Uber’s main competitor, Lyft, stands to gain from the dispute. It will continue to operate at ONT, Elkadi said. The fee imposed by the airport affected all …
Uber, the pioneering ride-hailing business, has ceased operations at Ontario International Airport, saying it is leaving because of a dispute over a fee increase imposed by the airport.
The app-activated pickup and delivery service planned to stop serving ONT passengers starting one minute past midnight Friday, Sept. 13, the company confirmed on Thursday.
“I wanted to follow up and share that Uber is following through on its decision to end operations starting tonight (Friday) at 12:01 a.m. PT,” Katie Alto, an Uber spokesperson, wrote in an emailed response Thursday.
Uber had asked the OIAA to not implement the $4 fee until it could provide justification for the increase and explain what the extra revenue would be used for. “But they refused,” Uber wrote in an email.
Elkadi said the airport had been in talks with the San Francisco-based ride-hailing company since early August. He said the two sides discussed the fee increase, looked at different opportunities for Uber and “different ways we can partner.” But the talks were not fruitful.
“The hurdle was the one dollar increase. It was an increase they wanted us to reconsider and we are not,” he said.
Uber’s main competitor, Lyft, stands to gain from the dispute. It will continue to operate at ONT, Elkadi said. The fee imposed by the airport affected all Transportation Network Companies, namely Uber and Lyft. Taxis pay a $3 fee.
Signs indicating “Uber and Lyft pickup and drop off” areas will be changed. The airport will black out the word “Uber” until new, generic signs are made and installed, pointing passengers to ride-hailing and rideshare app service locations, Elkadi said.
“We are informing our customers to make sure they download the Lyft app,” he added. He said passengers also can get to the airport and avoid parking fees by taking Omnitrans.
Elkadi said the money raised will be used to improve airport roadways, parking lots and signage. Elkadi disputed the characterization made by Uber about high fees. He said Hollywood-Burbank Airport assesses TNCs at $3.50 per ride and the fee at LAX is $4 per ride. “Our rate is reasonable,” he added.
Uber said it had not passed the airport use fees onto its riders and did not want to start doing so.
Uber is likely particularly interested in seeing the proposal fail: Earlier this year, CEO Dara Khosrowshahi said it was “toss up” as to whether Uber Eats …
In 2012, Uber’s then-CEO Travis Kalanick lamented, “Every city we go to, eventually the regulators will make something up to keep us from rolling out or continuing our business.” This sentiment appears to pervade Uber to this day, underlying the company’s adversarial relationship with regulators around the world.
In 2014, for instance, Uber began the “ Greyball” program, whereby it programmed its app to identify and evade law enforcement in cities — including Boston, Paris, and Las Vegas — where regulation curtailed or banned its service. These sorts of aggressive tactics have, in turn, garnered pushback from governments worldwide.
In 2017, Transport for London placed Uber on a 15-month probation, warning the company to address public safety concerns or risk further restrictions. And just this year, Uber suspended service in Barcelona after the regional government mandated a 15-minute delay for ride-hailing pickups to protect the interest of taxi drivers.
Tensions between Uber and regulators have no end in sight, and, in fact, appear to be escalating. Just this week, Uber responded in an adversarial fashion when faced with two disruptive regulations:
New York restaurants push back against Uber Eats. The New York State Liquor Authority issued a proposal which would see food delivery fees capped at 10% of order revenue. The cap would affect restaurants holding a liquor license, constituting approximately half of the market in New York City. This could significantly reduce Uber Eats’ margins, as delivery companies typically take a 25% cut of orders, according tothe Wall Street Journal. An Uber lobbyist and former aide of New York City Mayor Bill de Blasio petitioned at least three community boards to reject the bill, without disclosing her relationship to Uber. Uber is likely particularly interested in seeing the proposal fail: Earlier this year, CEO Dara Khosrowshahi said it was “toss up” as to whether Uber Eats ultimately becomes larger and more profitable than the company’s core ride-hailing segment. As of Q2 2019, monthly active platform users on Uber Eats had grown 30% year-over-year.
California wants Uber to give its drivers benefits. Lawmakers in California passed a landmark bill this week which would reclassify millions of contract workers as full-time employees, beginning in 2020. Uber categorizes its drivers as contract workers, allowing the company to skirt laws that would impose a minimum wage and require employee benefits such as health insurance. Uber was one of the main targets of the legislation, according to the New York Times. However, in a response issued by Uber’s Chief Legal Officer Tony West, the company denies that the bill will impact its treatment of drivers. The drivers, West argues, perform work that “is outside the usual course of business” because Uber “is serving as a technology platform for several different types of digital marketplaces.”
