In 2012, one taxi license in Toronto sold for $360,000 and this dropped to $153,867 in 2013. One year later, the cost of a license fell even further to $118,235.
The main reason behind the decrease in price is Uber, the online ride-sharing service that lets you order a ride from your smartphone. By the looks of it, Uber is ending the dirty dealings behind Toronto’s cab business.
“Among the key players was Mitch Grossman, a businessman whose family had collected more than 100 plates. These plates gave Grossman a pharaoh’s power.
If a driver wanted to use one of his family’s plates, Grossman could force him to buy an overpriced car from his sales operation, finance it through a family firm called Symposium Finance (where rates reached 28 per cent) then join Royal Taxi, the Grossman family’s taxi brokerage.”
The report notes that other taxi plate holders included an airline pilot, a dentist, and investors from the U.S. and Israel. At least 30 percent of the industry’s income went to people who did nothing but sit and watch the cash flow in from their licenses.
Today, we have a new competitor in the ride-sharing market. Uber looks to be putting an end to the dirty deals behind Toronto’s cab business by offering a service that is quick, convenient, and affordable.
“After installing the Uber app on my iPhone, the screen showed that there were at least half a dozen available cars nearby. The app said I could have a car in five minutes. I touched the icon, and the app announced that my car would be an Acura TSX, driven by David.
David and the Acura appeared on schedule. The car was nearly brand new, with a leather interior. I asked David about his job. He was a student, and paid his tuition by working for Uber. The setup was straightforward – David had gone into the Uber office, undergone a background check, had his car inspected, and set up a company account.”
When you use Uber, the fare is automatically charged to your credit card through the app. Uber takes a 20 percent cut of the fare and pays the rest to its drivers. Uber drivers have the ability to work whenever they want and in a good week a driver can easily net $1,000.
In comparison, Toronto’s taxi drivers have to work 12-hour shifts and they have to pay daily rental fees for the car. In addition, the fees for taking a taxi in Toronto are a lot higher than Uber.
If you live in Toronto, have you been using Uber? If so, how are you liking it when compared to Toronto’s traditional taxi service? Let us know in the comments below.
[via The Globe and Mail]