmations that often never came—Uber and, to a lesser extent, Lyft, steadily expanded their presence through the month of July, and by August had substantial fleets of vehicles roaming the South Fork, especially on weekend evenings.

On Saturday of Labor Day weekend, the Uber app showed dozens of cars clustered around each of the South Fork hamlets, and several more on the Lyft app.

Taxi owners and drivers said the impact on their business was dire. Lower rates charged by Uber and Lyft for rides to the same locations quickly had potential clients turning away from taxis waiting curbside at bus and train stations and outside late-night spots.

Some cab drivers said that a reliable source of rides, outside the Stephen Talkhouse in Amagansett, became an interminable waiting game last month—with some drivers sitting for hours without ever being flagged for a ride. Young partyers would come out of the bar with their phones in hand and dive straight into cars that had pulled up just seconds earlier, they said.

Even when a potential customer would come to the window, negotiation was the first inquiry, with a mobile phone in hand to check the competition.

“Now, everybody is asking for the price and saying Uber is cheaper,” said Jymmy Uzhca, who started his own two-car taxi company, Jymmy’s Taxi, in 2014. This summer, he said, was his worst in business.

“We pay a lot of money, like, $9,000 per car,” he said. “I’m okay this year, but we’ll have to see after next summer.”

The biggest cost burden, drivers said, was the approximately $7,000 a year for insurance on a car registered with the state as a taxicab, mostly for liability coverage. Drivers for ride-sharing companies like Uber do not have to carry liability insurance themselves, since the companies offer $1 million in umbrella coverage to each driver.

The state legislation also preempted local municipalities from imposing their own licensing requirements and regulations, so ride-sharing drivers don’t have to buy the town licenses.

The costs of operating a taxi are what drove the rate schedules used by local companies—the ones that riders have long complained are too high, inconsistent, impossible to know until they are already inside the vehicle and payable only in cash. Ride-sharing apps, on the other hand, tell the rider the price before the ride is even agreed to and offer the convenience of payment by credit card through the app, as well as being able to hail the ride even before stepping foot outside.

Some drivers said that the freewheeling nature of the cab business locally has done itself in, to an extent. High profits drove a mushrooming in the number of cab companies and cabs on the roads of the South Fork—as well as a dizzying array of telephone numbers with which to hail the cabs, many of them cars leased to drivers from other areas for busy weekends.

“There’s too many taxis—there must be a hundred cabs in Montauk,” said one driver, a Montauk resident, who was waiting at the East Hampton train station in an East End Transportation cab this week. He asked that he be identified only as Pete.

Some cab drivers have already started to jump ship—ditching their jobs with taxi companies and signing up their personal cars to work for Uber.

“I used to make good money before Uber came,” said Jeffrey Buitrago, who had been driving a cab at the start of the summer but on Labor Day weekend had the distinctive black-and-white Uber emblem in the window of his Toyota. “In July, it was okay, but it really hit us in August.”

Mr. Buitrago, a 20-something East Hampton High School graduate with tattoos on both arms and carefully coiffed hair, said that he estimates he earns about $35 an hour driving for Uber, after deducting for the gas that he burns—not as much as he would make on a busy shift driving a cab, at least before the arrival of ride-sharing competition, but enough to be worth the jump.

He also noted that he will have to pay 6 percent of his earnings in taxes next spring—a requirement of the state legislation governing ride-sharing—and that he is racking up miles on his car quickly.

“You really need your car to be brand new,” he said. “The brakes wear down, you have to keep an eye on the oil and fluids. But it’s worthwhile.”

Juan Munoz Jr. says he might be following in Mr. Buitrago’s footsteps soon. He currently drives full time for a Southampton cab company but said that as he saw his earnings drop from $2,000 per week to barely more than $500 in the final week of summer, he has started to consider signing up to drive for a ride-sharing company.

“I work for one of the most reputable companies, and I’m close with the owner. They thought they were going to take a 20-percent hit at most, but it’s been much worse,” he said. “I keep logs of how much I make, and I’ve taken at least a 50-percent hit this month. This week, it was more like 75 [percent].

“So I have to do what’s in my own best interest,” he added with a shrug. “If you can’t beat ’em, join ’em, right?”

East Hampton Town Supervisor Larry Cantwell said that the town has already tried to make some accommodations for taxi drivers facing newly stiff competition, lowering the price of a town license by a third. He said he doesn’t expect the town would soon be dropping its licensing requirements—which this year included background checks and fingerprinting of licensees—and said that some fees are necessary to maintain the standards.

Mr. Cantwell said that regulations the town adopted ahead of the state’s legalizing of ride-sharing helped the town tamp down the sort of problems it had with Uber drivers in the past. He said that Town Police issued summonses to some drivers for not adhering to the state regulations—which bar ride-sharing drivers from accepting hailed rides curbside, taking cash payments or soliciting rides.

The supervisor said the future was uncertain, and that he hoped Uber would not drive the taxi industry over a cliff.

“What does concern me is that, while we have a lot of companies that take on extra vehicles in summer and then close down or remove vehicles in winter, we have a core group of small local cab companies that provide services here on a year-round basis—and if they get put out of business, that would be bad,” he said. “The state’s approval of [ride sharing] has established a new competitive environment for the taxis. We’ll see what the consequences are.”