Uber’s driver costs will likely increase in an effort to appease regulators, exacerbating the difficulty of achieving profitability. Uber maintains that the California legislation does not automatically reclassify its drivers, but the company is likely to receive considerable pushback on this front. Already, Uber has advocated for legislation giving drivers an earnings floor and “access to benefits.”
While this would increase Uber’s labor costs, it would not be as significant as the increase associated with reclassifying drivers as full-time employees. Either way, Uber’s increased driver costs will follow its cut of 435 technical employees (8% of the workforce in engineering and product) in September. The convergence of these trends creates a difficult landscape for Uber to maneuver, particularly as it attempts to achieve profitability after accruing a $5.2 billion loss in Q2 2019.
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Uber, Lyft, and the places where they operate still can’t quite agree on how to regulate the companies’ relationship with their thousands of employees …
Laboratories of Democracy is a series that looks at the nation’s most intriguing experiments in local policy.
The policy: Background checks for Lyft and Uber drivers
Where: Austin, Texas
In place since: 2016
Uber, Lyft, and the places where they operate still can’t quite agree on how to regulate the companies’ relationship with their thousands of employees — sorry, the independent contractors whose cars, time, and energy make the companies run.
Despite the companies’ efforts, California’s state legislature passed a bill this month forcing companies like Uber and Lyft to reclassify their contractors as employees. Uber, thumbing its nose at lawmakers, said that it would continue its current model of having drivers be independent contractors. Uber’s “usual course of business,” Uber’s chief legal officer Tony West said in press statement, is “serving as a technology platform for several different types of digital marketplaces,” in which the drivers do not participate. This would seem to directly conflict with the California law’s text and intention — the law’s supporters specifically said it was meant to target “gig economy” companies like the ride-hailing services.
At the core of nearly all these controversies is how the companies’ relationship with their drivers should be regulated. As West told the media this month, Uber is “no stranger to legal battles.”
Uber and Lyft today are more likely to pour money into lobbying and marketing to get their way, but in Austin, Texas, in 2016, they tried that, and when it didn’t work, they just picked up and left town.
Four years ago, Austin lawmakers introduced a package of rules and regulations affecting Lyft and Uber that would, most significantly, require fingerprinting for their drivers for safety reasons. The companies claimed that this was an unnecessary precaution that would disrupt their ability to sign up new drivers. The two companies spent more than $8 million in a campaign over a single, confusingly worded 2016 ballot question on background checks and other regulations.
While far worse PR would soon be coming, the fight over whether drivers in Austin should have to get fingerprinted captured the attention of the national and even international media. The city that’s as well known for its strong sense of distinctive local identity as it is for its yearly tech-and-culture-fest South By Southwest became a notable holdout to the global spread of these ride-hailing giants.
While Lyft and Uber were then experiencing skyrocketing growth, they had also run into regulatory friction in several cities all over the world. When New York City attempted to cap the number of Uber vehicles in 2015 due to concerns about congestion, Uber launched a ferocious political campaign to defeat it, including a feature in the Uber app called “de Blasio view” that would show extremely long wait times for vehicles, implying that that would become a reality if Mayor Bill de Blasio got his way. (Three years later, New York City was able to institute the cap.)
But Austin’s attempt to regulate Lyft and Uber would ultimately have a nationwide impact on how both companies operate today.
How the policy worked:
In May 2016, just days after Austin voters rejected a change to the city council’s ride-hail rules, Uber and Lyft left Austin.
“On the driver side, it really sucked because they were caught in the middle,” said Harry Campbell, the founder of the Rideshare Guy, a website and podcast devoted to the industry. While most people in Austin were able to make do with their pre-Lyft-and-Uber options, of the drivers, he said, “One day they had a job, and one day they didn’t.”
Drivers began flocking to a Facebook group called Arcade City Austin, which was started by the creators of a fledgling ride-hailing app. Passengers would post where they wanted to go in the group and drivers, most of whom had previously worked for Uber or Lyft, would reply, creating an ad hoc ride-hailing system. Drivers would also post screenshots of their Uber or Lyft profiles as a clunky form of background checking, essentially substituting the system that Austin voters had found wanting.
“It was extremely illegal,” Campbell said.
Austin is a car-based city: About three-quarters of Austin-area commuters travel by themselves in cars, and the area’s transit system, Capital Metro, has just under 100,000 “boardings” per day, in a combined metro area of over 2 million, with just under 1 million in Austin itself. “Tourists rely on [ride-hailing apps] because they land in an airport without a car and don’t know their way around the city,” said Kara Kockelman, a civil engineering professor at the University of Texas at Austin. “Residents don’t have much of a problem because they don’t have a problem finding other modes. A huge portion was by private car or other mode.”
More legitimate operators rushed into the breach, including Fasten, an established Boston-based ride-hailing company. There was also RideAustin, a nonprofit founded by local entrepreneurs that charged a fixed fee per ride similar to Fasten and gave the rest of the fare to drivers, a stark difference from Uber and Lyft’s notoriously opaque system for split payments between themselves and drivers.
