UBER Competition

The success of ride-hailing app Uber has brought growth in the UK’s traditional taxi and private hire industry to a standstill, with thousands of drivers trading local cab companies for Silicon Valley’s largest start-up.

Despite record numbers of drivers, new corporate data shows the number of new taxi companies in the UK fell by 97 per cent in the first four months of 2016 amid signs Uber’s disruptive impact is spreading beyond the capital.

Uber has caused upheaval in nearly every market it has entered, leading to large-scale taxi strikes in capitals like Paris and Brussels and plummeting values for taxi licenses in New York and Chicago.

As Uber has expanded around the world — it now operates in 68 countries — regulators have also been grappling with what type of requirements to place on Uber drivers, trying to balance users’ demand for the service with its impact on existing taxi companies.

The company says its flexibility and fairness is attracting drivers from established companies. Gladys Mapanda, who worked for three minicab operators in London before becoming an Uber driver a year ago, said the experience has been “a liberation” for her as a woman used to “boys club” minicab businesses.

Uber notes that over two-thirds of new drivers are referred by existing operators. But UK trade unions fear the company is forcing out competitors with artificially low prices.

Steve Garelick, secretary of the GMB union’s professional drivers branch, said operators “are finding rates and damage to what was their marketplace too much to take”.

Faced with similar disruption, some cities in China are planning to reduce daily fees paid by taxi drivers to help them compete with Uber, while several cities in the US have responded by taxing Uber rides and using the funds raised for infrastructure improvements.

In a nod to the London taxi industry’s famous “Knowledge” exam, Uber drivers in the capital are required to take basic English and geography tests. Uber has also offered black cabs an olive branch by adding a hansom option within its app, although relatively few black cab drivers have signed up for the service.

Uber’s concessions appear to be having little effect. Only eight new taxi operations were incorporated with Companies House between January and April, compared to 290 in the same period last year and more than 300 in 2014. The total number of new taxi companies registered in 2015 was 65 per cent lower than in 2014, the first fall since 2008.

In London, the number of licensed private hire operators has declined by 11 per cent since Uber launched in the city in 2012, according to Transport for London. GMB believe at least 10 private-hire businesses close each month.

Uber has expanded its UK operations from four to eighteen areas since the start of 2015 and now has over 30,000 drivers in the UK; in London, it accounts for about a fifth of all taxi and private-hire drivers.

In an effort to fight back, established groups including Addison Lee, the country’s biggest minicab company, have signed up to taxi comparison app Karhoo, which launched in London last week. The app allows users to compare prices and services across different companies, as well as make bookings in advance.


http://www.ft.com/cms/s/0/c4ded228-1910-11e6-bb7d-ee563a5a1cc1.html#axzz48nG6GzD5
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 April is the cruelest month for taxicab tsar Evgeny “Gene” Freidman, the one-time undisputed heavyweight champion of New York City medallion ownership. In the good ol’ days—i.e., before ride-sharing apps—the 1,100 or so medallions that Mr. Freidman’s byzantine network controlled were worth an estimated billion dollars. Mr. Freidman borrowed heavily against the perceived value of those medallions to finance additional purchases. Unfortunately, he who lives by leverage can also die by leverage.

Last April, things started to crumble fast for the man who BusinessWeek called “The Taxi King” in a lengthy piece that both lauded Mr. Freidman’s guts and also made fun of his personal quirks (the entire first paragraph was about his “f—ing divorce” and “f—ing haircut”). In a series of articles last April, the Observer chronicled the slow-motion collapse of Mr. Freidman’s over-levered empire.

There was a secret meeting, first reported by the Observer, aimed at derailing Uber. It was closed to the press and attended by Ydanis Rodriguez, the chair of New York City Council Transportation Committee, who has been a loyal ally of the traditional taxi business.

Then, on the very day of the secret meeting, the Observer broke the news that Attorney General Eric Schneiderman would be suing Mr. Freidman, accusing him of reneging on a 2013 settlement and continuing to shortchange drivers, particularly those who collect fares via credit cards.

So that was last April. But now, things have continued to worsen for the ersatz billionaire. The locations are different (Chicago and Philadelphia) while some of the accusations are the same (shortchanging drivers) and some are freshly outrageous (forgery). In a document obtained exclusively by the Observer, Mr. Evgeny’s taxi partners in Chicago and Philadelphia claim he stole from them, using privileged legal accounts; claimed his parents, girlfriend and children are cab drivers; hid money from the government by using these businesses.

