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9 chapter two LITERATURE REVIEW INTRODUCTION This chapter summarizes relevant findings from the literature review. Relevant literature was identified through a review of TCRP reports, a search of the TRB Transportation Research Information Services (TRIS) database, the website of Easter Seals Project ACTION, and resources of the Taxi, Limousine & Paratransit Association (TLPA). Information relevant to the projectâs topic from the identified reports and documents is summarized here. TRB PUBLICATIONS NCHRP Research Results Digest 366: Local and State Partnerships with Taxicab Companies, published in 2012, documents how states and local governments can promote partnerships with taxicab companies for the provision of public transportation (8). An expanded definition of public transportation is used, including not just service provided by public transit agen- cies but also service provided by all types of public agencies, including state and local governments, human service agen- cies, and school districts. Among the eight types of partner- ships defined and studied, four are relevant for this synthesis, focusing on taxi-based services provided by public transit agencies: â¢ Demand-responsive service for people with disabilities or seniorsâThis includes ADA paratransit services as well as other demand-responsive service for people with disabilities and seniors. â¢ Subsidized taxi ridesâTransit agencies (and others) use various types of fare media that enable individual riders to take taxi trips at a discount. Beginning as âuser side subsidyâ programs in the 1970s, riders use tickets, scrip, and vouchers for fare payment, but increasingly transit agencies and other sponsors provide riders with smart cards for payment. â¢ Wheelchair-accessible taxisâVarious public agen- cies, including transit agencies, have subsidized the acquisition and sometimes the operation of wheelchair- accessible taxi vehicles. â¢ General public dial-a-ride (DAR)âTransit agencies (and others) contract with taxi companies to provide general public dial-a-ride service, which includes those who are older or have disabilities, although this is not now a common service. Several case examples from NCHRP Research Results Digest 366 contain information relevant for this synthesis, including: â¢ Taxi service can be less costly and more effective than bus or other transit modes for certain trips, including ADA paratransit trips. â¢ Trips for taxis need to be financially attractive to the taxi drivers because almost all drivers are independent contractors. â¢ It is important that taxicab companies recover some of the extra costs (administrative, training, insurance, etc.) that result from arrangements with transit agencies (and other types of agencies) from taxi driver fees. â¢ Paying for the taxi trips according to a contract- established rate may be better than paying based on meter rates. Particularly if the contract rate is higher than the meter rate, the taxi company may be able to recover the extra costs resulting from the arrangement. â¢ Not all taxi drivers are effective as drivers for a publicly sponsored service. Some drivers appreciate the steady work that can result from contract work. Drivers who are more entrepreneurial (e.g., they seek out the airport trips) are not typically a good fit. â¢ Transit and other agencies need concerted efforts to over- see a contract with a taxi company, including the need to verify trips. â¢ Contracting with an intermediary such as a broker or prime transportation contractor to oversee the taxi-based service can help manage the taxi service for the transit agency (or other sponsoring agency). â¢ The use of technology for fare payment (e.g., smart card, debit card) can improve control over the service and reduce costs. â¢ Public involvementâthrough taxi regulation and finan- cial or other incentivesâtypically is needed for taxi com- panies to include wheelchair accessible vehicles (8). TCRP Report 124: Guidebook for Measuring, Assessing, and Improving Performance of Demand-Response Transpor- tation (2008) is a resource to help public transit agencies mea- sure, evaluate, and improve the performance of their DRT services, including ADA paratransit (9). Building on data and performance assessments of more than 35 DRT systems
10 around the country, the guidebook includes a chapter docu- menting the policies, procedures, strategies, and practicesâ collectively referred to as management actionsâreported by the sampled DRT systems to improve performance. Among the management actions is a same-day taxi pro- gram. The five DRT systems that had implemented a same- day taxi program as supplemental to their ADA paratransit service reported a number of benefits, including cost sav- ings to the extent that riders chose the taxi service rather than the ADA service for their trips. The same-day service also increased flexibility for ADA riders given the taxi programâs same-day attribute, as compared with the next-day service of ADA paratransit. Cost savings accrue to the public transit agency because the subsidy level for the taxi trips typically is substantially less than the subsidy for the next-day ADA service. Even if the taxi program generates new demand, which