How Clueless Are Calgary Cab Companies?

A bit of a kerfuffle has erupted in Calgary today, with some cab companies suing a local company called FastCab over “unfair competition”. FastCab offers a service where, using their smartphone app, you can “hail” a cab for a modest fee. Calgary cab companies, almost always tone deaf to public opinion, believe this to be unfair. From what I can see, the law is not on their side, and the arguments they presented in the media are specious at best.

It’s Competition, Get Over It

First there is the issue that this competition is “unfair”. Most competition is unfair. If anything, the cab companies have the unfair advantage. They have a monopoly, granted by the City of Calgary, to provide taxi service. This lawsuit is, if anything, an abuse of that monopoly power, and that is illegal in Canada without prior approval from the Competition Bureau. There is no way a reasonable person could describe taxi service under the current structure as better for the consumer.

So, rather than trying to innovate, and improve their service, the cab companies are determined to maintain the current level of mediocre service. Up until now, they could do that because there was no effective way to compete in the industry. Medallions for cabs are limited. The city only issues a set number of them. That simply leaves outsiders no choice but to find other ways to get around this pointless and ill-considered limitation.

Here’s an idea: maybe the cab companies should improve their service? Well, we know that is unlikely to happen, although this latest uproar may actually force them to rethink and innovate. Right now, their response is fairly typical of unimaginative and entrenched monopolies: try to protect the status quo, no matter how bad it actually is for the consumer.

It Isn’t Illegal And It Isn’t Wrong

FastCab has done nothing wrong, as far as I can tell. Their service appears to me as the legal equivalent of hailing a cab on the street. Conceptually, it is no different. The only wrinkle? You pay FastCab a modest fee each time you use the service. Again, no different than paying the doorman at a hotel a tip for getting you a cab.

The complaint by the cab company is that this service by-passes their dispatchers, and allows people to “jump the queue”. Again, so what? So does hailing a cab on the street, getting a cab at a cab stand at a hotel, or getting a cab at the airport. All of these actions by-pass the dispatchers. All of these accomplish the same thing as using FastCab. As far as I know, there is no requirement that I phone a cab company and use their dispatchers to flag a cab down on the street. In fact, I believe that a cab not already assigned to a passenger is required by law to stop and pick people up. That is the law in most other major cities in North America. As far as I know, it is the same here in Calgary.

The City Needs To Step In

Taxi service in Calgary is abysmal by any standard. There aren’t enough cabs. Cab drivers are, for the most part, simply not competent and not familiar enough with the city. I have never, ever had a cab driver figure out where I live, I always have to give them directions. Always. In an era of cheap GPS systems, this in inexcusable. The city has created this situation, by limiting the number of taxi medallions they hand out. Supposedly this is done in the name of trying to ensure good customer service, but it has created the exact opposite. It has created a situation where cab companies don’t have to compete, can offer mediocre levels of service, and don’t have to improve on it, because they are the only game in town when it comes to taxis. Otherwise, you have to drive yourself, rent a car, take transit or get a ride with a friend.

It is time the City of Calgary revisit how it manages the taxi fleet. Personally, I would say that the city needs to do 2 things. First, get rid of the limits on medallions. You want to offer cab service, pay your fee and off you go. Second, set minimum standards for drivers and taxis. Take the approach that New York does, where cab companies can choose from a limited list of approved vehicles, and all vehicles have to enter the fleet new. No used beaters turned magically into a taxi. You want to add a new cab? It has to be a brand new vehicle from an approved list. And those vehicles can only be in service for some period of time or a maximum number of kilometres. Once they hit the limit, they are done.

But won’t that result in too many taxis? Or subpar service? Not likely. Frankly, it can’t get much worse than it is now. A little competition might just shake up the current companies. They would actually have to think about how to differentiate themselves, and improve their service. Right now, they don’t have to, because there is no incentive to do so. FastCab has innovated around them, and given us a glimpse of how things could be. The response by the cab companies makes it blindingly clear just how incompetent their management is: rather than respond with innovation and improved service, they sue to maintain the status quo. The status quo isn’t acceptable.