Cab crash: Is Chicago's cab industry on the verge of collapse?

CHICAGO (WLS) -- Is Chicago's cab industry on the verge of collapse? The I-Team looked into a new study by the union for taxi drivers, which suggests hailing a cab could get much harder in months and years to come.

The competition is fierce as rideshares like Uber and Lyft take business from traditional cabs. The result is a crash in the cab market as more drivers face foreclosure and surrender their once-prized medallions.

Stacy Fendrick spent 50 years working hard behind the wheel of a cab.

"I started when I was in high school," he said.

Now the Rogers Park resident uses it as a personal vehicle.

Jason Knowles: And now you look at it today sitting here like this?
Stacy Fendrick: And it's gone, and it's gone, a lot of waste of money.
Knowles: You actually peeled off those numbers.
Fendrick: Right.

Fendrick recently declared bankruptcy and surrendered his city medallion. Once worth around $350,000, he now estimates it's worth $60,000.

"We used to get people all over the place, we would get cabs all over the place. Now there is nobody, there's nobody," he said.

He blames the city's refusal to ease up on regulations, taxes and fees, as well as the popularity of cheaper rideshare services. Those drivers are subject to background checks, but are less regulated.

Knowles: How hard has this been for you?
Fendrick: This is terrible, when you have to get out of business and you have been in business. I am old, but there are younger people out there that have put money in these cabs.

The city's data portal lists about 5,400 cars defined as "active" and close to 1,500 not active. But the Cab Drivers United Union gave the I-Team a report called "Chicago's Taxi Medallion Foreclosure Crisis." The union said it's a deeper dive into "daily trip" data.

CLICK HERE to read the full Cab Drivers United Union report.

In March, almost 3,000 out of 7,000 taxis, the union said, were not used for any trips. Since 2013, the report said more than 774 medallions have been surrendered.

"I have talked to over 100 cab drivers or medallion owners, and they fall into three buckets: Either one, they are in foreclosure proceedings, or they have already defaulted and are not in foreclosure yet, or they are at the verge of defaulting on the loan," said Furqan Mohammed, attorney.

Mohammed is representing several cab drivers attempting to renegotiate their medallion loans. He said the values of the medallions have crashed, much like the housing market in 2008.

"It's unprecedented, basically a collapse of a 2,000-plus businesses," he said.

John Aikins is one of 579 cabs under foreclosure.

"I have four boys who are college age boys and a mortgage, it's been very hard," he said.

He's negotiating with his bank so he can stay on the road and compete with about 227,000 city-registered rideshare drivers.

"I could barely make the payments," Aikins said.

Uber said: "In just five years ridesharing has created flexible earning opportunities for tens of thousands of drivers in neighborhoods across Chicago and helped millions of riders get from A to B."

The city of Chicago said it continues to support the cab industry and has taken some steps to reduce fees and raise income of cab drivers, but Fendrick and other drivers said it hasn't been enough.

Jason Knowles: You were planning on using that medallion to retire?
Stacy Fendrick: Yes, that was my nest egg.
Knowles: And now it's gone?
Fendrick: Completely gone.

The union is also critical of the city for not promoting a universal cab app to compete with rideshare. But the city said it's promoted two private cab apps that are part of a city program to help cabs, and that ultimately the consumer makes the choice. Many times that's a less expensive ride in an Uber or Lyft.


"Business Affairs and Consumer Protection is focused on creating transportation options for our consumers while continuing to regulate and support the taxi industry. That means we enforce rules and regulations to ensure safe, reliable and consistent service for customers while maintaining a fair and well-regulated transportation network. Transportation companies compete for customers, and ultimately it is the consumer who makes the choice. We continue to have ongoing discussions with cab drivers and owners while responding in a timely manner to consumer concerns. That is our mission and the balance we strive to maintain."


We already have the CHICABS.ORG program. The City has been promoting CURB and ARRO - both taxicab e-hail and e-pay smart phone applications for over a year now.

The City of Chicago welcomes input and dialogue with the industry regarding these important issues. Taxis and rideshares are two different industries that provide consumers with choice for safe, reliable transportation options.

The City of Chicago has taken many steps to bring innovation to the ground transportation industry. Below please find examples of the way the City has adapted and evolved its regulations to accommodate a rapidly-changing transportation landscape.

Offering universal taxi app service. BACP selected Arro and Curb apps to provide a smartphone application that will make it easier for Chicagoans and visitors to hail a nearby taxi and pay for their ride. These apps connect customers seeking a ride and enable taxi drivers to collect a higher number of fares.

Enacting a 15 percent taxi fare increase. This will increase average taxi driver income by $4,000 to $10,000 annually. This reform took effect on January 1, 2016.

Requiring that taxicab owners share paid exterior adverting revenue with the taxicab driver that drives the taxicabs promoting the advertising on City streets. Taxi drivers will be credited $0.50 (fifty cents) per twelve hour lease, $1.00 (one dollar) per twenty-four hour lease, $3.50 per weekly twelve hour lease and $7.00 per weekly twenty-four hour lease. This will result in an additional $135-$295 per year for the average driver. This reform took effect on December 1, 2015.

Introducing a $50 late fee payable to taxi drivers when taxi companies fail to "pay-out" credit card fare payments within one business day. This reform took effect on December 1, 2015.

Reducing the credit card transaction fee imposed on taxicab drivers by taxicab companies from 5 percent to 4 percent by January 1, 2016 and subsequently from 4 percent to 3 percent on July 1, 2016. This generates an additional $375-$800 annually for the average taxi driver.

Banning the practice by taxicab owners of asking for and keeping bond or security deposits for a taxicab and then failing to provide the taxicab to the driver. This reform took effect on September 28, 2015.

Reducing lease rate caps for taxi drivers. This change results in $2,400-$5,800 in additional yearly income for taxi drivers depending on the type of vehicle leased. This change took effect January 25, 2015.

Extending vehicle age requirements for fuel efficient vehicles by increasing their allowed life cycle to seven years. This change further promotes fuel efficient vehicles and saves drivers on average up to $2,200 in yearly gas costs when using a fuel efficient vehicle versus a non-fuel efficient vehicle. This change took effect January 25, 2015.

Reducing fines for which a taxi driver can be cited from a maximum amount of $1,000 to $400. This change took effect January 25, 2015.

Reinforced that the practice of "chaining" short-term leases to avoid long-term leases by medallion licensees is forbidden. This change took effect January 25, 2015.
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