If you are in a rush, how do you get to work? Do you take a cab, a bus, uber? The answer to that question is changing drastically.
If San Francisco is any sign, taxi cabs around the world are in danger.
The city’s largest taxi company, Yellow Cab Co-Op, said that it will file for Chapter 11 bankruptcy in a December letter to shareholders obtained by the San Francisco Examiner. While regular taxi operations will continue, the company needs to restructure due to “serious financial setbacks” caused by mounting debt and competition from ride-hailing apps Uber and Lyft.
The major problem? People just aren’t taking as many regular cab rides any more now that Uber and company present a solution that’s often cheaper and more convenient. “On an annual basis over 5 million passengers are transported in Yellow cabs,” Yellow Cab President Pamela Martinez wrote in the letter. “We used to have more and our goal is to get them back and even more.”
As Uber and Lyft recruit drivers with significant bonuses, as well as more flexibility in hours, the old taxi companies also aren’t able to retain the best drivers. “We need to have not just more drivers but drivers who are happy to be behind the wheel of a Yellow cab because we offer the best opportunity to make a living in a taxi,” Martinez continued.
Yellow Cab might be just the first domino to fall in ride-hailing’s global assault on the taxi business. Many local taxi companies have lobbied for legislation to protect themselves against Uber, but the startup worth more than $60 billion is hard to defeat. It is striking that Uber and Lyft together raised more than $3 billion in December alone, in the same month Yellow Cab admitted it would have to file for bankruptcy.