While Austin had definitively rejected Uber and Lyft, the artisanal ride-hailing renaissance showed that there was still an appetite for something beyond the existing taxi system. “Life finds a way,” Campbell said.
Austin residents who used ride-hailing services since 2014, before the ban, responded to it by using private cars or one of these alternative services, according to research by a group of scholars at the University of Michigan, Columbia, and Texas A&M based on a survey of more than 1,800 former Uber and Lyft riders in the November and December following the May 2016 vote.
“Most respondents switched to either a personal vehicle including sharing personal cars with friends (45 percent) or another transportation network company (41 percent) post- disruption. Interestingly, after the disruption, only 2.9 percent of people took the reference trip via public transit,” the researchers wrote.
Almost 9 percent said they had or were considering buying a car to account for the disruption in ride-hailing services. Researchers observed “a decrease in the average service satisfaction level post-disruption,” and there was a perception Lyft and Uber were higher quality compared to the alternatives that existed afterward, according to the survey.
But the most substantial effect may have been politically on the rest of the state. Other Texas cities had already scuffled with Uber and Lyft over driver fingerprinting. Lyft left Houston in 2014 while Uber left San Antonio briefly in 2015, eventually working out a deal with the city.
After the Austin vote, Uber and Lyft stopped operations in Austin and decided to move their fight from the city council to the Texas statehouse, pressuring the legislature to move authority for ride-hailing from the municipal level — which had traditionally regulated transportation like taxis — to the state level.
The companies showered money and manpower on the capitol, hiring dozens of lobbyists and spending hundreds of thousands of dollars. In just the first half of 2017, Uber spent somewhere between $820,000 and $1.6 million while Lyft spent between $365,000 and $760,000 in Texas, according to calculations done by the National Employment Law Project and the Partnership for Working Families.
Texas Gov. Greg Abbott (R) signed the new state ride-hailing law in May and Uber and Lyft returned soon after. “Texas has for a long time been the home for innovation and economic growth, but a patchwork quilt of compliance complexities are forcing businesses out of the Lone Star State,” Abbott said. The bill established licensing for the companies at the state level, including background checks that did not require fingerprinting.
Uber and RideAustin did not respond to Vox’s request for comment.
“They went to the statehouse to get a more favorable response” Rebecca Jones, director of work structures at the National Employment Law Project, told Vox. “In part because at that time state legislators were less familiar with how the companies operate and they were much more susceptible to this is bright and shiny and new and if they opposed it they would be [considered] Luddites.”
It set a national precedent. There are now more than 40 similar statewide laws that take power away from municipal lawmakers and protect the ride-hailing industry, making it easier for the companies to establish themselves all over the country and standardize their operations.
But lobbying efforts aside, data shows that while Austin voters may have voted in the ban because they wanted their own ride-hailing policy — or at least to stick it to large out-of-state companies — they also wanted to ride Ubers and Lyfts.
The competitors couldn’t survive once the ban was lifted. Fasten’s ride volume dropped 16 percent, the company told Curbed, after Lyft and Uber returned. RideAustin, according to data from RideAustin co-founder Andy Tryba, saw a volume drop of “55 percent in 1 week,” from almost 59,000 to just over 26,000, he wrote. “It’s hard to argue that the impact to the current local incumbents (including RideAustin) wasn’t swift and significant.”
While Uber and Lyft did some discounting, Tryba wrote, the deals were “nothing terribly significant,” Tryba wrote. “Despite local ‘anger’ on how Uber/Lyft left the city previously or the troubles Uber has internally — that didn’t seem to matter a whole lot.”
”Since coming back to Austin, Lyft has provided affordable and reliable transportation for riders, a flexible earning opportunity for drivers, and boosted economic growth for businesses and organizations throughout Austin,” a Lyft spokesperson said in an emailed statement. “We look forward to continuing to partner with the businesses, lawmakers, and the City of Austin.”
The ride-hailing industry, now solidly a duopoly in Austin and across much of the US, hasn’t stopped its fight in state capitols for favorable regulations. The two companies are planning to spend more than $60 million, the Los Angeles Times reported, on a ballot initiative on something even more existential than background checks and fingerprints: a special, non-employee classification for their drivers in California.
They haven’t escaped their reputation problems entirely. Uber and Lyft are now publicly traded companies that are still reporting billions worth of losses and have seen their stock prices decline since their initial public offerings.
But they’ll be competing to turn themselves into profitable enterprises in a legal landscape largely to their liking. “Uber and Lyft were not messing around about getting their way about regulation,” Campbell said.
