EDITORIAL HAILING CABS.

AFTER years of serving the San Fernando Valley, Valley Cab Co. appears destined to lose its franchise to operate in the area.

The City Council favors awarding the 96-cab contract to San Gabriel Transit Inc. A city panel issued a report - which the council endorsed - finding that San Gabriel Transit offered a more persuasive bid, with better descriptions of its hiring processes, service zone and management plan.

Fair enough. It's good to see the City Council take an interest in the quality of the Valley's services.

But why does the choice between Valley Cab and San Gabriel Transit have to be an either-or proposition?

It's not as though there's a lack of demand for taxicabs in Los Angeles.

According to a 1992 Cato Institute study, L.A. has only 0.5 cabs for every 1,000 residents - compared with 1.5 in Chicago, 3.4 in Atlanta and 13.5 in Washington, D.C., where almost anyone with a license and insurance can operate their car as a cab.

The taxi shortage results in unnecessarily high prices, especially in the Valley, which has a lower cab ratio than the city as a whole. L.A. cab fares are as much as 250 percent more expensive than they are in Washington.

Making cab companies vie for a limited number of medallions may be good business for City Hall. It surely brings in plenty of lobbyists and campaign contributions.

But is it a good deal for the people of L.A.? The council could better serve L.A. tourists and natives alike by paying as much attention to the quantity of area taxicabs as it does to the quality.

Instead of picking and choosing between companies competing for political favor, the council should let the public pick and choose between a number of providers competing for their business.

It doesn't much matter who runs the cabs as long as there aren't enough of them to serve the people. The whim of the City Council needs to yield to the laws of supply and demand.