Yellow Cab plans to seek rate increase from state PUC
August 8, 2014 12:00 AM
Yellow Cab vehicles parked on Market Street in Downtown Pittsburgh.
By Kim Lyons / Pittsburgh Post-Gazette
Yellow Cab is preparing to ask the Pennsylvania Public Utility Commission for a rate increase, its first since 2006, even as it continues to try to fend off competition from ride- share companies Lyft and Uber.
If approved as proposed, the rate increase also would add a $2 surcharge for trips on Friday and Saturday nights.
In a July 31 memo to employees and drivers (explore below), Yellow Cab President James Campolongo wrote that Lyft and Uber have created “issues” for the cab company. “We will continue the fight to bring them into compliance with every option available,” the letter said.
Along with addressing operational issues, to improve service, Mr. Campolongo wrote, “We need a rate increase.”
On Thursday, Mr. Campolongo comfirmed that Yellow Cab plans to file the rate increase request with the PUC next week but the process can take several months. It would be up to the PUC commissioners to determine whether such a rate increase was “just and reasonable,” according to the PUC code. The Friday and Saturday night surcharge would be similar to the $1 surcharge the company already applies to trips on Sundays and holidays, he explained, and is not equivalent to ride share companies’ so-called surge pricing, which increases the cost of trips when demand is high. Surge pricing can more than double the price of a regular ride share trip.
“We have to compete with Uber and Lyft,” Mr. Campolongo said. “We need a rate increase to give back to drivers, to get them what they deserve. We have to get the drivers whole.”
Lyft and Uber arrived in Pittsburgh this year, bringing the ride share model of connecting drivers in their own vehicles to passengers via smartphone apps. As they have elsewhere, the San Francisco companies faced objections from taxi companies, including Yellow Cab. The state PUC has issued cease-and-desist orders against both companies, as well as proposed daily fines of $1,000, because they do not have the required licenses.
The companies were granted emergency temporary approval to operate at the PUC’s July 24 meeting, but have yet to demonstrate they are in compliance with the conditions of the emergency order, according to a PUC spokeswoman.
Yellow Cab applied for an experimental service license for its forthcoming ride share app Yellow Z, which Mr. Campolongo mentioned in the memo to employees: “We are still working through the operational issues, but should be up and running mid-to-late August.”
In the memo, Mr. Campolongo addresses ongoing frustration with Uber and Lyft: “They set their own prices, take trips from us, don’t pay taxes or PUC assessments, and pick who they want when they want all without a PUC or any other permits.”
Taxi drivers are struggling to make enough money, due in large part to the PUC eliminating its fuel surcharge for motor carriers last June, Mr. Campolongo said.
The PUC increased the fuel surcharge in 2005 to offset rising gasoline prices. It renewed the surcharge annually until 2013, when the surcharge was eliminated after none of the motor carriers sought to have it renewed and because it was viewed as outdated, the PUC spokeswoman said.
When Yellow Cab tried to institute its own fuel surcharge last year, the PUC rejected its request, since it was a flat rate rather than one that adjusted as gas prices fluctuate.
While the ride share saga continues to unfold, Yellow Cab needs “to get on with life in this new competitive world,” Mr. Campolongo’s memo states. “The landscape of this business is changing and will never look like it did in the past.”
But, he notes, Yellow Cab has been in Pittsburgh for more than 100 years. “Remember these are our customers, this is our city, and Pittsburghers will come back to us if we provide quality service.”
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