Uber and the Uncertain Future of Taxis at the Airport

As rideshare companies continue to encroach on long-held terrain, a new contract with the Port of Seattle has cab drivers wondering what they’re fighting for.

It’s about 4:45 p.m. on a Friday in mid-September, and the staging area for Uber, Lyft, and Wingz at Sea-Tac Airport—the wide concrete quadrant where so-called transportation network companies (TNCs) can now operate legally—is packed and buzzing. Cars of all makes and models, but mostly Priuses, line up and sweep in and out of a few dozen parking spots that ring a cluster of benches and plastic barricades in the middle of the third-floor garage, where, at the moment, some 35 people are waiting, scanning the melée, clutching their smartphones, and pointing. “There he is!” “You think that’s ours?” “Yeah, a black Prius.”

It’s a tight squeeze—and a very delicate dance—that the drivers play well. Yet they often narrowly miss one another as multiple cars pull out at once from opposite sides of the aisle, backing into a line of five or six waiting just inches behind. Dozens of passengers, some with small children, stream up and down the barricades, squinting at license plates; drivers, too, wade into the crowd, calling out names. Ever-growing throngs—now seven people at a time, now nine, now 11—walk briskly up the striped walkway toward the staging area, rolling suitcase in one hand, smartphone in the other.

By 5:30, the chaos is such that an airport staffer has appeared in an electric-orange vest to direct TNC traffic. The sheer number of cars pulling in and shipping out, the sheer number of passengers waiting, causes one middle-aged man to ask, bewildered, “Are we supposed to use our Uber app to get one of these or can you just … grab one?”

Meanwhile, a dozen or so yards away, a line of Yellow Cabs waits for crowds that never come. The reasons for this are clear—an average taxi fare to downtown Seattle, at $42, can be almost twice the cost of an UberPool, and those who have come of age in the iPhone era may not think to just “grab one” of these bright-yellow rides. Some Yellow drivers stand outside their cars, hands in pockets, shoes aimlessly scuffing the ground; one checks his own phone. After a minute, there’s a passenger; then another. A pause, then two more, then another long pause. Several times, cabs in the middle of the line appear to pull out without taking a passenger at all. A little after 5 p.m., a tall woman with a black suitcase approaches the taxi podium to ask for information. “Taxi?” a Yellow Cab staffer suggests. “No,” she responds, murmuring a low explanation, then pointing down the curb. The staffer gestures in the same direction, and moments later, sure enough, she’s walking toward the TNCs.

It hasn’t always been this way. Until April 1, 2016, taxis held sway over the bulk of Sea-Tac’s ground-transportation traffic (an umbrella term that includes taxis, airport shuttles, and hotel courtesy vehicles, but not rental cars, personal cars, or public transit). In April, though, when Uber, Lyft, and Wingz were each given a one-year contract and a chunk of garage where they could pick people up at Sea-Tac, the tables began to turn.

An unscientific yet concerted effort to count the number of people picking up TNCs and taxis at Sea-Tac between 3:30 and 5:30 on this typical Friday—i.e., not a holiday weekend—yielded an hourly rate of approximately 175 people for rideshares, 70 for taxicabs. And given the speed with which the TNC crowds grew as the day waned, it seems likely they kept right on increasing long after this tired reporter called it a night.

Casual observations like these are supported by data. For the past two years, in terms of passenger traffic, Sea-Tac has been the fastest-growing large airport in the nation. The numbers are such that the airport is positioned to nab that title for the third year in a row. And it’s very possible, according to Sea-Tac senior media-relations manager Perry Cooper, that the nearly 20 percent growth in Sea-Tac’s ground-transportation traffic alone between January and August of this year is due in part to TNC presence—people who might otherwise have gotten a friend or family member to pick them up, for instance, might now be taking Ubers.

