With A-C Taxi’s demise, Sonoma County taxi industry weathers another big change

Having battled for more than two years with upstart ride-hailing newcomers Uber and Lyft, the local taxi industry is weathering another significant change with the year-end closing of A-C Taxi, one of the region’s largest operators.

A-C Transportation Services Inc., which was based in Santa Rosa and also operated Healdsburg Taxi, agreed to cease operations and pay a $200,000 fine as part of a settlement with the California Department of Industrial Relations, which cited it for refusing to provide its drivers with workers’ compensation insurance. The company had argued the drivers were independent contractors rather than employees, and as such weren’

The closing affected about 20 drivers, including one who spoke in front of the Healdsburg City Council Tuesday night asking for less burdensome regulations to encourage more providers to serve that city.

Whether it’s creative expansion, niche service, online apps or catering to tourists, the world of paid rides is being forced to adapt.

Taxi companies are licensed in the specific city where they pick up their riders, such as Santa Rosa and Petaluma. Those who pick up passengers in unincorporated areas are licensed by Sonoma County. Some providers choose to operate and be licensed in more than one jurisdiction, depending on how large an area they want to cover.

With the exodus, Sonoma County now has 100 taxis licensed to pick up riders, down from 151 just two years ago, according to county records. But the county does now have 41 registered taxi companies compared to 34 in 2013, signaling that more drivers are going out on their own and operating their own businesses. No statistics on the number of cab drivers in the county were immediately available.

The local market has become more segmented since the less formal ride-hailing services arrived and operators began to search for niche markets.

Some licensed operators function as one-person companies, relying on longtime customers or referrals who call for a pickup. Others, such as local powerhouse Pure Luxury Transportation of Petaluma, which employs 245 people, cater to those who can afford to visit for Wine Country special events or vacations.

The closure of A-C has given at least one operator the opportunity to pick up more market share.

“I have every intention to be the last man standing in Santa Rosa,” said Mark Neese, owner of Santa Rosa Yellow Cab. He has about 30 drivers and is looking to recruit more.

Now that Healdsburg Taxi is defunct, Yellow Cab is exploring taking on the Healdsburg market. Also, A-C had contracts with area hospitals as well as some shelters and nursing homes to provide vouchers for cab rides to those in need.

Those voucher fares made up almost 70 percent of A-C Taxi’s business, according to Kevin Kroh, president and co-owner of A-C Taxi. The contracts will need to be re-assigned.

Yellow Cab’s clientele is older and prefers to speak to a dispatcher rather than use an app to summon Lyft or Uber, according to Neese. The price difference between his service and the ride-booking services is less than 50 cents a mile, a much smaller margin than cabs that compete with the ride-hailing services in San Francisco, he added.

“I have managed to hold on pretty strong. I don’t feel I’m in competition with Uber or Lyft,” Neese said.

He believes that Yellow Cab has a competitive advantage over others locally, such as Golden Taxi and A-1 Taxi, because it’s the only Santa Rosa operator that offers 24-hour dispatching.

The drop in the number of taxis began when both Uber and Lyft started making inroads in the North Bay and taking market share from local operators. Traditional taxi providers have complained that these upstarts have an unfair advantage, as they are subject to fewer regulations governing vehicle inspections and driver background checks. Uber and Lyft also are battling in courts and with regulatory agencies to prevent their drivers from being labeled as employees, as opposed to less-costly independent contractors. Employers don’t have to offer benefits to contractors as they do to employees.

Eva Behrand, a spokeswoman for Uber, an estimated $60 billion company, said “hundreds of thousands of trips have taken place in the Napa/Sonoma region” by drivers for the San Francisco company since it came into the area in 2014. Lyft spokesman Alberto Gerstri declined to provide any figures.

The city of Santa Rosa has 14 companies that have a taxi franchise. In June 2015, there were 24, according to city records.

Some of those licensed have one cab, others have more than one taxi, and some have multiple cars, but not all are licensed in the city, said Police Lt. John Snetsinger.

For all the changes, the climate remains bright and the prospects strong in the luxury transportation category, which Uber has been trying to crack - even considering launching a limousine service here.

Pure Luxury owner Gary Buffo said his business continues to grow, with a 30 percent revenue increase over the past eight years. Its users range from large groups that use its luxury buses to local couples out for a dinner date who don’t want to risk a DUI.

Pure Luxury unveiled its BlinkCar app two years ago to cater to customers - especially younger ones - who prefer on-demand service like that offered by Uber and Lyft rather than calling his company to book a ride.

The app has been upgraded so Bay Area customers can pay for a direct destination trip rather than at an hourly rate, providing even more flexibility, Buffo said.

Customers have to book up to two hours in advance, but Buffo is eventually aiming to reduce that wait time locally to 45 minutes. The service also will be available to more than 300 global affiliates. The new options could cut into Uber’s black car service, but Buffo doesn’t consider the company a true competitor in the premium market.

“Our model is a different part of the population,” Buffo said. “Safety is everything for (our customers). They want to know who their chauffeur is... They are going to pay the price to be safe and secure.”

You can reach Staff Writer Bill Swindell at 707-521-5223 or bill.swindell@pressdemocrat.com. On Twitter @BillSwindell.