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Sep 5, 2017 9:57 AMPublication: The Southampton Press

Summer Of Uber Deals Painful Blow To Taxi Industry

East Hampton resident Jeffrey Buitrago quit driving a taxi and started working for Uber last month after he saw his taxi ridership drop as Uber cars became more prevalent in East Hampton.  MICHAEL WRIGHT
Sep 5, 2017 4:07 PM

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.”

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Maybe if the taxi companies did price gouge those in need of a ride they wouldn't have been "devastated" by the competition. $60 to go from the train station to the road behind the North Sea Fire Department is robbery! (That was a real price given to me the last time I needed a ride). I welcome Uber and Lyft with open arms!!
By S'hamptonNative (84), Southampton on Sep 5, 17 10:52 AM
Imagine that? Competition and better quality cars taking a bite out of the disgusting and unsafe local cab companies. Shocking.
By Mouthampton (439), Southampton on Sep 5, 17 10:52 AM
Sounds like the Taxi drivers should become Uber drivers
By TrueHamptons (33), Sag Harbor on Sep 5, 17 10:59 AM
Wait. Wait lol. I'm supposed to feel bad for a cab driver that once made $2,000 a week? $104,000 a year to drive a cab? Hell even $35/hr is insane for a cab driver. With how many times I've personally been screwed by cabs out here, good riddance.
By Brandon Quinn (191), Hampton Bays on Sep 5, 17 11:17 AM
What's that saying about not letting the door hit you in the rear?
By johnj (1024), Westhampton on Sep 5, 17 12:02 PM
Adapt or die.
By Pacman (273), Southampton on Sep 5, 17 12:14 PM
It's really not nice to cheer someone's financial losses. Putting all taxi companies in a bad light is not fair.
There are struggling residents that drive part time to put their kids through college and others that need to make ends meet on the expensive east end.
Having a national company with its large resources devastating a local industry is not fair if they get away with it.
Thank God your not impacted by something like that in your industry.
Local government needs to have Uber ...more
By Rayman (64), southampton on Sep 5, 17 1:42 PM
Nearly all businesses compete against national (and international) companies. There are few businesses who are not impacted by competition from any number of chain stores, e-tailers, national franchises, etc. The taxi co.s stayed in business thanks to local governments protecting them from competition. I do wish someone would step in and do that for my business!
By Arnold Timer (327), Sag Harbor on Sep 5, 17 2:18 PM
1 member liked this comment
Wow! 7 comments on 27East where all those posting are in agreement (and no mention of Trump!).
The local taxi companies created a situation that was doomed to crash and burn once they faced free market competition. The writing has been on the wall for several years and the local companies had a brief reprieve (during which they continued to gouge) thanks to town regulations. Anyone who has needed a taxi on the East End has been paying exorbitant rates for slow service in junky cars for a long, ...more
By Arnold Timer (327), Sag Harbor on Sep 5, 17 2:09 PM
3 members liked this comment
I did quite a bit of Uber driving on the east end this summer since it was legalized. When you need a ride in the middle of January, despite all the negatives, I think the local companies will be appreciated. Hopefully the local companies can maintain the services during the lull.
By Genuin (26), Hampton Bays on Sep 5, 17 3:02 PM
I took a cab to Quogue from WHB. My driver was well over 300 pounds and it might have been as many days since bathed.
By Hambone (514), New York on Sep 5, 17 7:16 PM
They did it to themselves. Many years ago I paid $40 to get from the talkhouse to a house next to the neighborhood house. They have been gauging people for as long as I can remember. I get insurance and all that but damn. Also my mom has paid 80$ to go to southampton and back. It's nuts.
By yanks684 (3), Wainscott on Sep 6, 17 8:08 PM
Uber is presently a not for profit company. It has never posted a quarterly profit ever. The latest numbers have it losing $6.5 million dollars a day. It's objective is to clear out the legacy taxi companies and introduce driverless taxis.
By Duckbornandraised (184), Eastport on Sep 6, 17 11:23 PM
You are most likely correct. Assembly lines are run far more efficiently by robots, AI computers diagnose illnesses better than doctors and one day most cars will be self-driving. Innovation is nothing new. Technology has been changing the world since the invention of the wheel. As previously noted above: "Adapt or die."
By Arnold Timer (327), Sag Harbor on Sep 7, 17 12:02 AM
I agree with most of the comments here about how taxi companies price gouge. I don't use Uber though - how do they calculate rates? Would the fare between point A and B always be the same?
By Rich Morey (378), East Hampton on Sep 8, 17 5:50 PM
Uber is hitchhiking.
By SlimeAlive (1181), Southampton on Sep 10, 17 6:08 AM
I would always prefer to support local businesses but they did this to themselves. One of them charged my friend and I $80 EACH to go from Star Room to Main St in Sag Harbor. And this was years ago. It is insane.
By PeteyBoy (8), Southampton on Sep 10, 17 7:56 PM