In other words: A rising tide could lift all boats. Taxi trips still make up the biggest proportion of all ground-transportation trips at the airport; in August, they were at about 26 percent (TNCs came in at a close second, at 22). TNCs aren’t necessarily stealing trips from taxis, Cooper says; instead, “The pie is just getting bigger.”

Still, other numbers paint a different picture. According to the latest data from the Port of Seattle, which runs Sea-Tac, outbound taxi trips in January, February, and March 2016 did leap up significantly from the year before—by +9.0 percent, +7.8 percent, and +7.2 percent, respectively. But from April on—since the introduction of TNCs—that percent change flipped into the red. In April, taxi trips were down -6.3 percent, and the number has been dropping ever since, from -9.5 percent in June to -16.6 percent in August. At a time of unprecedented growth, taxi trips are the one thing at Sea-Tac whose numbers have plummeted.

This precipitous drop has only added to the conflicting narratives, rumors, accusations, and emotions that started flying late last year when the Port began the bidding process for a new, exclusive five-year contract for taxi service at the airport (the official Request for Proposals was released in January). The airport has long been considered a steady gig for cabbies and consequently a lucrative contract for dispatch companies, who make their money by taking a cut of the fares. Most airport drivers are members of the union Teamsters Local 117, and have been netting at least $20 an hour—after paying about $5.70 per trip to the Port of Seattle, $160 per week in dispatch fees to Yellow Cab, and a slew of other expenses—despite some misleading assertions to the contrary [“Airport for Hire,” Aug. 3]. But that $20 depends on getting enough outbound trips—and over the past few months, it’s felt less and less certain that they will.

Yellow Cab has held the contract since 2010, but on Friday, September 16, the Port signed a new contract with insurgent bidder Eastside for Hire. New operations, with the fleet now dubbed E-Cab, are set to begin on October 1 and will last for five years (with the possibility of cancellation after years three and four). No significant changes are expected for riders; the taxis will be painted a different color, and there will be flat-rate options. Drivers, on the other hand, could face monumental change.

The main reason for this is that Uber and other TNC fares are often far less than taxis’. A Geekwire headline from early April says it best: “Testing Uber pickups at the Seattle Airport: How I got home for under $22.”

This is because taxis and their fares are regulated; TNC fares are not. It’s a great deal for passengers, but there’s plenty of evidence to suggest that these fares—in addition to the fact that, unlike with taxis, there is no limit on how many Ubers are on the street—make it even harder to earn a living while driving for Uber than for a taxi company, airport or no. Internal documents obtained by Buzzfeed, for instance, show that after expenses, Uber drivers in Denver, Houston, and Detroit made about $13, $11, and $9 per hour in 2015, respectively. In Seattle, one analysis found, Uber drivers can expect to make about $10.50 per hour.

Driving a taxi in Seattle has historically been a family-wage job. But what feels very real to some drivers is the possibility that their livelihood is swiftly being eroded; that the route once worth fighting for—the airport—is no longer even valuable; and that the five-year contract just signed by Eastside for Hire will have little to do with the taxi world that exists five years from now. It’s a shiny new car with a V8 that the upstart cab company is buying, but there might be corrosion in the engine.

The past year has been an exceedingly tense one for airport taxis—largely because last fall, when Port staff began discussing the parameters of the next taxi contract, they were simultaneously negotiating the one-year pilot contract with TNCs. The TNC contract went into effect on April 1; taxi companies submitted their five-year bids in March.

Enter the sturm und drang. “We have no problem if someone wins the contract—absolutely, we have no problem,” said an irate Salah Mohamed, a Yellow Cab airport driver and active Teamsters member, during the public-comment period at a Port of Seattle Commissioners’ meeting in early August, where some hundred or so angry taxi drivers were present. “What we have a problem [with] is … You gave the RFP before Uber came in! And then Uber came and you have no idea what the effect will be!”