is an issue for such programs, the difference in the trip subsidy levels still represents cost savings for the ADA paratransit program. TCRP Report 121: Toolkit for Integrating Non-Dedicated Vehicles in Paratransit Service (2007) produced a spreadsheet- based tool that allows a transit agency to assess options for using nondedicated vehiclesâtypically taxisâto operate part of the agencyâs ADA paratransit service (10). The research phase of that TCRP project, documented in an interim report, provides results of the projectâs survey of more than 30 transit agencies, all of which operated some amount of nondedicated service. Relevant findings from that survey include: â¢ Taxis are the predominant provider of nondedicated ser- vice and are used primarily for peak overflow trips and trips that do not fit well on the dedicated service. â¢ Payment for the service is most frequently based on a mileage (meter) charge. â¢ Key advantages for using taxis (and other nondedicated service) are responsiveness and cost efficiency. â¢ Problems cited most frequently include lack of accessi- ble vehicles, problems with oversight and contract com- pliance, and substandard service quality and reliability (including on-time performance). â¢ Nondedicated service is somewhat more productive than dedicated service, although this may be influenced by the concept that nondedicated service calculates rev- enue mi/h only when a passenger is on board, whereas dedicated service counts all mi/h when vehicles are in service, even if there are no passengers on board. â¢ Nondedicated service costs less on a per-passenger trip basis than dedicated serviceâ$14 to $16 per trip versus $23 to $24 per trip. The report notes that the difference may be attributed in part to the lower cost structure for taxi companies operating sedans and minivans and with less overhead (10). The interim report notes several other issues gleaned from the survey, which may affect a transit agencyâs use of taxi-based services, including FTA drug and alcohol testing requirements and insurance coverage. FTA regulations on drug and alcohol testing apply to transit agencies receiving federal funds and require that contractors involved in safety-sensitive functions adhere to the testing requirements. The FTA has determined that these requirements apply to taxi companies for which there is a contract to provide taxi service as part of the transit service, even when that service is nondedicated. The require- ments do not apply when the users choose which taxi company they want for a trip. This means that when the service structure has the transit agency or its broker or call center contractor assign a trip to a specific taxi company, the taxi company must follow the drug and alcohol testing requirements. The report further notes that a taxi company can partition a portion of its service to provide the transit agency-contracted work and only that portion must meet the testing requirements. Insurance is another issue. Insurance levels required for the taxi industry, set by the local regulatory body or a state minimum, typically are lower than what transit agencies require. Costs for the higher levels can be difficult for taxi companies. One solution that has been used by taxi compa- nies is to provide that higher insurance level only for that part of the taxi fleet that provides the transit agency-specified services, a strategy similar to that used for drug and alcohol testing (10). TCRP Synthesis 74: Policies and Practices for Effec- tively and Efficiently Meeting ADA Paratransit Demand (2008) includes the use of taxis and in particular accessible taxi vehicles as one of a number of practices and strategies that public transportation agencies can use for providing ADA paratransit services (11). That 2008 synthesis report notes that sedan taxi vehicles have been used for âsome timeâ as paratransit vehicles. For riders who use manual wheel- chairs and can transfer to a sedan seat, the sedans can accom- modate the wheelchair when the chair is folded in the trunk. However, when accessible minivans are used as taxi vehi- cles, the taxi service is more effective because the vehicles can accommodate power wheelchairs and scooters that can- not be folded, and riders using manual wheelchairs do not have to transfer to a vehicle seat. In TCRP Synthesis 74, among effective and efficient prac- tices, the report describes a demonstration project in Wash- ington State, in which King Countyâs transit agency (Metro) partnered with the city of Seattle and the countyâs taxi licens- ing division to provide accessible taxi service for people who use wheelchairs. Metro provided eight used wheelchair- accessible vehicles for use by taxi operators. This meant that the taxi company did not have to purchase the vehicles, which are considerably more costly than the typical sedan vehicle used for taxi service. It was reported that the demonstration project generally worked well operationally. However, there
