Since 2011, transportation network companies (TNCs) have established themselves as a popular mode of transportation in the City of Boston. Given their convenience and low cost, TNCs such as Uber and Lyft have become local consumers’ first choice over taxis. While TNCs service virtually all areas of the city, there is still one service area that eludes them: Logan International Airport, which is under the oversight of the Massachusetts Port Authority (Massport). Massport, under the supervision of its independent seven-member board, closely controls the types of transportation into and out of Logan per current state laws. For years, Massport has limited methods of arrival to and departures from Logan to taxi and livery companies. However, this duopoly has recently come under intense scrutiny as the public has become accustomed to TNCs.
Beyond Logan, consumers have made their choices clear through their purchasing behavior—taxi and livery ridership is down, and ridesharing has nationally become the go-to option. In the first quarter of 2016 alone, business travelers across the country used TNCs 46 percent of the time—a huge jump from 2014, when these firms accounted for just 8 percent of this market—while car rental companies and taxis accounted for 40 and 14 percent, respectively. Since the beginning of 2014, taxi services have seen their control of 37 percent of the business travel market decline, with car rentals also seeing their majority of 55 percent fall. In 2013, Uber—widely considered the most prominent TNC firm in the Boston area—provided its highest number of rides in Boston since it entered the market in 2011. The 14.5 million rides generated total revenues of $257 million for the company. Interestingly, 2014 saw a drastic decline to 12.8 million rides with $240 million in revenue. This decline represents a drop of 12 percent in the number of rides that Uber alone provided in Boston. In spite of this slide, Uber remains the most popular private transportation service option in the Boston area.
While Uber has aggressively mobilized to gain a larger share of the Logan Airport market, the airport remains a stronghold for taxi companies, who have experienced business growth in this service area over the last several years while seeing dramatic decline elsewhere. From 2012 to 2015, the number of people flying into Logan increased by about 10 percent. Over this same timeframe, the average number of cabs dispatched on a daily basis from the airport increased from 5,450 to 6,205—an increase of 14 percent. While cab rides out of Logan have increased, this may in large part be due to the fact that so few TNC drivers have livery plates, and therefore cannot pick up passengers at Logan, meaning that passengers must take a cab. This would explain why Uber and other TNCs have been able to access a portion of the Logan market, but not the entire market. The approximately 2.2 million rides out of Logan in 2014 made up 18 percent of total cab rides in Boston that year. Logan is currently one of ten out of the top 40 busiest airports in the country that does not allow TNCs.
These numbers illustrate the increasing volume of travelers flying into and out of Logan and help explain both TNCs’ determination to win access to this market and these firms’ concerns regarding restrictions on TNC service there.
Some of these companies have found creative workarounds. Uber, for instance, has found a loophole in state laws by using livery drivers with Massport stickers within its UberX, UberBLACK, and UberSUV services to collect passengers at Logan. This has angered taxi companies, who have argued that Uber is manipulating its prices to make itself more competitive with the taxi companies. They object to how Uber is using its livery service—which has a higher fee than Uber’s other services—to access Logan while still charging its customers the rate of its standard service, which is prohibited from Logan. A writer at Commonwealth magazine attempted an experiment to verify this claim. He ordered an UberX ride to pick him up at Logan airport, and was picked up in an Uber vehicle with livery plates, while still being charged the UberX rate. When comparing the price he paid for the Uber ride, $23.83, to those of taxi companies, which can range between $25 to $27 depending on traffic and excluding the tip, the writer did not really find the difference in prices to be that significant.
Should Uber and other TNCs be allowed to access Logan airport?
Recently, this question has been addressed by both chambers of the Massachusetts legislature with very different outcomes. In March, the House of Representatives passed a bill (Bill H.4049) that would continue the duopoly of taxi and livery companies at Logan by maintaining the current ban on non-livery Uber drivers. The proposed ban would remain in effect for the next five years. The bill also contained a proposal to provide financial support to the taxi industry to update their technology in the form of loan guarantees and financing for the purchase of taxi medallions through the Growth Capital Corporation (GCC). After being published as amended, and now going by the name Bill H.4064, the bill was sent to the Senate. In late June, the Senate passed an amendment (S.2371), which after being reprinted as amended became Bill S.2398, and attached it to the House bill (H.4064). The amendment did not feature an explicit ban on Uber drivers from accessing Logan airport, but deferred to Massport the ability to impose a tax and/or provide permission for TNCs to have access to its properties. The Senate’s amendment was sent for approval to the House, which rejected it. The bills are now in conference committee to hash out the differences. The legislature’s action on these bills comes at a time when the taxi industry in Boston is being hammered—in 2014 the value of a taxi medallion was $666,547, but by 2015 this had depreciated to $402,444.
Given the transportation industry’s dramatic transformation, a ban on TNCs from accessing Logan would impact consumers in an adverse way and signals that elected officials are inclined to protect legacy actors who simply cannot keep up in a rapidly changing transportation market. Such a precedent by the legislature would demonstrate its willingness to choose winners and losers in an industry that has benefited consumers enormously through unstifled innovation. By allowing fair competition dictated by the market, the legislature would be letting consumers decide how they get to and from Logan airport. Boston medallion owners and the taxi industry lobby for onerous restrictions on the new industry because the impact of TNCs has hit their bank accounts hard.
The question now for legislators is who are they going to listen to – their constituents, who are increasingly using TNCs like Uber, or those seeking to maintain government-protected market share?