It wasn’t the Port that ignored the possibility of major TNC disruption, though, says Cooper. It was the bidders. In early meetings with taxi stakeholders, he says, Port Commissioners proposed that Sea-Tac let the TNC contract run for a year first, then launch the taxi bidding process once taxi companies had a better handle on what kind of world they were inheriting. But “the overwhelming response” from bidders, Cooper says, was “We know our business. We’re fine. Put the RFP out.”

In simple terms, the taxi RFP is an opportunity for the Port of Seattle to auction off this lucrative slice of its airport business. Taxi companies pitch their plans to Sea-Tac, which are scored by Port staff on a variety of parameters, including customer service, environmental impact (a “green fleet”), and, crucially, an annual minimum amount of guaranteed revenue to the Port. Eastside for Hire, this year’s winning bidder, promised the Port a minimum of $22.5 million over the course of the contract, with a projected estimate of at least $36 million. (That put it in second place, in terms of revenue to the Port; Yellow Cab’s guaranteed minimum was significantly less, $17.5 million.) Eastside’s bid translates to a per-trip Port fee of $7, growing to $9 in year five, a fee that taxi drivers pay out-of-pocket. To many current airport taxi drivers, who already balk at the $5.70 per-trip fee under Yellow—and balk even more at the obvious loss of business to TNCs—$7 to $9 feels criminal.

This spring, prior to making a decision, and as TNC numbers ballooned and taxi numbers began to drop, Port Commissioners raised their initial concerns again. On June 14, Commissioner Tom Albro wondered if a taxi company might even default on its financial promises to the Port, given the competition with TNCs. “I worry that should the market continue to erode at the rate that it’s actually going, that a respondent, no matter how well-intentioned … might find themselves at a place where the most beneficial place for them is default,” he said. “I worry about where that leaves us.”

And that’s exactly why, Cooper adds, the Port then issued a request for a special addition to the RFP bids. Known as Addendum 5, it asked taxi bidders to offer a specific breakdown of what they anticipated their drivers could make per hour; it was the Port’s way of saying, “Are you sure?” In several cases, bidders rejiggered the numbers and reduced their bid slightly to make sure drivers would be making a living wage. Eastside for Hire did not change its bid, calling the request “superfluous and redundant.” Yet, strangely, the Port explicitly did not use any of that information in its evaluation of the bids. Addendum 5 was created “to ensure Port priorities related to driver equity and small-business opportunities were addressed,” wrote Cooper via e-mail, but it “was informational only. It was not used for any scoring of the bidders. The Port was comfortable with the range of responses and continued with the RFP process.”

Which, to many drivers like Mohamed, “was just a slap in the face.” To ask for information about driver income, and then decline to use it in the evaluation? “It was a horseshit. It was a horseshit! That was nothing.”

Battles over taxi regulation are nothing new; Seattle’s taxi history is long, embittered, complex, and consistently dogged by rumors of corruption and wrongdoing too speculative to publish. The addition of ride-share companies like Uber, though, is a new front in this ongoing battle. For drivers, TNCs’ impact on business at the airport—and, in turn, on driver livelihoods—is always front-of-mind.

How, they ask, can Eastside for Hire—a young, small flat-rate for-hire company that expressly partnered with a multinational curb-management company, Standard Parking, in order to leverage enough experience and financial stability to even make a bid at all—make promises to the Port of $7 to $9 dollars a taxi trip, in an environment that seems, to them, fragile enough to collapse?

“I used to make on average six trips” in a 10-hour shift, one Yellow Cab airport driver tells me (he didn’t want his name used lest it impact his job prospects), averaging some $200 in take-home pay. “It’s gone to five trips now. But that’s summer,” when far more travelers are inclined to visit Seattle. “In the winter, I don’t know how it’s gonna be. In the winter, without Uber, we made five trips … Everybody is scared about what’s gonna happen. We’re all thinking about that every day, every minute of the day.”

Salah Mohamed, too, is “making less trips than I used to … we used to make eight to 10 trips a day. Now it’s about seven trips.”