11 were challenges in obtaining affordable insurance for the accessible vehicles and in serving the demand over a large service area with the limited number of accessible vehicles. An earlier report, TCRP Report 75: The Role of the Private-for-Hire Vehicle Industry in Public Transit (2002), describes key characteristics of the private-for-hire vehicle (PHV) industry, defined as including primarily taxis but also limousines, shuttles, and jitneys (4). That study included a nationwide survey of the for-hire industry and investigated how taxis and other PHVs are used by public transit agencies through case examples (4). According to the 2002 report, key characteristics of the industry include: â¢ Taxi and other PHV companies are small, with more than half having fewer than 25 vehicles. â¢ Most companies are locally regulated and face regulation of their fares and entry controls. â¢ Transit contracting is âmodestly importantâ as a revenue source. â¢ The industry depends heavily on the use of independent contractor drivers. For taxi companies specifically, more than 90% are independent contractors, and the rate is increasing. The report concludes that the primary benefit of contract- ing with taxis and other PHV providers is to reduce costs, particularly for certain trip types. Disadvantages include a greater potential for fraud if oversight is insufficient, higher insurance requirements for taxi operators than those for non- contract service, drug and alcohol testing expense, and the need to increase driver training. The report also found that the transit agency contracting for service benefits from relatively strict regulation of the PHV industry. EASTER SEALS PROJECT ACTION PUBLICATIONS Easter Seals Project ACTION has published several reports and publications regarding the use of taxis by transit agencies and other organizations. A Survey on the Use of Taxis in Paratransit Programs (2009) describes the major characteristics of taxi-based programs provided by transit agencies, highlights benefits of using taxis, and identifies reported problems (12). The study was based on interviews with key staff at selected transit agen- cies and taxi companies representing 29 communities, review of documents such as contracts with taxi companies, and five case studies. The use of taxis is reported as one strategy that transit agencies use to reduce the cost of ADA paratransit. Although the report notes that determining costs can be a challenge because agencies may not always include the same cost fac- tors, the average cost for an ADA paratransit trip was reported to be $26.46, whereas the taxi-provided ADA paratransit trips often are less expensive, with most costing less than $20 and an average cost of $17.60. The reported benefits of using taxis included: â¢ Cost savings. â¢ Flexibility: for example, same-day service is possible (âadd-onâ and âwill-callâ trips), and the service is effec- tive to use at peak periods, nights, and weekends. â¢ Service quality for riders: for example, riders like the direct exclusive ride, which reduces or eliminates trip denials. â¢ Steady income for drivers: for example, some taxi drivers like the steady nature of paratransit trips compared with traditional taxi service that is more unpredictable. Reported problems included: â¢ Service quality and driver quality, including large vari- ation in service quality among drivers and inability to control independent contractors, with ADA riders not being picked up if a âbetter rideâ is available. â¢ Operational issues, such as liability and insurance, and difficulty in monitoring service. â¢ Fraud. Four of the five case examples included focus groups with riders of the taxi programs. Comments from riders common across the focus groups included: â¢ Users like the exclusive ride nature of the taxi trip, which provides a faster trip than shared ride service. â¢ Users like the personal nature of a taxi trip, which pro- vides more âdignity,â according to one user. â¢ Some taxi drivers lack sensitivity and English language proficiency. â¢ Accessible taxis, typically minivans, can be difficult to access for larger mobility devices. The report includes strategies that support successful taxi- based services for transit agencies, including: â¢ It is important that the pricing system ensure that taxi drivers make money and are paid on an equitable basis. â¢ Driver training is important. â¢ Transit agencies could consider contracting with more than one taxi company to facilitate competition so that riders can use the company of their choice. â¢ Transit agencies need to minimize paperwork for the company and drivers. Depending on the administrative efforts required of the taxi company, consider includ- ing a âpercentage of overhead to be retained by the taxi company.â
