INDUSTRY IN REVIEW

By Don McCurdy

“Devil or angel, I can't make up my mind.”

All Uber all the time. London to Louisiana, Uber is smoking the airways. Incredibly, regulatory jurisdictions are conceiving ways to allow Uber and their look alikes to do business as a taxi service without the same regulations as taxi services. Is that a bad thing? It's hard to say.

While hopes of the dreamers are that Uber will help “under served” areas get better service, I just don't see that happening. Will robberies against taxicab drivers simply move over to Uber? I don't see that either. While inspector's dressed as gang bangers may flag down cabs, I don't see actual criminals giving a credit card in advance to be able to rob a driver with little or no cash.

How did we get here?

Pretty simply, poor business practices. For decades, in most cities, the companies have been king. Rather than keeping standards high and providing good service, companies relied on protectionist laws to keep out competition.

Cities contributed to the problems of the industry with lazy regulation, restricting entry and, in cases such as New York City, viewing the industry as a cash cow to provide a few extra million when politicians overspend. Is that redundant, politician overspending?

I have visited dozens of cities and I have observed some interesting phenomena. Regardless of how detrimental taxi company procedures are to customer service they all tend to do the same thing as other companies in their city. I refer to it as their “culture.”

If the culture is to offer full destinations in the trip offer then they all offer full destinations in the trip offer. When it is pointed up that their service is terrible as a result, they deny it vehemently or lament that they won't be able to get drivers if they don't “do what everybody else does.”

In enacting these “driver friendly” rules, the company disregards the source of their revenue, the rider, and views the driver as the source of their revenue.

Driver income has become irrelevant to companies beyond the thought that they need to make enough to pay their business leases. In effect, taxicab companies in many cities have become vehicle leasing companies. Drivers have few choices as to who to drive for and are compelled to drive for someone who owns a permit or medallion.

What happened?

Well, Uber and others have invaded the inner sanctum of the taxicab industry, the cities, and are popular enough with the people that politicians are finding ways to allow them to operate. While they are obviously operating in the same manner taxicabs have for decades, they are able to generate enough plausible deniability to allow politicians in some jurisdictions to claim that they aren't taxicabs, sans meters, and let them operate.

From outward appearances, Uber lets the driver keep a larger portion of the pie so the drivers are attracted to the service. Whatever their quality control method is, they appear to be doing better at it than the established companies in the cities they invade.

What is the industry doing?

The industry is doing what they have always done, going to their protectors. In city council meetings, state assemblies and regulator offices around the globe the companies and medallion holders are going to their protectors and demanding the protection they've been paying for all these years. In some cities the industry has been successful in warding off the Uber demons but, alas, in others the Huns have breached the gate and are carrying off the spoils.

Drivers are joining the companies in defending their turf against the interlopers and maintaining their culture, no matter how detrimental to them it might be. Generally, there is much wailing and gnashing of teeth.

What can the industry do?

Well, in those areas where they have repelled the digital horde they don't have to do anything. However, it would be wise to do what they can to improve taxi service. In this way, the politicians can claim the industry doesn't need Uber because the industry works fine.

If your city has already found a way to let Uber, et al, in then you may have to actually start policing your fleet and start worrying about driver income. If leaving your company for Uber or any other company will cost the driver income then they will stay with you forever. If they can make more money driving for Uber or any other company they will drop you like a bad habit. Make no mistake, companies who do not maintain the ridership definitely lose money and some will go under as it should be.

Cell phones.

Some time ago I guessed that cell phones would send the mobile data terminal the way of the pay phone, and that has proven out to a certain extent. Cell phones have been a boon to drivers and has allowed drivers to develop their own customers from those poached from the taxicab companies. Drivers have gone independent in a lot of areas after driving for a company for a number of years and acquiring “personals” or “specials” sufficient to break away from the company. Uber is simply an organized variation of that trend.

Houston is a good example of this phenomenon with drivers of upscale cars applying for limousine permits and going independent. The company's reaction? Rather than deal with their own service issues the companies went to the city and had them institute a ban on new limousine permits. Simple solutions?

Drivers have developed “networks” of reliable drivers they can contact via cell phone if they have business they cannot handle and, in an extreme emergency, they may actually call the company to cover a trip they can't handle.

Conclusions.

The industry is changing. Speed and quality of service are the name of the game. The regulatory house of cards the industry has been living in is falling. “Time will tell who has failed and who has been left behind.”

The protectors of the industry are looking the other way and survival will now depend on the resourcefulness of the individual companies. Regulators will either relax the requirements on the companies and drivers or they'll have two tiers of service, uptown and ghetto. Customers don't mind paying for better service and drivers would rather not be forced to pick up in neighborhoods that police won't go into without backup.

I could write a hundred pages on the whys and wherefores of what's happening to the industry and what the industry can do about it, but defying the industry’s culture is almost as frightening as the Uber invasion. I've received emails defending and decrying Uber and their wannabes. So, even the industry itself cannot tell me: devil or angel?

If you have any comments regarding this or any of my articles please feel free to contact me at don@mcacres.com. —dmc

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