“On a good day, now, I probably pick up about four trips,” says Yellow driver Aamar Khan. “If I’m lucky, maybe five, if I work a full day.” But again, that’s during the warm months. He emphasizes that the $7 the Port of Seattle requires comes directly out of fares, and thus out of driver income; as a metered taxi, “Let’s say my passenger decides to go across the street. My taxi meter says I’m supposed to charge them only $4. But my operational cost at the airport would be $7 per pickup. I went into minus three dollars!”

Doing the math, Eastside for Hire manager Samatar Guled finds the bid not nearly as short-sighted as nervous cabbies and their union representatives make it seem. The minimum guarantee to the Port of $4 million in the first year, divided by $7, is about 571,000 trips—roughly 35 percent less than the number of trips taxis took in 2015. In other words, Eastside has no intention of defaulting; they are acutely aware of the Uber effect. “We were very responsible in the amount of money guaranteed,” he says. Compared to “what the others bid, we bid reasonably.”

And despite all the rumors, “ultimately the cost [in the new fleet] is going to be less” than what drivers have been paying under Yellow Cab, he says. “We are a driver-owned company; we care about the driver.”

Yet the TNCs’ presence still feels like a threat to many airport taxi drivers. The number of airport taxis is currently capped at 300, with an additional 50 wheelchair-accessible vehicles. The total number of taxis is capped by the City of Seattle and King County. But the number of TNCs is not. To taxi drivers, the TNC airport contract recalls an all-too-familiar refrain: When Uber came to Seattle, TNCs were capped at 250 per company. Then in June 2014, Mayor Ed Murray removed that cap completely. Today there are at least 9,200 Uber and Lyft drivers in the Seattle area, and there is no cap on the number of TNC drivers authorized to work at the airport, either.

“It’s unfair—egregiously unfair,” says Cindi Laws, director of the Wheelchair Accessible Taxi Association of Washington, long a consultant in the industry and co-author of the Unified Transport Management Group’s (UTMG) bid. While taxi drivers are about to pay the Port a $7 fee per trip, TNCs pay only $5, a cost that’s passed onto customers—easy to do, perhaps, since TNC fares are lower than taxis’. Taxi drivers are allowed to pass only $1 of the Port fee onto customers; that’s a stipulation of both past and future airport contracts.

Perry Cooper says the $5 TNC fee was assessed at a time when the per-trip fee was closer to $5 for taxis, not $7 (“That was to make sure we kept a level playing field”). As a result, after the one-year TNC contract is up on March 31, 2017, the Port expects TNCs to be paying $7 a trip as well. But since, with Uber et al, the “money for the [$7] airport fee comes from the customer,” says Mohamed, “and we as taxi drivers, the money comes from our pocket—it’s not a level playing field.”

Sea-Tac is not the first airport to have welcomed Uber, Lyft, and Wingz. In the San Francisco Bay Area, for example, TNCs have been operating at the region’s three airports since late 2014 and 2015, and now have control of approximately 50 percent of the entire ground-transportation market at each; taxi trips, meanwhile, are down 23 percent. And according to a report commissioned by the Port of Seattle (the same report that found Sea-Tac’s $7 taxi fee to be among the highest in the U.S.), some airports that had welcomed TNCs, like those in Washington, D.C., have seen their taxi trips plummet, too; or, as in Portland, rise at a dramatically slower rate than in the year previous.

As a result of all this, the newly minted contract signed on September 16 has a novel stipulation: that the Port conduct a survey of drivers in the taxi fleet every six months to make sure they’re making a living wage—in order to “keep an eye on it from the driver’s perspective,” says Cooper. “Are you guys getting what we’ve been told by the bidder? … If not, let’s talk about it again.”

The spread of Uber at the airport goes beyond that crowded, hectic hub on level three of the parking garage, edging right up to the taxi stand.