12 Another Easter Seals Project ACTION document is Mov- ing Forward Together: A Workbook for Initiating and Increas- ing Accessible Taxi Services in Your Community (2005) (13). This document compiles information gathered from a number of communities and taxi providers and offers a framework for communities to discuss issues and facilitate decision making about the provision of accessible taxi services. The workbook explicitly recognizes the factors that affect efforts to provide accessible taxi services, particularly that such vehicles are more expensive to purchase and operate than are sedans. The workbookâs nine sections address specific issues related to accessible taxi service, including vehicle design and cost, incentives to encourage taxi company acquisition of accessible vehicles, and suggestions related to contracts and operating agreements with taxi companies for accessible services that would provide revenues to help sustain the accessible service. The workbook also identifies a number of communities that have implemented accessible taxi service, along with contact information so readers can communicate with those communities for more information. More recently, Easter Seals Project ACTIONâs Summer 2014 Update is an information brief addressing Incentives for Accessible Taxicabs (14). This short publication outlines federal and local incentives for accessible taxi vehicles. Incentives at the federal level include capital funding through Section 5310/Enhanced Mobility of Seniors and Individuals with Disabilities in the federal transportation leg- islation. At the local level, taxi regulators have used various incentives to provide or increase the availability of accessible taxis in their jurisdictions, including: â¢ Mandate that a percentage of the taxi fleet be accessible. â¢ Provide additional or discounted medallions (licenses) for accessible taxis. â¢ Reduce licensing fees and provide tax credits. â¢ Extend the limit on vehicle life for accessible taxis. â¢ Add a fee for owners of nonaccessible taxi vehicles. â¢ Require training in disability etiquette, ADA law, and accessible transportation equipment for licensing. TAXICAB, LIMOUSINE & PARATRANSIT FOUNDATION PUBLICATIONS The Taxicab, Limousine & Paratransit Foundation, part of the Taxicab, Limousine & Paratransit Association (TLPA), sponsored a study that addressed the costs and operational issues of accessible taxi services: Assessing the Full Cost of Implementing an Accessible Taxicab Program (2010) (15). The report documents the capital and operating costs asso- ciated with accessible taxi services. A wheelchair-accessible taxi vehicle, typically a ramp-equipped minivan with acces- sibility equipment, costs as much as $35,000 when used and as much as $49,000 when new. This can be compared with the $5,000 used sedan typically purchased for taxi service. Operating costs are also greater because of higher fuel costs, higher liability insurance, and the additional time required to serve passengers who use wheelchairs. The report cites various strategies for developing accessible taxi services. Cities and other regulatory entities have offered taxi licenses for accessible vehicles at a reduced cost; transit agencies can contract for accessible taxis as part of their ADA paratransit program or other user-subsidized service; and taxi companies may offer incentives such as discounting the weekly lease fee for drivers who choose an accessible vehicle. Another study sponsored by the Taxicab, Limousine & Paratransit Foundation is Benefits of a Full Service Taxicab Company to the Community and Consumers (2006) (6). The paper provides guidance to communities and taxi regulators for developing a regulatory system that supports the âbest taxicab service model,â which is said to be the full service taxicab company. Such a company provides a full range of supporting functions for taxi service, including a group insur- ance package, use of technology (e.g., computer dispatching, automated billing), and comprehensive vehicle maintenance. The full service taxi model is at one end of a continuum of taxi organizational structures, with the individual indepen- dent taxi operator at the other end. The report identifies âfractionalizationâ of the taxi market in the United States, which refers to situations in which the jurisdiction has minimal control over market entry and exit, resulting in a number of smaller firms, each of which tries to become profitable. Eventually there are too many firms to meet the demand for service, and then drivers and riders suf- fer as service levels decline and driver incomes shrink. Exam- ples of cities that have tried such minimal control (essentially open entry to the taxi market) are provided, illustrating the negative consequences. The report then compares the differ- ences between the full service taxi model with the indepen- dent owner-operator model, concluding that regulation of the taxi industry is important and benefits the community as well as the industry and identifying the components for an effec- tive regulatory scheme. In particular, communities that adopt a regulatory environment that provides for the full service taxi company will benefit because such taxi companies are able to work with public transit agencies to provide special- ized transportation services, such as ADA paratransit. FTA REPORT FTA sponsored development of a guidebook for taxi compa- nies and other private transportation providers that explains the transportation planning process at the state, regional, and local levels and encourages taxi companies and other private providers to participate in those planning processes. Partici-
