INDUSTRY IN REVIEW

By Don McCurdy

Circle the cabs!

Portland Oregon is having Uber birthing pains. Apparently, the local taxicab companies are unwilling to just let it all happen and have organized into a lobbying group called the Transportation Fairness Alliance.

Taxicab companies traditionally aren’t interested in organizing or being associated with their competitors. Possibly, that has something to do with the idea that your competitor is your enemy.

Portland is toying with various ideas including a deregulation scheme referred to as “Taxis Gone Wild.” It would seem kind of obvious to me that if you aren’t going to regulate Uber then you have already accepted the idea that regulation of ground transportation providers is unnecessary. Having accepted that, it only seems natural that you deregulate other companies providing the same fundamental service. It will be interesting to see how all of this pans out.

Privacy violation?

Uber has refused to turn over trip information to the New York City Taxicab and Limousine Commission (TLC) citing privacy concerns. Five of six Uber bases were suspended. The bases reopened after the company filed an appeal and eventually Uber gave up the trip data.

In all, sixteen bases were asked for trip data and all of the bases complied except Uber who reported to have said it would be in violation of its Constitutional rights. I wonder if that would be the right to remain silent? One thing does seem apparent about Uber, it seems to have a bit of an issue with regulations. That’s okay, though. They’ve hired a couple of big shot lobbyists to plead their case so the TLC investigators may end up doing time. Okay, I made that part up.

Now there’s an advantage.

Uber has recently announced that it will be lowering prices in 48 cities while guaranteeing the drivers will be paid more. The theory, actually it’s some kind of economic law, is that the decrease in price will cause an increase in demand and the resulting increase in demand will bring more money to the driver.

Most regulatory jurisdictions I am familiar with tightly control the amount a taxicab can charge, with some cities, such as Chicago, going for years with no fare increase. The “official” reason given for disallowing taxicab companies to alter their fares was based on driver income. It was feared that allowing a taxicab company to lower fares would create a situation where driver income would bear the weight of the discount.

Interestingly, Uber gets the advantage of being able to experiment with its business model while taxicab companies do not. Uber is able to refine its business model to capture a larger market share. It has long been one of my basic observations of the ground transportation industry that it is over regulated. The Uber experience, whether you love it or hate it, appears to bear out that idea.

Got your Groove on?

Reports out of Uber home town San Francisco are that a new “clubhouse” has appeared on the scene to cater to “drive for hire” drivers. The new clubhouse is called Groove and gives drivers a place to congregate. While the site boasts of a lot of free stuff it costs $30 a month to be a member which kind of negates the “free” idea. The big draw appears to be bathrooms and plenty of parking. Having driven for a living at one time, I can tell you that both are important. Currently, Groove is not being overrun with requests, but it just opened and who knows how it will all turn out.

Across the pond.

An article out of London England reports that a driver for an “Uber taxi” put two gay men out of the “taxi” for kissing. The alleged victims in the case reported stated that Uber was homophobic. That part of story cracked me up since Uber started in San Francisco which is a difficult go if you’re homophobic.

The part of the story that was of interest to me was the “Uber taxi” part. Several times during the article the author referred to the vehicle as a taxi. Which is one of my contentions all along, but we’ll let that rest. The point for me was that, while Uber claims not to be a taxi service, the riding public views it very much as one. That really isn’t much of a concern since the press rarely gets the story right, at least in my personal experience.

Surge pricing revisited.

Once again, New Year’s Eve has come and gone and the whining of the surged echoes on. The surged? Yes, you know, those folks who call Uber during peak times and have to pay the premium “surge” price.

During my years in the industry I learned more than a few things, one of those being that when the “pain in the butt” factor exceeded the “monetary reward” factor drivers go home. Days of exceptional weather or exceptional volumes of business can often reach a level of traffic saturation.

Traffic saturation makes the entire event too much trouble for too little return on time invested. So, surge pricing, from a driver’s standpoint, is an awfully powerful inducement to work in adverse conditions. The real problem, as I see it, is that riders have had big brother price fixing for them for decades.They just won’t be able to accept the idea that difficult driving circumstances should bring a greater reward. Bummer, call a cab.

So, who is in charge?

My all time favorite regulatory agency, the Philadelphia Parking Authority (PPA), is at war with Uber and Lyft. While the Pennsylvania Public Utility Commission (PUC) has authorized the services of Uber and Lyft elsewhere in the state the PPA has banned them in Philadelphia. Uber has stopped using their U placard and Lyft the pink mustache and gone undercover. Well, as much as you can go undercover in a transportation business.

The PPA has actually impounded Uber and Lyft vehicles. Meanwhile the Philadelphia City Council has asked the state legislature to approve these services statewide, including Philadelphia. Which leads me to the seemingly obvious question of who exactly is in charge in Philadelphia? Who does the PPA report to? Are they a separate entity from the city and state? If the Pennsylvania legislature agrees and gives Uber and Lyft statewide authority will that effect the PPA ban or will the PPA just make them an offer they can’t refuse? Time will tell.

And so it goes.

Various entities have abandoned regulating taxicabs in the traditional fashion and have moved to “regulation lite” in the era of ride share companies. Taxicab companies often have serious infrastructure based on radio requirements and other regulatory requirements, so slimming down may not be that easy, especially if they’re still paying for all that technology.

While Uber has been quite pushy in starting up in markets without operating authority they have also not backed down. Along with that they’ve done some things right that instantly solved historical industry issues, like driver safety. The idea that you can’t even get a car to come to you without a credit card removes the crook’s vision of the taxicab as a rolling ATM machine.

While I still prefer an experienced, professional driver, the instant rating system they’ve developed puts them light years ahead of taxicab companies that still count on the customer to call in complaints and then rarely act on the feedback. The taxicab industry has fallen into an almost protectionist racket with the regulators providing the muscle to keep out interlopers. Well, at least until now. It will be interesting to see how the industry responds now that big brother is letting them fend for themselves.

Rest in peace.

When first drawn into management at a taxicab company, I had the good fortune to work for Charles Johnson. Charles didn’t have a lot of the attitudes that life time industry participants often seem to have and he viewed the industry as a business. Not just a business, but a business that needed a boost of pride.

While he and I didn’t always agree on things, if getting thrown out of a staff meeting would be an indicator, we both worked hard and lifted our company to the top of the industry in our city. Little edicts like “never walk past poor quality” are ideas that I keep alive in my current business.

When Charles left the company he started his own company, Total Contract Solutions, and helped companies across the United States to bid for bus and paratransit contracts, sharing his particular expertise to the betterment of many. Charles Johnson passed away in late January and I for one will miss him. I learned a lot from him and enjoyed our relationship though somewhat distant in the last few years. So, I say, thank you old friend and rest in peace.

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

© 2015 TLC Magazine Online, Inc.