In December 2015, the City of Seattle passed a landmark ordinance giving Uber and other TNC drivers the right to unionize—the first, and to date the only, such municipal law in the country. In March, the U.S. Chamber of Commerce sued Seattle over the law, arguing that it will “burden innovation, increase prices, and reduce quality and services for consumers.” A federal judge dismissed the suit, largely because its complaints were premature; the specifics of Seattle’s new law have yet to be inked. Named on the suit were two parties: Uber Technologies, Inc., and Eastside for Hire.

It’s no secret that Eastside has been working closely with Uber for several years. In 2014, the company negotiated a spot for its vehicles on the Seattle-area Uber app. (“UberTAXI” is last in the line of vehicle options that Seattle Uber users can choose from; rates are slightly higher than for an UberX.) In its bid for the airport contract, Eastside articulated that relationship. “ESFH is a versatile business that has successfully adapted to the technological changes in the industry,” the document reads. “As such, ESFH has built strong partnerships across the transportation industry in Seattle, including partnering with Uber’s affiliate in Seattle.” The bid also specified that Eastside will “coordinate inbound service requests with the assistance of the Uber app” and, notably, that Uber offered to extend them extra financial backing “of up to $500,000.”

That backing is important; Eastside for Hire, a small flat-rate company with no metered taxis in its fleet, needed to create some serious alliances to enable it to bid on a contract as big as Sea-Tac (which now requires both flat-rate and metered taxis). That’s why Eastside created a new “taxi alliance,” according to Guled, called E-Cab. That alliance, an LLC created this year, was co-launched with Uber.

“E-Cab: A Bridge to Your Better Future,” an early-January recruiting flier reads. “We are building bridges between the old traditional Taxi and For Hire industry and the new TNC companies.” The flier adds that Eastside for Hire is “anticipating bidding the Airport contract with the support of Uber Technologies.” Yellow Cab drivers recount the tale of E-Cab’s late-January launch, during which Uber Seattle manager Brooke Steger and Eastside for Hire owners Samatar Guled and Abdul Yusuf and consultant Chris van Dyk all presented to the drivers in attendance what the new fleet would be called and how it would work. According to city documents, Guled and Yusuf are listed as managers of E-Cab, not owners. “E-Cab is backed by Uber,” claims Yellow driver Aamar Kahn. “Uber had a big role in it. When E-Cab started back in February, Uber was there.”

“Eastside for Hire works very closely … to me they are 90 percent Uber,” says Mohamed, angrily, drawing the battle lines, echoing a slew of other drivers in public comments and in private interviews: “I’m a taxi. My first enemy, business-wise, is Uber.” Although one of the stipulations in the new airport contract is that 75 percent of the metered taxi spots in the new fleet are to be reserved for current Yellow drivers, to Mohamed joining the new fleet feels like a betrayal. “You’re handing me over to a company called Eastside for Hire … [but] you’re handing me, you’re selling me to Uber!”

Yellow Cab driver mistrust has been so rampant, in fact, that the latest data available from the city of Seattle shows E-cab with a total of three cars in its fleet.

Wih October 1 fast approaching, that is changing; Guled says he’s received 360 applications for the 350 available spots. To him, Eastside’s relationship with Uber is, quite frankly, necessary. “We realized, before the [other] taxis, I guess, that TNCs are here to stay,” he says. “Instead of just fighting a never-ending fight, we negotiated.” And that negotiation had everything to do with supporting driver livelihoods. “We partner with Uber so our drivers can make more money,” he says. “We are a driver-owned company … whatever helps out drivers.”

Uber spokesperson Caleb Weaver confirms via e-mail that Uber has been working with Eastside for Hire since 2014. “Uber’s partnership with Eastside for Hire has provided their drivers earning opportunities and made additional services available to riders using the Uber app in Seattle,” he writes. He adds that, going forward, Uber will help the E-Cab fleet reduce “deadheading,” the term for when a taxi goes back to the airport without a passenger.

This will allow those with the Uber app to use it to take a taxi to the airport, Guled says, maybe with a discount. That would be “much better than coming back empty.” With the number of taxi trips dropping and dropping, “Where do you make up the difference? How do you diversify?” One way, he says, is to “work with companies like Uber.”

