Color Wars: Curbing the Underground Taxi Market

Thirty-six years in the cab business have left Richard Hybels with a jaundiced view of his competitors. "You'll never find anyone more dishonest than in this industry," the brusque 69-year-old says, leaning over a desk at his Bayview office, a cluster of portables shared by several local taxi companies. Hybels parks his Ford Crown Victoria amid rows of identical cabs, some bearing the tomato-red color scheme of his modest company, Metro Cab, others with the more ubiquitous yellow of Town Taxi. He skulks in a doorway and crosses his arms, adopting the prepossessed look of a TV cop.

He suspects many of his brethren aren't playing by the rules.

Hybels used to be a broker, meaning he mostly traded in taxi permits — or medallions — rather than actual taxis, often leasing them to drivers for months at a small profit margin. He quit the long-term lease trade after acquiring Metro, but says other companies use leasing as part of their business model; it's easier to traffic in medallions than to maintain a fleet. Although that model is currently legal, it's made the whole cab system much harder to monitor. It's also enabled long-term medallion "managers" to run their own underground cab businesses, often without an official roster of drivers. Over the last decade, the underground medallion market swelled in San Francisco, bedeviling regulators at the San Francisco Municipal Transportation Agency. Underground brokers routinely hire drivers who can't get jobs elsewhere, charging them well above the standard $109 "gate" fee to rent a cab for an eight-hour-shift. (Hybels says that if he bent rules and overcharged drivers, he could pull an extra $85,000 a year.) When drivers' names aren't on an official payroll, it's harder for consumers to file complaints against them.

This week, the SFMTA proposed a series of policy changes to curb the underground medallion market. The new laws will prohibit taxi companies from renting to anyone except the drivers on their payrolls. If as many cab companies are running schemes as Hybels suspects, then much of the industry will feel a pinch.

Hybels generally supports the idea. Counterintuitively, so does Mohammad Iqbal Khan, an erstwhile medallion kingpin who was last year investigated by the SFMTA after officials discovered he was managing perhaps 30 medallions within Luxor Cab Co. and leasing them at inflated rates to unregulated drivers. Khan purchased his own small fleet and paid Luxor for rights to the color scheme and dispatch service, so his cabs were indistinguishable from Luxor's.

Khan recently departed Luxor and became co-owner of Gold Star, a 21-cab fleet that shares its lot with Metro. He says he's following the rules now, even if it's harder to turn a profit. Hybels, ever wary, keeps an eye on Gold Star at all times. He's still dubious the SFMTA can legislate corruption out of the industry.

 
My Voice Nation Help
4 comments
Crabby
Crabby

geogone has a very good memory. The former owner and former manager of National Cab were actually booked and it was a driver that broke the seal on the meter. The people that were booked had no idea.

I agree the story is small beans indeed. How about how MTA has given the big companies cut rate medallions that profit them by $300-400 grand per year?  Kind of like Big Oil and Congress relationship.  Who is on the take?

MTA could have sold 150 medallions for $37 MILLION but they chose to rent them for peanuts. Plain crooked

geogone
geogone

meanwhile you waste ink on a story about small beans ancient history taxi business chicanery while scam.com companies like Uber continue to rake in huge amounts of capital from the vc's; it recently got an infusion of half a billion dollars. Have you been bought off as our regulators and government officials have? you are forgiven if you have; it's a lot of money and I would take it.

geogone
geogone

are no different than legal taxi services. They dispatch and collect a fee based on mileage. Why does the Department of weights and measures allow them to conduct business? A taxicab company owner in San Francisco was arrested and jailed when one of his drivers broke a Dpt. of W&M seal on a meter. Also, when the economy takes a turn down, as it must someday, the TNC's will discover that taxi driving arguably is also the most dangerous job in the world. I apologize for any errors and split infinitives.

geogone
geogone

I have driven a taxi longer then care to say. I also have driven and other cities, like New Orleans. I think I'm qualified to tell you a couple of things. First, there are never enough taxis. secondly, taxis have been around since antiquity.; taximeter were mounted on wagons/chariots, measuring distance traveled with reduction gears dropping balls into a basket to establish fares. what I am trying to convey Is that the techno- princes and princesses currently reigning exist in the here and now, Disregarding the long-term consequences of predatory business practices by these illegal ride services companies. in reality, the TNC,'s do not even need to charge a fare in their goal to drive regulated taxi services out of business, being are so over capitalized by venture capitalists desperate to find there money a home with the next new thing it would take years and years before they burn through their capitalization. in reality, under their slick surfaces the TNC's

 
San Francisco Concert Tickets
©2014 SF Weekly, LP, All rights reserved.
Loading...