San Francisco taxis look to compete with upfront ride cost

San Francisco’s taxi industry is taking a big step in the effort to compete with Uber and Lyft.

The San Francisco Municipal Transportation Agency’s Board of Directors, which regulates taxis, approved a pilot program that will allow taxi companies to quote passengers travel costs before ride requests are made, as Uber and Lyft have done for years now. 

Kate Toran, director of taxis at the SFMTA, said the app will quote fare based on the meter rate and an algorithm, and enables passengers to accept or reject the ride. Toran said providing fare upfront will help avoid “meter anxiety” passengers experience as they watch meters continue to tick up, adding:

“This is a functionality that other types of services allow. Moving the taxi industry in this direction we think is a real benefit.”

The taxi industry has been crippled by Transportation Network Companies, such as Uber and Lyft, which are regulated by the California Public Utilities Commission. Taxi trips took a further nosedive once the Covid-19 pandemic hit in March 2020.

SFMTA data shows that the average number of monthly taxi trips dropped from 314,752 in 2019 to 92,126 in 2020, though this year is showing a modest increase with an average of 140,000 trips per month.

Hansu Kim, who owns the Flywheel app and Flywheel Taxi, said he thinks allowing passengers to see the costs upfront will help draw riders back to the taxi industry.

He said:

“It really allows two things. It allows the consumer to basically now price shop and they can see that taxis are equivalent to Uber and Lyft.”

Kim said the perception is that taxi rides are more expensive than Uber or Lyft. While historically that may have been true, Kim noted that the cost is becoming more equivalent as surge pricing drives up fare, sometimes surpassing what passengers would spend on the same taxi ride.

Prices surge on Uber and Lyft when demand for rides is higher than driver availability. Taxi are more riders requesting a ride than there are drivers in a high demand area. Taxi services do not charge surge prices when rides are requested through an app.

Kim told SFBay he expects the Flywheel app to begin offering upfront pricing next month. The SFMTA said eight taxi companies are using the Flywheel app, including Kim’s Flywheel Taxi fleet. There are two other taxi request apps available in the area: Arro and YoTaxi.

The pilot program is part of a larger reform package the SFMTA board approved Tuesday, including fine structure revisions for driver infractions. The board also approved a policy that allows taxi drivers and passengers to negotiate a flat fare of up to $20 per person for shared rides.

Directors chose to continue pursing a reform that would decrease dispatch response times, but they have asked staff to return to the board with a plan to do so. 

Director Amanda Eaken said:

“This seems like one of the kind of key performance indicators you would want to make sure we’re tracking.”