The largest traditional cab company in San Francisco filed for Chapter 11 bankruptcy last month. While they did not cite San Francisco startups Uber or Lyft outright, the papers that they filed spoke of worsening business conditions as a reason for the bankruptcy. The official word from Yellow Cab Cooperative is that lawsuits filed by passengers are the cause of the need to restructure the business and file for Chapter 11. Though Uber is no stranger to lawsuits, including the most tragic case I’ve come across with a driver running into a family crossing the sidewalk, they seem to have the means to settle.
While the arms-race for rides has been heating up worldwide, with stories of taxi drivers rear-ending Ubers, Uber drivers staging car-blocking horn-honking protests around city halls, sting operations with cops posing as Uber passengers to ticket the drivers when Uber is deemed unlawful in a city, and the recent canvassing-battle surrounding the Superbowl, it’s no surprise that startup and technology-obsessed San Francisco is the focal point of the conflict potentially signalling the end of the taxi era.
A solid business, doing well, would not be brought down by competition alone. But the lawsuits compounded by the downright miserable taxi experience in cities all over the world make this a harbinger of what may come to more cab companies down the road. With both cab companies and Uber/Lyft essentially writing the rules on regulating drivers and conditions surrounding the experience, there are any number of stories on either side of the argument for why taking a ride from someone else can be a dangerous proposition. Will cab companies be able to keep up? Even with more regulation, enforcing the drivers in credit-card acceptance, and unrolling apps to make on-demand cab calling as simple as it is with Uber or Lyft, the big downfall of taxis is that there are different companies in every city, whereas Uber is available in a huge number of cities, nation-and-worldwide.
Also, both Uber and Lyft (who recently got a $500 million investment from General Motors) are working their ways into the self-driving car market. While this is far off in the distance from becoming reality for both, the end game is to have driverless, easy to use-and-hail taxis, which will cut down on the numerous issues that rideshare and private car companies face with both drivers and clientele acting inappropriately or even dangerously.
In the end, unless cab companies merge under an umbrella to make it easier for travellers to use one app, and as long as ride-hailing services have the advantage over traditional taxi companies in the form of billions of dollars in funding, I believe this is not the only story of a traditional taxi service going bankrupt that we are likely to hear. Only time can tell.