But letting your child ride unaccompanied in a car with a stranger has become a somewhat acceptable, growing form of outsourced parenting. In Phoenix, two national ride-hailing services HopSkipRide and Zum began operating within a month of each other this summer, joining VANGo, which started in the spring.
“We are seeing tremendous growth in our existing market as well as massive demand to launch new markets,” said Joanna McFarland, CEO of HopSkipDrive, which launched in Phoenix in July.
After Phoenix, HopSkipDrive expanded into Houston to became its 10th market. The service now operates in six states. One of its competitors, Zum, which serves parents and schools in transporting children in the San Francisco area and Los Angeles expanded into Phoenix, Miami, Dallas, Chicago and San Diego this summer.
The ride-hailing services promises a safe ride for kids to and from school, to soccer practice, dentist appointments or anywhere else time-crunched parents need.
While one parent said using the service was better than leaving her child home alone, another isn’t so sure the background checks are enough to prevent crimes. The companies assure parents their services are safe.
Like adult ride-sharing, HopSkipDrive and other kid-transport services like Zum, VANGo, Kango and Bubbl, use apps.
These are the offerings among the various apps:
Unaccompanied transportation for children 3 to teens
Car and booster seats supplied
Price-lowering for car pools
A fare estimator
Newer, clean cars
Ability to track children on their journey
Escort door-to-door service
Notice of a child’s safe arrival
Advance booking or for one service
Same-day booking for last-minute trips
McFarland said 90% of parents use the service to get their children, the dominant age being 11 and 12, to or from school and after-school activities.
“With more parents working and bell times being right when parents need to be at work, especially at 3 o’ clock when school ends, it doesn’t mean mom and dad are out of work,” McFarland said. “It can be a huge challenge to manage all that.”
The ride-sharing service for kids are more expensive than Uber or Lyft. The cost for HopSkipDrive is $17 plus $1.50 per mile and 50 cents per minute. Zum charges $19.50 for single rides and $10 for carpool rides per child for a one-way trip.
For comparison, the Uber price estimator for the Phoenix area notes the cost for an UberX would be a base fare of 42 cents, a booking fee of $3.05 plus 85 cents per mile and 18 cents per minute.
But, all the apps promise safety is the first priority.
McFarland, who co-founded HopSkipDrive in 2015 with two other mothers, said it’s service keeps children safe through vetted drivers, a safety team keeping watch, and allowing parents to track their child from point A to point B via their technology.
The driver verification process includes: county, state and national criminal record checks, FBI-approved finger-printing background checks, and driver’s must have at least five years of care-giving experience. Most drivers are female.
The mobile app allows parents to create a code word for drivers to say when picking up the child. Drivers also wear identifiable orange shirts with “CareDriver” on the back.
If a driver is running late or experiences a flat tire, the safe ride support team will notify the parent, the school if necessary, and send a back-up driver to transport the child if needed.
“We cannot leave a child stranded,” McFarland said. “We really think about safety every step of the way.”
Convenient, cheaper than a babysitter
For Mesa, Ariz. parent Amanda Ohmer, it was to bring her 11-year-old daughter Emmalee to her work in Phoenix, about 30 minutes away. Her husband had a work function and she was at work so a HopSkipDrive driver transported her.
“She said it was pretty cool and she enjoyed the fact the driver was super friendly and she said it was very adult-oriented,” Ohmer said. “She’s a serious child, so she liked that.”
The cost was $60, Ohmer said, owing to the long drive. “So not something I would do on a regular basis. But for a shorter trip? Yeah, it’s convenient and probably cheaper than hiring a babysitter.”
Even though Ohmer said her family lives in a safe neighborhood, the mom chose the ride-hailng service over allowing her daughter to be a latchkey kid.
“I didn’t want her (home) alone for such a long stretch of time,” she said.
Parents still not comfortable
Scottsdale, Ariz. parent Kathy Ariaratnam said she wouldn’t say she’s adamantly opposed to such a service, but background checks can’t predict future behavior.
“We do gun background checks and people pass and they still go out and commit crimes. We don’t live in a ‘Minority Report’ time,” she said referring to the Tom Cruise movie where people are gifted with knowing who will commit future crimes.
The mom of an 11-year-old son said if she were to consider a ride-hailing service she would lean more toward what Bubbl offers.
The service hires only active or retired police officers, firefighters, military, nurses or other first responders. The vetting process involves in-person interviews, criminal background checks, drug tests and a motor vehicle review. The most interesting safety measures to Ariaratnam are cameras in the vehicle meant to protect the driver and passenger. Videos are deleted after the ride, and there is no live viewing, the company says.
“Technology is pretty powerful in terms of what you can track and how you can use it and how it can be used to prevent people when they know Big Brother and Big Mother is watching,” she said. “I would have to ask a lot more questions before I would be comfortable.”