Chicago Cab Industry Collapsing As Medallion Foreclosures Soar
Chicago mayor Rahm Emmanuel has a lot on his plate these days between soaring murder rates, failing pension systems and the worst domestic migration trends in the country as residents see the tax-hike writing on the wall and are moving out of the ‘Windy City’ by the 1,000s. Now, it seems he can add a failing taxi industry and millions in additional annual tax revenue losses to his list of woes.
As the USA Today points out, the cab industry in Chicago is quickly hurdling toward extinction as nearly 50% of the city’s fleet sat idle in March 2017 and medallion foreclosures in 2017 have already exceeded 2016.
About 42% of Chicago’s taxi fleet was not operating in the month of March, and cabbies have seen their revenue slide for their long-beleaguered industry by nearly 40% over the last three years as riders are increasingly ditching cabs for ride-hailing apps Uber, Lyft and Via, according to a study released Monday by the Chicago cab drivers union.
More than 2,900 of Chicago’s nearly 7,000 licensed taxis were inactive in March 2017 — meaning they had not picked up a fare in a month, according to the Cab Drivers United/AFSCME Local 2500 report. The average monthly income per active medallion — the permit that gives cabbies the exclusive right to pick up passengers who hail them on the street — has dipped from $5,276 in January 2014 to $3,206 this year.
The number of riders in Chicago hailing cabs has also plummeted during that same period from 2.3 million monthly riders to about 1.1 million.
More than 350 foreclosure notices or foreclosure lawsuits have been initiated against medallion owners already this year, compared to 266 last year and 59 in 2015. Since October, lenders have filed lawsuits against at least 107 medallion owners who have fallen behind on loan payments, according to the union’s count.
Meanwhile, the value of Chicago medallions have crashed by 90% in less than four years after peaking at over $350,000 each back in 2013.
The value of Chicago medallions hit a median sales peak of $357,000 in late 2013, just before Uber arrived on the scene in Chicago. In April, one medallion sold for just $35,000, according to city data.
About 39% of Chicago’s medallions are owned by individuals or groups with four or few fewer medallions, while the majority of medallions are owned by companies that maintain large fleets of taxis and lease the permits and vehicles to licensed operators.
“It feels like the city is just watching us collapse,” Aikins said. “Right now, there are a few people, the elderly and some others who refuse to take Uber because they are uncomfortable with it, that keep us going. But how many of those people are out there to sustain us?”
Not surprisingly, the cabbie union has done what unions do best by calling on local government officials to prop up the dying industry through tax incentives, measures which should buy them at least another month or two of operation.
The union is calling on the city take several actions to provide relief for the city’s struggling taxi industry, including changing rules so taxi drivers aren’t required to replace their vehicles as often, waive an annual $1,176 per taxi ground transportation tax fee, and eliminating a city medallion license renewal fee that costs owners $1,000 every two years.
“When they opened up ground transportation and taxi market to thousands of for-hire vehicles like Uber, Lyft and now Via . . . taxi driver income has been decimated and owner-operators are unable to keep up with loan payments for their medallions plus their high-operating costs,” said Tracey Abman , associate director at AFSCME. “As a result of that, hundreds of taxi owner-operators are facing foreclosures on their medallions and thousands more foreclosures are likely unless the city takes substantial action to reduce the financial burden on small taxi owners.”
Of course,Chicago cabbies aren’t alone in feeling the pinch. In New York, ridership in the city’s iconic yellow cabs has fallen about 30% over the last three years. Last year, San Francisco’s Yellow Cab — the city’s largest taxi company — filed for Chapter 11 bankruptcy protection. Los Angeles taxi ridership fell 43%, and revenue was down 24%, between 2013 and 2016.
Shocking that it is so hard to compete in an industry in which Uber is willing to burn billions of dollars per year to provide your service for a fraction of your operating costs.