First was a suit filed by Everett Abitbol in Philadelphia on April 7 but not covered until now. Mr. Freidman’s partners claim their shared business is being bled dry by Mr. Freidman, and one paragraph reads more like The New York Post than a formal court document: “Freidman’s desperation is likely exacerbated by his high-profile divorce which is regularly reported in New York City newspapers. Allegations of cocaine use and domestic abuse (culminating in a guilty plea to shoving his estranged wife into a wall) have been widely reported as Freidman struggles to pay $31,000 per month in child support.”

More troubling for Mr. Freidman is the Chicago lawsuit. In a memo filed in Cook County on May 4, plaintiffs Savas Tsitiridis of Dispatch Taxi Management LLC and Pure Taxi Media LLC accuse Mr. Freidman of “enriching himself and depriving the entities of operating capital needed to, inter alia, pay vendors and employees.”

http://observer.com/2016/05/derailed-by-uber-deposed-new-york-taxi-king-gets-sued-in-chicago/
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 The South African politician in charge of transport in the central Gauteng province had to be rescued by armed policemen in Johannesburg today after metered taxi drivers attacked and held him hostage in a protest against Uber.

Ismail Vadi, the provincial minister in charge of transport in Gauteng, the country’s economic heartland that included nearby capital Pretoria, was assaulted by 20 metered taxi drivers at his office in Johannesburg, the leading Business Day newspaper reported.

The attacks occurred in the  provincial government’s offices in downtown Johannesburg where Vadi was briefing reporters about his government’s plans to issue Uber drivers with the same operating licences as metered taxis. This would allow them to operate as metered taxis too.

During a tour of facilities, which the group of metered taxi drivers attended, one driver walked up to Vadi and shook his hand, according to a reporter formt eh newspaper who witnessed it. “Then they started hitting him and shouting‚ asking him if he knew what he was doing. He fell to the ground and more men joined the attack. A security guard who tried to intervene was thrown to one side.”

Vadi ran into an office where he was locked in until police arrived. The taxi drivers refused to allow him to leave the building and blockaded the road outside, until more police arrived and began issuing fines. These taxi drivers accuse Uber of taking their business away from them without the same licences taxis are subject to.

There have been protests against ride-sharing service Uber in South Africa before, but never of this magnitude – and never where a senior politician in charge of one of the country’s nine provinces has been in such danger. Gauteng is the most prosperous of these, and includes the economic seat of pwoer Johannesburg and political capital Pretoria, 50km to the north.

http://goo.gl/HNKt1t
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 PLYMOUTH

 A Loan Shark who charged more than 100 per cent interest on loans to taxi drivers has pleaded guilty two counts of unlicensed money lending

Former motor dealer Mark Constantine, aged 55, of Higher Stert Terrace in Prince Rock, Plymouth, arranged 70 loans targeting vulnerable cabbies and private drivers who were desperate for help.

The court heard that Constantine had a previous conviction for altering the mileage on vehicles for sale, or “clocking” as part of that business. Stuart Jessop, for the England Illegal Money Lending Team, said that Constantine had been licensed to lend money when he traded as Maritime Car Company.

However, that licence lapsed in 2011 and wasn’t renewed or a new application made, but Constantine still went on to set up Mark Anthony Cars Ltd to finance vehicles for taxi drivers.

Mr Jessop, said that the victims had trouble obtaining credit through high-street banks or other mainstream lenders because they were regarded as a risk. The court heard that taxi and private hire drivers were either provided with vehicles with regular payments plus interest or lent money at excessive interest rates, with drivers typically paying back at least £100 per week.

In total 70 finance agreements were taken out, charging an average rate of interest of 107 per cent – though sometimes significantly higher. One example that was quoted by Mr Jessop involved a driver borrowing £3,000, with a total repayment of £8,000 – £5,000 in interest alone, an ‘eye-watering’ figure according to Judge Lawrie.

To ensure these loans were repaid, Constantine took different forms of collateral, including spare car keys and an electricity payment card from one customer. If all else failed Constantine used what the judge in the case called “an element of pressure” to make sure he was paid. But during the summing up Judge Lawrie said that Constantine did not threaten or use violence against any customer who struggled to meet repayments.

However, Constantine was still unlicensed and unregulated, making all the loans illegal. Judge Ian Lawrie told him: “What I find distasteful is that vulnerable people are being exploited, whilst stating that his repayment terms had been clear and interest rates didn’t vary over the term of the loans.”

Constantine who pleaded guilty to two counts of unlicensed money lending covering four years up to his arrest in May last year was handed a 12-month prison sentence, suspended for two years. Prosecutors at the Illegal Money Lending Team have now launched legal action under the Proceeds of Crime Act to identify and seize assets.

The court heard that he had £59,400 in five bank accounts when he was arrested, but Barry White, for Constantine, said that he now had no money and no cars. Mr White stated to the court that Constantine had wound up his business and paid off his tax liabilities, with no chance of recovering his outstanding loan repayments from his clients.

https://goo.gl/z3tReG
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SEVENOAKS

 Taxi drivers are being trained to help passengers with dementia, in a ground-breaking move by Sevenoaks District Council.

Swanley cabby Robert Challis is among the 30 locally licenced and volunteer drivers who have now attended council-funded sessions, which teach them how to recognise signs of dementia and raise any concerns with 24-hour helplines.

Sevenoaks Council’s cabinet member for health Michele Lowe said: “During the course of their work, taxi drivers encounter hundreds of people, including older and vulnerable customers. 

http://goo.gl/BF636q
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CANADA


If you want to operate a bank in this country – a bank – you have to pay a fee of $32,000 to be considered. That may not be unreasonable: Checking out your suitability is detailed and time-consuming. If you want to operate a taxi, the fee differs from city to city but it’s not unheard of to have to pay $200,000 or more. To operate one taxi. That’s totally unreasonable. 

Why do taxi licences cost so much? Because taxi fares are set at uncompetitive levels. Why doesn’t competition drive fares down? Because entry to the industry is legally restricted. If you don’t have a licence, you can’t operate. And, most places, the number of licences grows much more slowly than the population.

Artificial restriction of supply. Does that sound familiar? It should. What does OPEC do? Though Saudi Arabia, its leading member, is currently trying to crush both Iran and the North American fracking and oil sands industries by pumping oil like crazy, through most of their organization’s history OPEC’s 13 member countries have sought to restrict oil output so as to raise world prices. They can’t be a true monopoly. There are too many of them. But by colluding they try to imitate what a monopoly would do.
 

Taxi regulation is like OPEC. It artificially restricts the number of taxi operators so they can charge higher prices than free competition would produce. The only difference between taxi regulation and OPEC is that taxi regulation has been much more successful.

You can understand why taxi owners – why any industry – would want to mimic OPEC. What’s confounding is why governments enable them to. Is there really a public interest in having fewer, more expensive taxis? Fewer cabs is hard on taxi-riders, both in getting a cab and in paying the high price. In this supposedly green era, you’d think we’d want more taxis, not fewer. If taxis were cheaper and more convenient, fewer people would buy cars.

Most city governments didn’t set out to make taxi licences worth a small fortune. Most just wanted to make competition “orderly.” But limiting entry immediately created a strong lobby for slowing the growth of permits.

 The only difference between taxi regulation and OPEC is that taxi regulation has been much more successful

Now new technology from Uber, Lyft and others is disrupting the market and forcing governments to reconsider their OPEC model. If they’re smart, they’ll recognize limiting permits was an error and switch to a regulatory rule of “fit, willing and able,” which means that if would-be cab drivers can show they are these three things, they get a licence. Demonstrating that shouldn’t cost more than a few hundred dollars a year. 

Quite stunningly, in view of its unending drumbeat on innovation, Quebec’s government has just dug in on a last-century, maybe even 13th-century approach to taxi regulation, responding to its Uber moment by reinforcing the taxi guild, thus buckling under to the tyranny of the status quo. According to draft legislation introduced last week, operators such as Uber will need regular taxi licences. And there is no promise the number of licences, which is lower now than it was in the early 1950s, will grow in any significant way.

People who have invested hundreds of thousands of dollars in a paper asset (a licence) whose value new entrants will compete down to zero are a social, moral and political problem. The best way to deal with them is to tax the new entrants at a modest rate for a few years, use the tax revenues to buy off existing licence holders, then abolish the tax and let demand and supply determine how many taxi cars and drivers we need.

http://goo.gl/O03TSz