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Will Uber Spell the Downfall of Taxis?

It’s entirely possible that, when you heard the news of Uber, Lyft, and other transportation network companies and services similar to them, you could’ve predicted the gradual downfall of the traditional metered taxi cab. Until now, there hasn’t been a reputable set of statistics to verify this possible trend, but a recent testimony from San Francisco’s transportation authority may be an early warning of the approaching downfall of traditional taxis. Could this affect auto insurance rates as well?

Uber, the leading app-powered transportation service in America, has been taking a large amount of business away from San Francisco’s taxi drivers since the service’s implementation in October of 2012. The average number of trips taken by a single San Francisco taxi per month in 2012 was around 1,400, but now, in late 2014, the average has fallen over 60% to just 504 trips per taxi on average in July of this year.

Services like Uber aren’t just hurting the taxi drivers, though. People who use wheelchairs may also feel the negative effects of Uber’s takeover, indicated by a 50% drop in wheelchair pickups by taxis between March 2013 and July of this year. This may be due to the fact that transportation network companies (TNCs) have no policies in place for wheelchair accessibility, and many transportation network company vehicles are not wheelchair accessible.

Kate Toran, director of taxis for San Francisco’s transportation authority, had this to say about the lower rate of wheelchair pickups since the introduction of the Uber service in San Francisco: “The ramp taxi program is just a vulnerable program in the taxi program overall because it costs more to operate, maintain and it costs more in gas for the drivers. It takes more time to do wheelchair securement, so it’s kind of the first to go.”

San Francisco may be a far cry away from Illinois, but it doesn’t mean that Uber and similar companies may not soon be overtaking taxis there as well. Car insurance in Illinois is some of the cheapest in the country, but plenty of people still use taxis, and a recently vetoed bill may put an end to that. No matter how low auto insurance rates become, there will still be people that depend on public transportation.

The bill, vetoed in August by Governor Pat Quinn, would require transportation network company drivers to submit to background checks. Included in that bill was a policy that would’ve limited “surge pricing” during peak hours.

This may seem like a dangerous bill to veto, but many analysts agree that the failure of traditional taxis can be blamed largely on overregulation. Many regulations in place restrict yellow cabs and make them unable to compete with app-based services like Uber, especially since transportation network companies have the ability to dynamically change their prices. TNCs have taken advantage of rush-hour pricing and frequently drop their prices below the regulated minimum for taxis, and regulated cabs have been unable to respond.

San Francisco regulation officials have been responding to this competition by relaxing standards and policies, allowing more people to obtain taxi licenses for less money. The taxis even have their own app now, allowing customers to summon and pay for 80% of the city’s taxis right from their phone.

Do you think Uber is here to stay? Would you prefer normal cabs to stick around? Feel free to share your thoughts in the comments section below.