Minneapolis medical patients, bar hoppers, airport-bound travelers and other habitual users of Uber and Lyft will need a stiff shot of patience come May 1.
Finding a ride after May 1 will take patience if Uber and Lyft pull out of Minneapolis
Taxi cab firms might hire some drivers, but it will take a while to build back an industry that has pivoted to medical and student contracts since the mega rideshare companies entered the Twin Cities market.
The Minnesota Star Tribune
March 21, 2024 at 11:04AM
When the rideshare giants entered the market, there were over 1,600 licensed cab drivers in Minneapolis. There are now 39, and city officials say it will take two to six weeks for drivers to get licensed — so there’s not much time.
And that’s if the taxi companies want to ramp services back up, something operators say they are wary of doing until they see that Uber and Lyft are gone for the long term.
Since the rideshare companies first entered the Twin Cities around 2014, Minnesota taxi firms changed business models, pivoting mostly to contracts to transport medical patients, people with disabilities and charter school and shelter-bound students.
Alberto Naula, a supervisor at Express Taxi in Minneapolis, said the Uber/Lyft issues are all his drivers talk about. Naula is getting calls from Uber and Lyft drivers trying to figure out what they will do.
Express Taxi is small, conducting 150 to 200 rides a day in the metro area with a fleet of roughly 20 drivers. The company wants to grow, but “there’s a lot of competition,” Naula said.
Several other rideshare operations have expressed interest in serving the metro and have been talking with Uber and Lyft driver groups. For instance, Washington D.C.-based Empower announced last week it intends to start serving the Twin Cities market soon.
Uber and Lyft estimate they have about 12,000 drivers in the metro. With St. Paul’s licensed cab drivers, there are fewer than 100 taxi drivers who could pick up fares in both cities.
Regulations have changed since Uber and Lyft entered the market. Rideshare companies, classified as transportation network companies, must pay a license fee of $36,415 in Minneapolis and $41,115 in St. Paul. Cab companies pay $1,188 in Minneapolis and $456 in St. Paul, but then must also license each car and each driver.
That’s a lot of money for small companies that feel they’ve been burned by the city governments in the past as Uber and Lyft came into the market.
Former cab company owner Hussein Taha in Fridley wants to restart the Blue Taxi he ran in Minneapolis before the arrival of Uber, but slowly — with only five cars to start. Initial fees to license the company and cars would be over $3,500, and that doesn’t count the fees for drivers.
Those wanting a taxi driver license in Minneapolis must pay a $90 fee and have a valid Minnesota or Wisconsin driver’s license, no felony convictions in the past five years and the ability to read, write and speak English, said Amy Lingo, district supervisor of business licensing for the city. Background checks take time to complete.
Given the cost, Taha said he won’t budge until he’s absolutely certain Uber and Lyft leave the marketplace. Otherwise, he said, “The competition will be too tough. Their prices are too low.”
Uber has taken steps toward exiting the market, sending letters to drivers and announcing it would close its service center in less than a month. Lyft also has informed drivers about the Minneapolis exit.
The two companies said a measure passed by the Minneapolis City Council setting minimum pay for drivers would make it unprofitable to operate. While Mayor Jacob Frey vetoed the bill, the council overrode it last week.
Now there’s new pressure to consider from Gov. Tim Walz, state legislators and others who say many low-income people and those with disabilities depend on the rideshare services. Some legislators are proposing statewide remedies.
The issue came to a head as more drivers complained they could not make a living with the formulas used by Uber and Lyft. Driver groups lobbied the council to pass a minimum wage.
Now many of the drivers have lit up the phones at existing licensed taxi companies asking for a job.
“We have five to 10 Uber and Lyft drivers come to our facility a day” asking for job, said Steve Pint, CEO of Transportation Plus Inc. (T-Plus), a New Hope-based contract provider that books rides via an iHail app.
With 500 cars and vans and 550 drivers, T-Plus is the largest local ride service. With $50 million in annual gross revenue, it gives 3,500 rides a day, mostly to health insurance company patients, students and Metro Mobility riders.
After pivoting to save the company after Uber charged into the market in 2014, only 5% of T-Plus’ service now is traditional taxi or rideshare work. That’s down from 50%. It operates Airport Taxi, T+Ride, Plus Mobility and the former Yellow Cab.
Pint said his company would only ramp up taxi services again if Uber and Lyft fully exit the market. With Walz and others pressuring Minneapolis to reconsider the minimum wage terms in the law that goes into effect May 1, he doesn’t quite believe the mega rideshare companies will actually be leaving the city.
“We have already been burned once,” he said. “We are not going to get burned again.”
Plus, Pint said contract customers have contacted him worried about their services. He’s adamant that he won’t sacrifice the new business model to pivot again.
Waleed Sonbol, who runs the 250-car, St. Louis Park-based Blue & White Taxi, and also owns Red & White Taxi and Rainbow Taxi, is frequently asked to help local Uber and Lyft drivers in this uncertain frontier.
It’s a community he knows well. Many affected drivers attend the same mosque, he said: “We talk a lot.”
Sonbol held a conference call Friday with more than a dozen Uber and Lyft drivers.
“They asked if they could come over and join here,” said Sonbol, whose 313 independent drivers are under contract to provide about 4,000 rides a day to patients, blind residents and students needing transit. “I said, ‘Let us wait and see what happens.’”
If May 1 comes and Uber and Lyft actually exit, Sonbol said, “Then we will get you guys on board our app within a day or two. We will get you up and running. We are preparing ourselves for it.”
But he will start slow, with just 25 of the drivers. Right now, only 10% of his business is traditional taxi work.
If new drivers are added, Sonbol said he would charge them a flat fee of up to $100 a week to join his “RideSure” app and let them keep 95% of all fares. They would not get involved in the contract work done for insurers, health providers, the Department of Human Services and charter schools.
Sonbol is prepared to pivot back to traditional taxi work if the market opens for it. “We are ready,” he said. “Our noncontract work could grow tremendously.”
Taha said if the Uber/Lyft exits happen, he will reapply for a license for Blue Taxi in mid-May. Like the other companies, his existing business provides rides for medical appointments under a contract with the state.
Meanwhile, smaller rideshare players across the country other than Empower are also making inquiries. Mohamed Egal, a nine-year Uber driver who heads a local group called Mulda Members, said drivers are talking to recruiters from app-based firms such as Miami-based Revo Rideshare, and Texas-based Wridz and Hitch. “They just want to know if there is enough demand here,” he said.
If one of these companies came to town, he said he would sign up. “We have been working very hard to get to this point where our voices are finally heard,” he said. “We pay taxes, and we deserve fair pay.”
Pioneering surgeon has run afoul of Fairview Health Services, though, which suspended his hospital privileges amid an investigation of his patient care.
