It's hard to ignore the allure and convenience ride-hailing start-ups like Uber have brought to the transportation industry. Apps allow consumers to reserve rides with the swipe of a button on a smartphone, with no cash required.
As valuations for major ride-hailing players including Lyft soar into the billions, the value of traditional taxicab medallions is declining. Medallions are city-issued licenses to operate cabs. But some New York City medallion owners are fighting back. They're trying to craft their own app solutions, albeit with mixed results, and working longer hours to pay the bills.
Just ask NYC medallion owner Safdar Iqbal.
He's working more to make ends meet. The Queens, New York-based driver bought his medallion for $570,000 in 2009. He needs to earn about $5,000 a month to break even on insurance, the medallion mortgage and industry fees. Iqbal earned extra income by leasing his car to a second driver who works the day shift.
"This was an investment in the long term," said Iqbal. Despite the challenges, the 48-year-old said he wants to make his NYC medallion work. "It would help me raise my family, take care of the kids, pay the rent and later on, work as my retirement."
Other taxi and limo drivers are taking more aggressive action in the face of ride-hailing start-ups.
New York City-based Allstate Private Car & Limo is creating apps of its own to compete with Uber and Lyft. Vice President Gerhard Doetsch says the company's managed to hold its core business due to consistency including flat rates and qualified drivers. The company has a fleet of 500 cars in the tri-state area.
Its app is called "iRide," and "gives us a good opportunity to compete once and for all," Doetsch said.
Uber's valuation could reach $50 billion after its latest rumored funding round of $1 billion, and it has collected more than $750 million in New York City during its first four years of operation. And billionaire investor Carl Ichan just threw his weight behind rival Lyft to the tune of $100 million earlier this month.
And while the value of medallions is declining, industry watchers say it's important to realize valuations can rise and fall like any speculative bubble. According to data from the New York City Taxi and Limousine Commission, medallions sold for an average of $800,000 in the first quarter of this year—a 20 percent decline from 2011, when medallions first sold for more than $1 million.
With medallion values falling, cab and limo drivers are fighting back.
Even though Allstate lost about 15 percent of its driver fleet and business in the past year due to competition, Doetsch said it's since regained about half the number of fleet drivers and customers.
And independent medallion owner Iqbal is hopeful that a successful yellow cab app—that he hopes the city is developing—will save the taxi industry in NYC.
The New York City TLC so far has not launched a competing ride app. "We need something for app hailing with yellow cabs, to have even arms with Uber," Iqbal said. "Then, I can compete with them," he said.