City should work services like Lyft, Uber into Austin's transportation system


Photo Credit: The Associated Press

Editor’s Note: Associate Editor Noah M. Horwitz is lobbying on behalf of cab companies this summer in Houston, where on Wednesday the City Council voted to allow Lyft and Uber to operate. Horwitz was not involved in any way in the editing of this column.

Getting downtown on a Friday night from anywhere in Austin is more than a hassle, and being forgotten about by taxis during peak hours does not make it any better. A friend told me about Lyft, an app that would provide a car and driver at the push of a button. In the 15 minutes it took me to download the app, put in my information and request a ride, a car with a pink mustache across the front pulled up in front of our house and we were on our way with Starbursts and water provided by our driver. We’d found a solution.

But I was surprised to learn after describing my discovery to another friend that transportation networking companies (TNCs) like Lyft and Uber, which have both launched branches in Austin within the past three months, are actually considered illegal by officials not just in Austin, but also in other big cities like New York City and Brussels. Despite the official cease and desist orders, Lyft and Uber continue to operate in Austin.

Austin is a tech-savvy city, often welcoming creative alternatives to traditionally stable industries, so the pushback from the city comes as somewhat of a surprise. Samantha Alexander, public information and marketing manager at the Austin Transportation Department said, “A ground transportation company must have an operating authority permit in the City of Austin in order to provide ground transportation services. At this time, [Lyft and Uber] do not have the required operating authority.” A resolution adopted by the city in May cites concerns such as compliance with the Americans with Disabilities Act, driver qualifications and vehicle inspections that have implications for rider safety and equality.

In this light, TNCs operating in Austin without the required permits offer a service without complying with regulations to which competing entities must adhere, theoretically giving TNCs an unfair advantage. But the undeniable popularity of TNCs show that there is something fundamental lacking in the current on-demand transportation system, whether it’s user interface or simply the quantity of drivers, to which TNCs provide an answer. Instead of banning them, the city needs to analyze why people are using TNCs and use that information to improve the existing regulations.

“The laws have anti-discriminating components to them,” said Ed Kargbo, president of Yellow Cab Austin. “The City of Austin sets the rates so that on-demand transportation services are affordable for everyone in the city, so the folks that have more money don’t get to cut the line. You can’t increase the price when people are most desperate for transportation,” Kargbo said.

In a hypothetical anecdote, Kargbo described a situation where, in a system of variable rates, people with means get to skip the line while an elderly lady on a fixed income that needs to get to a dialysis appointment has to wait.

“It would be an unfair system. The city is playing their role as protector of the consumer,” Kargbo said.

But this anecdote only works when on-demand transportation services are considered a right rather than a privilege and are therefore not subject to the free market. TNCs take the existing taxi model and apply a prototypical capitalist supply-demand price scheme, notoriously with Uber’s notorious surge-pricing where fares increase with demand, and entrepreneurial opportunity for the drivers. This innovation shakes up an established system with old ideas.

Launched before the first Formula One race held in Austin, Yellow Cab’s Hail A Cab mobile app offers many of the same features of the TNCs, including taxi requests at the push of a button, GPS tracking of the certified driver and estimated time of arrival.  When asked about the difference between Hail A Cab and the TNCs, Kargbo said they are very similar.

“It is just another method that allows people to connect to a potential transportation provider,” Kargbo said.

According to Kargbo, one out of every three Yellow Cab trips is dispatched through the app.

But despite regulatory concerns, TNCs offer an important alternative in the existing transportation structure.

TNCs allow opportunities for drivers who, after a background check, can use their own car and connect with riders via a mobile platform. As participants in the emerging ‘sharing economy,’ TNCs provide peer-to-peer opportunities for drivers to make money through innovative use of an asset otherwise intended for personal use, in addition to providing alternative transportation solutions for riders. After requesting a ride, the rider can see the name and picture of the driver and the car, know how long until they are picked up and track the driver along the way. The rider’s fare and tip payment are made directly through the app; no money is exchanged directly between rider and driver.  

Marketing senior Jessica Wong first tried Lyft after hearing about the promotions offering free rides to first-time users, including the driver’s tip.

“The whole Lyft experience is great,” Wong said. “I've always had pretty personable drivers, and I'm always offered waters and snacks in the car. The GPS tracking is a huge plus; you know exactly where your driver is and exactly how long it'll take for them to get you, and it helps that they include a picture of the driver and the car. Its convenience far outweighs a taxi. