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jitneys

Your daily Uber/Lyft update

From the Tuesday Council committee hearing at which the draft ordinance was reviewed.

Despite having a newly-released draft ordinance in hand, City Council members spent a Tuesday committee hearing asking many of the same questions about regulating ride-sharing services as they did months ago.

Echoing concerns raised by taxi and limousine companies, council members grilled Parker administration officials about setting rules for emerging services that connect riders to willing drivers via smartphone applications.

Repeatedly throughout the three-hour hearing, cab and limo drivers stood up as council members asked questions that centered on their fears that new regulations would create an unfair business advantage for the new services and eat away at their livelihoods.

“What will the effect be on the public if the taxicab companies are no longer viable?” Councilman Oliver Pennington asked.

“The taxicab companies will continue to be viable,” said Tina Paez, director of the city’s Department of Administration and Regulatory Affairs. “They probably will lose some market share.”

[…]

The administration’s conclusion is that existing operators will adjust, pointing to studies from other cities that have chosen to regulate, rather than ban, the ride-sharing services.

“What we’ve seen, especially if you look at that Seattle data that just came out from last year with two years of operations … they’ve actually seen a growth in the number of trips and a growth in revenues,” Paez said. “It’s only 3 percent, but if they were having a significant impact where they were cannibalizing, you would have seen a significant decrease.”

Lauren Barrash, founder of The Wave jitney shuttle service, disagreed.

She said her business already has seen a decline because her target market is the same as Uber and Lyft, which have been operating in Houston since February.

Ahead of a City Council decision, both services had offered free trips until last week, when Uber said it would charge riders.

Critics, however, say the two have been charging customers for weeks.

“My April revenue is the lowest in 2014 and 2013,” Barrash said. “January is traditionally our lowest month. Currently, for April, we’re at half of what January 2014 was. … I might not be as big as Yellow Cab, but I will be impacted the quickest. It will put me out of business.”

That would be unfortunate if it happens, and I confess I hadn’t given much thought to non-cab operators like The Wave. With all due respect, however, Council is no more obligated to protect jitneys like The Wave than they are to protect legacy cabs. I’d hate to see The Wave go under, but I’d also hate to see Houston try to deny the existence of change in the business. The basic idea behind the draft ordinance, which will make Uber and Lyft comply with the same safety and inspection requirements as the cabs, seems like the right direction to me. I look forward to Council finishing the job. PDiddie, who is not a fan, Campos, who thinks the lack of representation by Uber/Lyft supporters at the meeting could upset the conventional wisdom about how this turns out, and The Highwayman have more.

No restraining order against Uber and Lyft

The ridesharing services in Houston and San Antonio can continue to operate, at least for now.

A federal judge Monday declined to issue a temporary restraining order sought by Houston and San Antonio cab companies hoping to block ride-sharing services that permit riders to use smart phone applications to catch rides.

Houston-based U.S. District Judge Vanessa Gilmore set a July 15 date for an injunction hearing, which could result in stopping the smartphone-based companies from operating or give city ordinances as chance to catch up with the technology.

Gilmore said she had some “real concern” about whether the taxi and limousine companies had standing for a temporary restraining order, and added that she was particularly concerned about doing anything that stands in the way of a political process that already is under way.

[…]

Gilmore said she believes the current situation simply is an instance of technology outpacing laws.

“I think technology has gotten ahead of the law,” she said. “It happens all the time.”

That much is clearly true. The rest is subject to debate. Mark July 15 on your calendars, y’all.

In the meantime, here’s a Sunday Express-News story about ridesharing services and their entry into Texas markets. Think of it as a primer for those who are just tuning in. A couple of points:

Lyft and Uber are disrupting the long-established industry of taxi and limo services that, in most cities, “really haven’t had a need to evolve,” said Paul Supawanich, a senior associate with Nelson\Nygaard, a transportation planning consulting firm.

Physically hailing a taxi or having to phone a dispatcher, Sundararajan said, becomes less efficient than using a smartphone app.

With Lyft and Uber, customers input their credit card information into each services’ smartphone app first, so any monetary withdrawal is done electronically without the driver and passenger having to exchange funds directly.

The ridesharing companies want to be thought of as technology platforms, not taxis, because their drivers aren’t professionals and usually only work a few hours at a time. Lyft has billed itself as more like getting a ride with a friend. Drivers are encouraged to give their vehicles themes or hand out snacks.

But taxi drivers and companies are frustrated because a taxi driver can’t operate without a city permit, and drivers pay hundreds of dollars every week for the right to use those permits — expenses Lyft and Uber drivers currently don’t have to bear.

“If they want to play in this game and be in this business, then play by the rules,” said John Bouloubasis, president of San Antonio’s largest taxi company Yellow Cab San Antonio and one of the plaintiffs in the federal lawsuit.

Bouloubasis pays $455 annually for each basic taxi permit and another $175 for permits that authorize vehicles to pick up and drop off passengers at the San Antonio International Airport.

Bouloubasis leases the right to use the taxi permits back to the cab drivers. Some drivers lease Yellow Cab vehicles, which costs $88 a day. Other drivers own their vehicles but pay for the right to use a Yellow Cab permit, the company’s brand, its dispatching services, and to be covered by its insurance, a cost that runs $267 a week.

In effect, drivers have to make up a financial deficit every day if they want to at least break even, said Richard Moreno, a driver for Star Taxis who pays $75 a day to rent his vehicle and use the permit.

“There’s no sympathy in this business,” said Moreno, who said he’s already started to feel the effects of Lyft’s and Uber’s presence on his bottom line. “It’s cutthroat.”

All new taxi drivers also have to pay a $2,000 driver deposit, which they can choose to pay in a lump sum or in increments.

Lyft and Uber drivers don’t have to pay any of these fees.

Both companies keep 20 percent of every fare; the rest of the profits, plus tips, go to the drivers. Drivers don’t have to pay any base cost for the right to drive for Lyft or Uber.

Another difference: Lyft and Uber have set their own rates; taxi drivers’ rates are regulated by the city.

One thing that hasn’t gotten much discussion in Houston is that not all taxi permit holders do things to add value to the permits. Basically, they lease them out to cabbies for a flat fee, which makes them excellent cash cows, but it’s on the cabbies themselves to earn the money to pay for the leases. The permit holders themselves don’t offer dispatch service or any other means of directing riders to the cabbies that lease the permits. This isn’t true for most permit holders, of course, but there’s a non-trivial number of the non-value add types. Rideshare services, or TNCs if you prefer, are a direct threat to them, as well they should be.

They’re a threat to the permit owners that do provide value to their leaseholders, too, and I don’t see any resolution that allows Uber and Lyft into the market that doesn’t diminish the return on those permits. But as I’ve said all along, I don’t see the market for paid rides as being static. I think with innovation and some new ways to access these services, the market can and will grow, and this growth can benefit the legacy companies if they work for it. This bit of the story resonated for me:

The new companies are becoming popular because they are filling a need, said Supawanich, with Nelson\Nygaard.

“If no one in San Francisco (where Lyft started) ever complained about getting a taxi,” Supawanich said, “these services would not exist.”

“We’ve had the same basic transportation options for a really long time,” he said. “It’s kind of been a new splash for the market.”

The 80/20 Foundation, the private foundation of Rackspace founder Graham Weston, launched a petition on Change.org last week to encourage City Council members to adjust the city ordinance to allow Lyft and Uber to operate because the foundation believes millennials want other transportation options.

“There is research showing that fewer and fewer young people are interested in owning cars,” 80/20 Foundation Executive Director Lorenzo Gomez III wrote in an email this week. “So any city that wants to attract young talent will need options that make it easier for them to get around. Ride share is one of them.”Muñoz hasn’t tried Uber yet and hasn’t used Lyft since she first took a ride last month. But she’s thinking about using it again this week when she and some of her coworkers head to the Night In Old San Antonio Fiesta event. To her, the fact that these ridesharing services operate exclusively via smartphone apps is just an example of companies adapting to changing times.

I haven’t taken a cab in Houston in at least a decade. In recent days, however, I’ve been thinking about how I might use a service like UberX or Lyft. I’d consider using it as transportation to and from a sporting event downtown, for example. The round trip likely won’t cost much more than parking, and it could avoid a lot of hassle. Another possibility is using it as a shuttle to and from an event like the Art Car Parade, where parking is free but really hard to find unless you get there very early. If I do any of these things, it’s not coming at the expense of the existing cab companies. Along the same lines, if I were thinking about living downtown or in Midtown, or some other parking-challenged part of town, I’d strongly consider the possibility of giving up at least one car – which would be a significant savings – and using a combination of transit, ridesharing, car sharing, and bicycling in its place. The amount one spends in a given year on gas, insurance, maintenance, fees, parking, and so forth even on a paid for car could probably buy you a lot of rides. If we ever want to nudge people towards a higher-density, lower-carbon lifestyle, ridesharing services need to be in the mix.

Finally, The Atlantic Cities reminds us that as in all things, the past is never dead and everything old is always new again.

These services might feel radically different from the traditional taxi model, but in fact American cities have seen this movie before. Long before TNCs captured public attention, the low-tech jitneys of the 1910s disrupted the existing transportation order by promising a more customized service at a similar price to public transit.

The rise of the low-tech jitneys coincided with a spike in unemployment at the outset of World War I, and the availability of affordable secondhand cars. With more cars on the road and fewer jobs to occupy the labor force, drivers began picking up rides for a nickel. The appeal of flexible service — in conjunction with streetcar dissatisfaction, low rates of automobile ownership, and shifting housing and travel patterns in many cities — led to a dizzying increase in jitney operations across the country. “The mushroom growth of the jitney has been so rapid that cities which were in blissful ignorance of it in the evening found cars in operation the next morning,” The New York Times reported in 1915.

As quickly as jitneys flooded into cities, however, local regulations washed them back out to sea. Streetcar companies, which paid more in state and local taxes and maintained roads adjacent to tracks, complained that the jitneys reaped the benefit of these roads without paying for their upkeep. Municipalities largely sided with streetcar interests because they didn’t believe jitneys could handle the same passenger loads, and thought the loss of streetcars would be disastrous at a time when the vast majority of Americans relied on transit for travel. Between 1915 and 1918, the number of jitneys operating nationally declined from 62,000 to 6,000.

The jitney more or less disappeared by 1920, but the idea of car-like convenience at the price of transit never disappeared — most U.S. cities still run public vanpool and dial-a-ride services — and with TNCs it’s returned with a vengeance.

Funny how these things go, isn’t it?

New jitney rules coming

City Council is preparing to make some changes to its ordinances regarding jitneys.

The goal of the new rules, some of which also will be established by mid-September in a “green” ordinance that will govern the use of zero-emissions vehicles, is to “allow the market to function appropriately,” said Chris Newport, a spokesman for the city’s Department of Administration and Regulatory Affairs.

Newport said the previous rules are outdated and inhibit new ideas.

“The changes create a flexible framework and set the foundation for the industry to grow without standing in the way of technology and investment,” he said.

Erik Ibarra, owner of Rev Eco-Shuttle, said that is exactly what the new ordinance will do. The changes to the ordinance may “regulate us out of business,” he said.

I’ve written about RevHouston before. Ibarra’s concern appears to be because his service is currently neither fish nor fowl. Jitneys are being defined as having between nine and 15 passengers and operating on a fixed route. If that sounds like the Washington Wave to you, go to the head of the class. RevHouston is using a jitney license that Ibarra got to keep from getting tickets for not complying with taxi ordinances, but his service is for six and fewer at a time, and really is more like a taxi since it’s not on a fixed route. The city says it has a plan for that:

Although Ibarra’s two six-seat vehicles would be allowed to continue operating under the law under an exception, he said the new ordinance may not allow him to grow or to purchase more vehicles.

City officials say Ibarra’s company will be able to operate as a pedi-cab under the “green” ordinance, which the council is expected to consider in mid-September.

[…]

Ibarra said he is concerned that his company’s growth potential will be limited before the new regulations are in place.

He agrees that many of the changes proposed in the ordinance will be good for the industry but questioned why his company will be left in limbo.

“Why not put the green ordinance first?” he asked, noting that he would be in “regulatory purgatory” for six weeks. “It just seems backwards to say, we’re going to regulate you out of the market first, but don’t worry, we’re going to set up a green ordinance for you. … If this passes, they’re not going to prevent other companies from growing, just my company.”

I’m sure there’s a reason Council is doing the jitney update before the green ordinance, but regardless of that it does potentially leave Ibarra in the lurch. What happens if the green ordinance doesn’t get passed, for example? It probably won’t matter in the end, but I can’t blame the guy for fretting about it. As for his concern about his company’s growth potential, I must say that classifying RevHouston as a form of pedicab makes sense to me. As long as the green ordinance wouldn’t forbid him from operating, say, a ten-passenger eco-shuttle, I don’t see the problem. Am I missing something?