Mayor acknowledges “review should have occurred, but it didn’t” after Burlington Taxi closure

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Burlington Taxi closed its doors on November 26^th. On November 30, the City of Burlington convened a special meeting to address the issue.

After the meeting, Mayor Marianne Meed Ward said in a press release, “Early in 2019, staff formed a small team to look into the bylaw review and removed the motion from the regular reporting list, with a plan to report back to council on progress. That report back didn’t happen. While we have heard that the key reasons for Burlington Taxi’s closure – high insurance rates and insufficient number of drivers – are unrelated to the bylaw review requested in 2018, we acknowledge that review should have occurred. It didn’t, and for that, we take responsibility.”

Meed Ward noted that Burlington Taxi had been acting as a key transportation service for many within the community throughout the pandemic. The closure leaves the city of 190,000 people with just one cab company, Gem Taxi, which numbers only four cabs.

At the Special Meeting, Burlington Councillors unanimously approved a report by By-Laws Manager Kerry Davren, which recommended the City amend its by-law “to allow exemptions to existing licensing requirements that may no longer meet modern taxi business operating models and to temporarily change the method in which new licences are granted.”

“While (the closure of Burlington Taxi) has left an unfortunate gap in service, it also provides opportunity for new business to enter the Burlington transportation market,” reads Staff Report BB-12-21.

“Burlington Transit uses taxi operators to augment accessible transit, school boards use taxis to supplement the school bus system and those with medical conditions who require specialized transportation are major taxi users. The gap in service is greatly affecting this vulnerable population so the sooner new companies can be legally operating, the better. Anecdotal information is already being submitted that indicates outside taxi companies are operating illegally in Burlington and potentially taking advantage of customers. The City does not have appropriate enforcement resources to stop all such activity and the longer it is allowed to continue, the more difficult it may be to eliminate.”

Also on November 30^th, the City of Toronto’s Licensing Committee heard a deputation by Dr. James Cooper of Transport Research Services of Austin, Texas, who warned against the impracticality of allowing two unequal vehicle for hire services to compete in the same market, as Toronto has done.

Changes too late for Burlington Taxi

Staff report BB-12-21 does not address the largest issues faced by Burlington Taxi owner Scott Wallace, who could not be reached for comment.  In an Instagram post he said, “Burlington Taxi has been experiencing a severe labour shortage for several months, and we can no longer meet demand with current staffing levels. We are sorry for the stress this has placed on our team, as they carried the burden of extensive wait times and strain on customer service.”

“We are particularly proud of our team that provided pandemic taxi service over the last18 months. Despite the fears and uncertainty their jobs presented, our drivers stayed behind the wheel and helped us transport those who needed us most: seniors, students with special needs, medical transport clients, Canada Post employees, and many more.”

Wallace has attributed the shutdown to a shortage of drivers, the effects of the pandemic, and crippling insurance rates. He said that added to those issues is the heavy competition from ridesharing companies like Uber, and Lyft.

With fifty-three years of service, Burlington Taxi ranked as the city’s longest-running and biggest cab brokerage. It was founded by the Wallace family in 1968, with four cars dispatched from the original Plains Road office. In recent years, it was operating out of a 12,000-square-foot facility in the heart of the city. While numbering 55 cars at its peak, its fleet had recently dwindled down to approximately 12 cars and 27 drivers, making it impossible to keep up with the day-to-day expenses of running a brokerage. 

Wallace told CBC when business began to rebound earlier this year, he attempted to call the drivers back, “but most had moved on.” And he couldn’t find any new drivers, citing the $600 to $700 cost to get on the road, and the need for a criminal background check and defensive driving course, plus insurance rates that have skyrocketed up from $5,000 to upwards of $20,000 over the past few years.

“I have lots and lots of work,” he said, before shuttering his doors. “We turn down work every day, but there’s no one to do it.”

“It has been emotional for us. It has been emotional to watch this deteriorate.”

Innovative insurance products for rideshare exclude taxis
High insurance rates have been a significant issue for GTA Taxi drivers for several years.
In 2017, Ontario moved to legalize an innovative concept for rideshare companies permitting insurers to base rideshare drivers’ insurance only on the hours the vehicle was used to pick up passengers, as opposed to full, 24-hour-per-day commercial coverage required by Taxi drivers. Ontario did not permit Taxi drivers to access the new, less expensive form of coverage. Taxi drivers are required to carry full commercial insurance, which can range in price from $7,000 to $25,000 or more, per year. 
According to its spokesperson Scott Blodgett, the Ministry of Finance is aware of the current issues regarding the affordability and availability of auto insurance for taxis, and recognizes this issue has been escalated by the COVID-19 pandemic. 
He says that insurance premiums for taxis are based on the individual claims experience (e.g. frequency of claims, and total claims costs) for a taxi or fleet of takes, as well as the insurance company’s overall claims experience.
“Taxi insurance is a specialty product that is priced to reflect the higher risk nature of the service (e.g. long hours on the road, multiple occupants), and the experienced claims costs, which are materially higher than other lines of auto insurance,” he states.