Boston's Cabs Are Most Expensive Anywhere

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Ever feel like it's more expensive to take a cab in Boston than in other cities? It's not your imagination. For most types of trips, Boston has the highest cab fares of any big city in North America.

Radio Boston begins a two-part series, in which we try to figure out why fares are so high and what, if anything, can be done to bring them down.

The data in the charts below were provided by TaxiWiz.

Trapped In The Pool

The next time you land at Logan Airport and get a little impatient waiting for a cab to take you home, remember that your cabbie has probably been waiting for you a lot longer. While you were returning your tray table to its upright and locked position, he was on the ground, trapped in a kind of taxi limbo.

"There's a separate parking lot called the pool," explains Tom, last-name-unmentioned because he maintains a rather candid blog about his profession called "Boston — The Hack."

Like all cabbies that want to pick up a fare at the airport, Tom has to pull into a huge Massport facility that most of us will never see.

"You can't just drive around the airport. You'll see, it's this whole complicated system," Tom tells me as he drives behind the car rental lots and pulls into the pool. "You've actually got to pay a toll that gets charged on your Fast Pass."

Inside, it looks like a drive-in movie theater, but it's actually dozens upon dozens of cabs, arranged in neat queues.

"It's like entering the fourth ring of hell," Tom groans, dismayed at the scope of his competition. "It makes you wonder if it's really worth it."

Tom pulls in, takes a ticket with a number on it, and finds his space.

He turns his engine off and...

"The excitement begins," he says, laughing.

Forty minutes later, a giant digital sign tells Tom his number is up. As instructed, he proceeds to gate B2, where he finally picks up his fare.

A young lady climbs in and asks to be taken near the Malden Center T stop.

This is what Tom goes through to pick you up. And he does it making maybe $100 on a 12-hour shift. As expensive as fares may seem, the big money is not going to him.

Nonetheless, fares are, indisputably, expensive.

The average price of one-, two- and three-mile taxi rides. Click to enlarge. (Data courtesy Bernfeld for WBUR)
The average price of one-, two- and three-mile taxi rides. Click to enlarge. (Data courtesy Bernfeld for WBUR)

How Much More Expensive Is Boston?

"How much does this trip usually run you?" I ask the young lady in the back of Tom's cab.

"I want to say around $40 total," she says. "I was just in Chicago and it seemed like cabs were much cheaper there. My general sense is that they're cheaper in DC, and New York City, too, but I don't know, I don't take cabs very often."

Maybe not. Neither do I. But Mike DeGraw-Bertsch does. He's the creator of Taxi Wiz, a website that provides fare estimates for 20 cities around the world (basically, all the big cities in which the government sets the rates).

"(In) lots of cities, like Miami, for example, it's kind of up to the operator to decide what the fares are going to be," DeGraw-Bertsch explains, as he clicks through his website. "New York, Boston, LA, cities like that have structured, metered fares so that you don't have to contact each individual operator to find out what the fares are gonna be."

In all the big cab towns, like Philly or Chicago, it basically works the same way.

There's a flag drop — that is, the money you owe just for getting in the cab. In Boston, that runs you $2.60. And then there's the per-mile charge, which Boston sets at $2.80.

The same structure applies in places like New York, Boston, and Washington, but the price tags vary dramatically.

"If you're going three miles or more, Boston is the most expensive city that Taxi Wiz does fares for," DeGraw-Bertsch says.

Boston cabs' flag drop costs are toward the expensive side, but the per mile rate is what drives the price up. Click to enlarge (Data provided by Bernfeld)
Boston cabs' flag drop costs are toward the expensive side, but the per mile rate is what drives the price up. Click to enlarge (Data provided by Bernfeld)

Some cities, like Toronto or New York, have higher flag drop fees than Boston, so the really short trips cost a little more. But once you go any real distance, Boston's sky-high $2.80 per mile charge kicks in, making Boston the most expensive major cab town in North America.

In New York, the per mile charge is a flat $2. In Montreal, the per-mile charge is only $1.60. In DC, it's a mere $1.50.

In Boston, the city sets the fares with input from the local cab industry. So I asked a bunch of people involved with the industry: Why are cabs so much more expensive in Boston than they are most everywhere else?

They all gave one answer in common: the medallion.

The Money Is In The Medallion

Back in the cab with The Hack, Tom gives me a quick lesson in how the cab business works.

"I pay a rental for this car. It works out to $95 for the night," Tom explains. "Basically, I'm working to pay off my nut, the rental. Everything after that is mine."

After gas, of course. He could probably make a lot more if he owned his own car. And I'm guessing he could afford one.

What he probably couldn't afford is the license to operate that car as a taxi. It's a little square plate nailed to the back of the cab. There are only 1,825 of them available for the whole city of Boston. And the last time one went up for auction, it sold for about $400,000. That's what they call a medallion.

"There's absolutely not economic justification for a license like that," says Edward Rogoff, a business professor at Baruch College in New York and a longtime observer of the taxicab industry. Rogoff says the medallions are a pox.

"The delivery of taxi service to the public is not best served by a medallion system."

Mark Cohen, chief taxi regulator for the city of Boston

"Other than the cost of the driver, they represent the highest cost of operating the vehicle, " Rogoff says. "They serve no economic purpose except to take income away from the drivers and to raise fares."

The medallion system was first introduced in Boston in the 1930s. It was the Depression. A lot of people who'd lost their jobs tried to make ends meet driving a cab, and they were desperate. They crowded the streets, they undercut the market.

In response, the established cab industry lobbied government to license taxis, and to permanently cap the number of licenses. These medallions, which were originally issued for just a few bucks, have since become a commodity to be traded by investors.

A handful of people and financial institutions now own all of the medallions in Boston, which they lease to the people who actually provide taxi service.

"The delivery of taxi service to the public is not best served by a medallion system," says Mark Cohen, director of licensing for the Boston Police Department and the chief taxi regulator for the City of Boston.

"Really?" I ask.

"Really," he says.

I'm surprised to hear Cohen says this because, along with driver licenses, medallions are what give him power over the industry. And even he thinks they needlessly drive up fares.

"A tremendous amount of the money that goes over the meter goes to bankers and investors," Cohen says. "It doesn't go to cab drivers who are working very hard."

There are car services out there that don't need these medallions to operate. But they're not allowed to pick up street hails, and they're not allowed in cab stands, or in that pool at Logan Airport.

And why not? Mark Cohen at the police department is in charge of all of this, right? If he thinks the medallion system is needlessly siphoning money out of the cab industry, why can't he just just wave his hand and say "from this day forth, no medallion required"?

"It's an issue of property," Cohen explained. "When they decided to have taxi medallions be worth something, the state cannot step in and just take it away because it seems like a good idea. That being said, the next alternative is to, what? Buy back the cab medallions? Well, I'm not very good at arithmetic, I'll let you do that."

OK... $400,000 times 1,825 medallions equals $730 million in market capitalization, which I guess...

" more money right now than the City of Boston can use to do that project," Cohen says.

Something Else Is Going On Here

So, it sounds like we're stuck with medallions.

But so are Chicago, Toronto and Philadelphia. So is New York, where a medallion recently sold for a whopping $700,000. And yet, cab fares in Boston are consistently higher than in New York.

Something else is going on here to make Boston cab fares the highest in big city North America for most trips.

Tuesday on Radio Boston, we explore other factors that put upward pressure on Boston cab fares.

This segment aired on February 14, 2011.

Headshot of Adam Ragusea

Adam Ragusea Reporter/Associate Producer
Adam Ragusea was formerly a reporter and producer for WBUR.



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