13 pation enables providers to benefit from business opportuni- ties presented by transportation plans and projects, such as services funded by different grant programs that may involve private providers. The guidebook is Private Transporta- tion Operators at the Table: A Guide to Participating in the Transportation Planning Process (2011) (16). The premise of the guidebook is that private transporta- tion operators can and should be involved in the transportation planning process by providing their expertise and offering their ideas and suggestions to a communityâs vision for mobility. At the same time, and more importantly for the taxi com- panies and other private providers, the transportation plan- ning process can benefit the private providers by presenting possible business opportunities that may develop through the networking and partnerships that stem from the planning pro- cess. As explained in the guidebook, this includes, for exam- ple, providing premium same-day taxi service, contracting to provide ADA paratransit and other services for public transit agencies, and providing transportation for human service agencies. To help ensure that taxi companies and other private provid- ers can take full advantage of the possible business opportuni- ties, the document also provides guidance on how the providers can better align their companies to take full advantage of the new business options. The guidebook addresses the concept that taxi companies and other private providers do not always participate in the transportation planning process, even though there are vari- ous opportunities for such participation, and that transporta- tion planners may not recognize the significant role that taxi companies and other private providers can play in provid- ing transportation services. By encouraging taxi companies and other private providers to get actively involved in the planning process, transportation planners and organizations, including public transit agencies, will better understand how taxis can provide publicly sponsored transportation services. OTHER PUBLICATIONS FROM TRANSPORTATION RESEARCH INFORMATION SERVICES SEARCH Taxis as Urban Transport (17) is a recent report that describes the taxi industry and its place within public transportation in urban areas, focusing on taxi regulations in the United States and internationally. The report describes the taxi market as having four major segmentsâhail, taxi stand (or rank), pre- book, and contractâwith each presenting differing needs for regulation. With the rise of TNCs, the report states that the development of applications (apps) has affected the prebook market, with each app functioning as a new dispatcher. The author classifies apps: â¢ The dispatcher appâA taxi company or dispatcher com- pany creates the app, which is used only by that company. â¢ The joint dispatcher appâSeveral taxi companies join in a common app, which can also be used in different cities. Examples include Taxi Magic and myTaxi. â¢ The app-based, private, for-hire vehicle companyâ The company is organized exclusively for app-based prebookings using dedicated drivers and vehicles. Uber is an example. â¢ The price and availability appâAn app that provides price and availability information for taxis from differ- ent dispatchers; the user can contact the chosen service. The main arguments for taxi regulation relate to public safety, congestion, market failures, and city impacts or, more analytically, qualitative, quantitative, and economic regula- tions. According to the report, the primary objective of taxi regulation is to maintain a balance of taxi supply and demand. The report emphasizes that taxi regulation must be tai- lored to the issues and objectives of the local community as well as market conditions. Although there are recurring chal- lenges in regulating taxis, the specific mix of challenges is local. The taxi regulatory agency monitors the performance of the taxi industry and has the capability and authority to apply corrective measures when needed. According to the report, regulations could consider: â¢ Quality controls over vehicles and drivers. â¢ Quantity controlsâIf used, they could be designed so the âeconomic rentâ (essentially the economic value) that is created benefits the community or the drivers. This can be done by limiting the validity of the licenses, auctioning them on a regular basis, or requiring license holders to be owner-operators. A quantity control system should be able to change the quantity to respond to changes in the market. â¢ Economic controlsâSetting taxi fares must balance the desires of the taxi industry with consumer interests and generally is a good practice. Taxis as Urban Transport concludes by noting that there may be gray areas among taxis, mass public transportation, and private vehicle transportation, but taxis provide one way to get from one location to another and can be seen a part of the âtransport solutionâ in a community and not as a problem. âTaxis That Save You Money in ADA Paratransitâ (18) is a paper prepared by the San Mateo County (California) Transit District (SamTrans) for an APTA conference that explains the agencyâs efforts to use taxis to serve ADA paratransit riders (18). The paper describes two plans that the transit agency considered for using taxis: a user-side subsidy and con- tracting for âmanagedâ taxi service. Analysis of the user- side subsidy plan concluded that it was not likely to save the transit agency money. Building on data from another transit agencyâs user-side taxi program for ADA riders, SamTrans concluded that user-side subsidy trips would tend to be short trips, and such trips would erode productivity from
