Illegal taxicab operation
Most jurisdictions within and surrounding major cities of the United States require taxicab operators to be licensed, however, many unlicensed cabs are in operation. These illegal cabs are often referred to as gypsy cabs. The term is now considered by many to be racially insensitive. Illegal cabs can be marked taxi vehicles (sometimes referred to as "speedy cabs"), and others are personal vehicles used by an individual to offer unauthorized taxi-like services. Illegal cabs are prevalent in cities with medallion systems, which restrict the number of legal cabs in operation. Illegal taxicab operations are a victimless crime although it may affect the economic value of licensed taxis, and safety regulations may be bypassed. Both the drivers and passengers of illegal cabs are taking this risk. However, passengers sometimes find illegal cabs to be more available, convenient, or economical than licensed ones.
A variety of terms are used in the industry to describe legal and illegal transportation providers. Hacks or Hackers is a common term that originated with the hackney horse, a breed of horse typically offered for hire in the 19th century. Other terms used are livery cab, car service, or jitney cab.
The phrases vary by locality and often refer to different classes of licensed transportation providers. For example, in Philadelphia a cab driver's license is called a hacker's license, while in New York City livery cabs are licensed for telephone dispatch only.
In Lagos, Nigeria, illegal cabs are usually referred to as "Kabu kabu".
In Trinidad and Tobago illegal taxis are referred to as "PH" cars. This is because of the coding used on licence plates to distinguish between private cars from taxis. On a private car's licence plate, the number begins with a "P" (for private) while on taxis the license plates begin with an "H" (for hired). Thus the slang "PH" indicates an informal blend of the two states.
In St. Catharines, Ontario an illegal cab is called a "speedy". They offer rides of 8 dollars anywhere in town, and flat rates outside of town are also offered. Due to the high rate the legal taxis cost, speedy cabs are very popular amongst the retired, elderly, and generally fixed income people; many college students also use the system.
Unlicensed cabs may be found cruising the residential streets of a city, typically in the working-class neighborhoods. Sometimes, drivers will also wait at a location where taxi service is in demand, such as airport or train station arrival areas or shopping centers, asking arriving passengers if they need a ride. Unlicensed taxis often do not have meters, so the fare is usually agreed to at the beginning of the ride. The car itself is usually large, similar in feel to a licensed taxi.
In New York City and some other cities, non-medallion car services (also called livery cabs) lawfully exist but are only supposed to respond to telephone dispatch. They cannot legally pick up street hails or enter taxi stands at airports. However, outside of the core Manhattan business district, livery cabs are ubiquitous and will respond to street hails.
Some areas also have sedan services, which likewise, respond to telephone dispatch.
There are also non-taxicab based unlicensed transportation providers. Examples include "dollar vans" plying city bus routes in New York City, and van services that offer rides between major cities.
In some large American cities, and in Hong Kong, a medallion system is used to license cabs. The city issues a fixed number of medallions, and only medallion taxis are allowed to pick up fares. In general, this leads to medallions becoming ever more expensive—a New York City corporate medallion can sell for up to $1 million each. Medallions are transferable, and while some cab drivers own their own medallion, most must lease one on a daily or weekly basis from a fleet owner.
The medallion system has several effects upon the illegal transportation market. By acting as a barrier to entry to the taxi market, it has the unintended consequence of creating a market for unlicensed cabs, especially in areas that tend to be underserved by medallion cabs. Taxi medallions tend to increase in value over time, and their owners and lessees tend to be very eager to protect their exclusive rights, for example, by lobbying for stricter enforcement against unlicensed cabs.
In working-class neighborhoods
In America, there is significant anecdotal evidence that unlicensed cabs are mostly found in working-class neighborhoods of large cities. There are likely several reasons for this. First is a lack of licensed taxis—due to the perception, by cab drivers, of safety issues or that better tips can be had in wealthier neighborhoods. Often due to expensive medallions, licensed taxis don't leave the Central Business District (CBD), except to go to airports to drop off or pick up customers, which are easy and guaranteed income. If a metropolitan area is made of islands and depends on bridges and tunnels, and the CBD is a particular island, there is great psychological pressure to the licensed taxi driver to not leave that CBD island except for airports—even if the destination is a wealthy neighborhood—for fear of inability to obtain a return fare, safety concerns, or reliability of an outer-island customer paying his bill at the end of the journey.
Eventually, a precedent forms wherein customers will never find a licensed taxi in outer areas, causing licensed drivers to expect difficulty finding customers for a return trip, and wherein customers will wait for the first unlicensed cab or public transport rather than wait indefinitely for a licensed cab. Eventually drivers may form informal patrol zones corresponding to licensed and unlicensed taxis. Compounding this, residents of outer neighborhoods often own fewer cars per capita and thus are more dependent on publicly available transportation.
Moreover, residents of such neighborhoods may favor unlicensed cabs even if licensed taxis are available. Metered fares usually include a rate pertaining to the duration of a trip; as such, in areas where traffic congestion is common and unpredictable, the duration component of a licensed trip can skyrocket a fare beyond customer expectation. In contrast, unlicensed fares are known in advance, eliminating customer fears of unexpected cost.
It is not uncommon for residents and drivers to develop long-term relationships, wherein a customer comes to rely on a specific driver, using him regularly to commute to work or go shopping.
In Baltimore, USA, supermarkets in working-class neighborhoods frequently have "courtesy drivers" who, although not employed by the supermarket, have shown identification to management and are allowed to wait in front of the store for fares. Unlike licensed cab drivers, these courtesy drivers will also help to carry groceries up to one's apartment. "Hacking" in Baltimore has grown grass-roots style to a region-wide phenomenon, originating from "Hack Clubs", organizations usually operating in converted rowhouses where "hacks" made their cars available, distributed business cards with a central number, employed a "dispatcher", and hung around the rowhouse waiting in line for calls. This practice continues today, but hacking has evolved to the point where people nowadays just wag a finger toward the street, and wait for anyone to stop. This new way of getting around remains popular, despite being incredibly dangerous, due to disillusionment with the city transit service, and the fact that licensed cabs seldom stop for fares in the most dangerous parts of town. There are plenty of willing drivers, and competition can be fierce. The fare is negotiated and paid upfront. Police maintain this is illegal, and sometimes enforce with $500 tickets, and a trip to the courthouse. However, hacking is so prevalent in certain parts of town that cops don't bother making traffic stops.
Unlicensed cabs are also found among the Amish of rural Pennsylvania. An Amish taxi is typically an illegal taxicab operation run on an informal basis by an individual who is not specifically running a taxi service, but who has been propositioned by an Amish person to transport them for shopping or business purposes. Old Order Amish do not drive, but will hire a van or taxi for trips for which they cannot use their traditional horse and buggy transportation.
In most rural locations with a low-density Amish population, it would be impractical for an Amish person to hire a commercial taxi from a metropolitan area since the taxi would have to drive long distances just to pick up the Amish person. It is therefore more convenient and less expensive to find an unlicensed non-Amish neighbor willing to act as a "taxi".
Normal individual automotive insurance is not intended to insure driving a vehicle for hire for business purposes.
A paratransit license from the Pennsylvania Public Utility Commission (PUC) is required to operate an Amish Taxi legally in Pennsylvania. This applies to anyone who transports people for a fee. The vehicle cannot hold more than 15 passengers, and must display a PUC identification number on both sides of the vehicle.
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