We have been following how ridesharing companies have decimated the taxi industry for years now. In addition to rendering taxi medallions near-worthless compared to the price that many drivers spent their lives (and careers) working to purchase them at, ridesharing companies have also contributed to a rash of depression and suicides among drivers who have seen their livelihoods plummet suddenly and unexpectedly.
But now, it’s looking like taxi’s could be on their way back, according to FT. And it could be due to an unlikely hero: law firm Kirkland & Ellis.
Kirkland & Ellis is best known for getting in the trenches on messy corporate transactions. But they also represented New York City cab drivers in a pro bono assignment after drivers resorted to a “round the clock hunger strike” to draw attention to help they needed resolving loans to buy taxi medallions, the report says.
And the efforts paid off: drivers got relief early this month when a deal between the city’s municipal government, a private equity firm that had become the single largest taxi medallion creditor, and an advocacy group that spoke for thousands of taxi drivers resulted in slashing loan balances for drivers, FT wrote.
Some loans were as high as $500,000 and are now just $170,000, which allows drivers to make reasonable and far more manageable payments every month.
Medallions cost about $300,000 in the early 2000s, the report notes. By 2010, they had increased in price to almost $1,000,000. But when ridesharing firms entered the market, they crashed to under $100,000, leaving many drivers in financial ruin.
“This wasn’t a campaign to cancel debt completely but a collective effort to make it fairer,” one driver told the FT.
Recall, in January of this year, we wrote that medallion lenders had started to demand payments after suspending collections for several months during the worst of the pandemic. Recalling that the collapse in medallion prices began before the outbreak – in January, NYC launched a city task force which proposed a $500 million bailout for drivers’ loans. This was followed by a February threat by NY State Attorney General Letitia A. James, to sue the city for $810 million to compensate drivers.
After the pandemic hit, efforts to help NYC cab drivers – over 90% of whom are immigrants, evaporated.
In 2013, yellow cabs made nearly half a million trips a day. In 2020, that number dropped to 50 – 60 thousand. But the yellow cab industry was already hemorrhaging trips pre-pandemic.
As unregulated vehicles for hire flooded the streets, investment-backed platforms such as Uber and Lyft undercut fares, able to absorb the loss. As riders flocked to these cheaper and more accessible taxis, yellow cabdrivers were left in the dust. –CNN
While our euphoric and completely nonsensical public markets continue to subsidize cash burning ridesharing companies, we have to admit that it’s nice to see NYC’s taxi drivers finally win one...it’s been a long road.