14 the agencyâs dedicated van and sedan service for ADA riders because those short trips can more easily be grouped on dedi- cated service and benefit productivity. In addition, the transit agency concluded that a same-day, user-side subsidy program was likely to become so popular that it could increase over- all costs of paratransit, even if it lowered the cost of certain individual trips. For the second plan, the transit agency analyzed the cost per mile for taxi service versus its contracted dedicated van service, as well as the marginal cost of trips on the dedicated service. Based on these analyses, the transit agency found it would be more cost-effective to use taxis when the dedicated service fell below certain productivity thresholds and for trips that were shorter than 6.5 mi because a taxi trip was more cost- effective than a dedicated vehicle trip to that distance. The goal became how to select trips for the taxi service that were less than 6.5 mi but not so short as to divert trips from the dedi- cated van service that could be combined productively on the shared-ride service. The agency then planned and implemented a taxi trial service with specific objectives, including lowering the cost per passenger trip, maintaining service quality, and prevent- ing trip denials. The agency brokered the taxi trips through its private contractor, which operated the dedicated service. The contractor was reimbursed for its administrative efforts. The taxi company was reimbursed $5 for the flag drop, which included $3 in lieu of a driver tip and $2.50 per mile. The taxi company decided to give the entire $5 flag drop to the driver. Riders paid the standard ADA paratransit fare. The taxis were used to provide certain services: trips dur- ing weekday nights and weekends, when the dedicated ser- vice was less productive; trips that were difficult to serve on the dedicated schedules; open-ended return trips for riders who were delayed at medical appointments; and trips when the dedicated service was running late or when vehicles broke down. SamTransâs evaluation of the trial service concluded that the taxi-based service could save money for the transit agency. The evaluation also found that continued success depends on the willingness of the taxi company management and, importantly, the drivers to serve the ADA paratransit trips. Understanding Senior Transportation: Report and Analy- sis of a Survey of Consumers Age 50+ documents the find- ings of a nationwide telephone survey of 2,400 older adults conducted by AARP to understand their transportation needs and choices (19). The survey queried respondents on their use of transporta- tion modes, including taxis. According to the survey results, driving and ride sharing are the most frequent mode choices. Walking, public transportation, taxis, and community and senior vans are used infrequently; each of these modes was identified by fewer than 5% of respondents as their usual mode of transportation. When the responses were analyzed separately for younger (ages 50â74 years) versus older (age 75+ years) seniors and between seniors who drive and those who do not drive, the survey found that 10% of the older seniors who do not drive report that taxis are their usual mode. When asked about problems with the various modes and specifically taxis, respondents reported that cost is the key problem. Other problems cited less frequently included: âtaxis take too long to come,â âtaxis are hard to get,â âtaxis are poorly maintainedâ and âdrivers are unfamiliar with the area.â The report concludes with policy implications. Regarding taxis, the authors state, âTaxis are a transportation option that can have many of the preferred attributes of the car, such as comfort and security, but older persons see cost as a large problem.â To address this, âpolicy makers could explore reducing the costs to the consumer by providing vouchers to cover some or all of the costs.â Aging in Place: Intermodal Transportation and Options for Meeting the Unmet Transportation Needs of Nonmetro- politan Older Adults documents the results of a nationwide survey of 1,228 older adultsâ (age 60+ years) transportation to assess driving habits and perceptions of alternative trans- portation modes (20). Results indicated that older adults (86%) regularly drive their own vehicles and reported that it would be difficult to give up driving. Respondents were asked their perceptions of five possible transportation alternatives that communities could implement for older adults when they are no longer driv- ing: volunteer drivers, point-to-point shuttle buses, senior centerâbased buses, prepaid taxis, and coordinated bus-train systems to distant medical centers. Respondents reported that they were likely to use three of the five alternatives if they could not drive: volunteer drivers, point-to-point shuttle buses, and senior centerâbased shuttle buses. The prepaid taxi alternative was the least popular, especially among non- metropolitan respondents. Based on the survey results, the authors concluded that community groups may have to devote considerable efforts to educating and marketing transportation alternatives to older adults so that they accept such alternatives.