Conflict following a taxi-contract changeover is, so far, pretty routine; relinquishing control over one of the most lucrative contracts that taxis can get does not go down quietly. In 2010, when Yellow Cab won the Sea-Tac taxi contract, for instance, the previous contract holder, STITA, sued. As a result, some of the sound and fury accompanying the upcoming switch, says ESFH consultant van Dyk (long a lobbyist in the industry, including previous roles with Yellow Cab), could easily be “sour grapes from a losing bidder.” Each player sometimes skews existing data in favor of a pre-existing narrative, he says, and lengthy histories of internal politics and personal vendettas can undergird much of the debate.

Still, some suspect foul play—with Uber as accomplice. “Our feeling, as operators, was [that the Port’s] mind was made up before anything else,” says Kahn. Why, for example, when Yellow Cab has been in business for a century, and managing the airport fleet for the past five years, and Eastside for Hire has only existed since 2007 and never managed an airport fleet, did Yellow lose so many RFP points on “experience”? Eastside for Hire knew that it didn’t have the experience necessary on its own; its bid is largely predicated on its partnership with Standard Parking and, to a smaller extent, with Uber. “That is one of the things we do realize—we lack some experience,” Guled says. “So we reached out to the people that have the experience.”

Cindi Laws finds this piece of information not only suspect, but grounds for dismissal. “The Port Commission is facing the possibility of an absolute shitshow,” she says. “Port staff gave this contract to a company using the experience of Standard Parking,” although the “RFP states very clearly that only the qualifications of the proposer are to be used.” Also, on its own, Eastside hasn’t demonstrated stellar financials; “they were break-even for the last three years,” Laws says. “That’s questionable.”

She points to the line of credit with Uber; to E-Cab’s relationship with Uber; to the promise that these taxi drivers can now turn to Uber for extra income. “Port staff gave the contract for taxi operations to a non-taxi company that partnered with two giant multinational companies” to make its bid, she says. “Port staff doesn’t seem to grasp that they gave the taxi contract to Uber.”

This is not a new narrative: TNCs are wreaking havoc on the taxi industry, and Uber in particular—now worth some $62.5 billion—appears set to destroy it. Uber CEO Travis Kalanick is known for confirming this kind of thinking in public. (To wit: “We’re in a political campaign,” he said in 2014. “The candidate is Uber and the opponent is an asshole named Taxi.”)

If, in the end, it’s a numbers game, it’s becoming clear which candidate is winning. Just head to the third-floor garage at Sea-Tac.

“Most people think this is probably the end,” one Yellow Cab airport driver tells me. “If we join them, we’re doomed. If we don’t join them, we’re still doomed. There’s a lot of people getting out of the industry right now.”

“This is the truth, my friend,” adds Mohamed. “We cannot survive at the airport.” Yet Uber, he says, most certainly can. “Uber can get away with anything they want. Just a simple app, and they can build the law any way they want.”

Nevertheless, “there still is real business out there if you just wanna drive a taxi,” argues Joe Blondo, a longtime Seattle cab driver, former president of the Alliance of Taxi Associations, and author of the blog Real Seattle Taxi. He drives all over the region, and is mystified as to why anyone would want to drive at the airport when, with experience and the ability to hustle, “There is definitely money out there for those who are looking for it.”

Guled concurs; he sees all the gloom and doom as unnecessarily fatalistic. “The taxi industry had a monopoly” for the past century, he reasons. “It’s very hard for a lot of people to change … They complain about trips going down. Yeah, because the airport opened up competition. What is the solution? Try to get more business outside of the airport, and try to diversify.

“Uber is testing a driverless car,” he adds. “The future looks really very scary.” But in the meantime, he’s resigned. “Change is a part of life. We’re trying to make the best of a difficult situation … It’s very clear that if we don’t change as an industry, we’re not going to survive.”

sbernard@seattleweekly.com

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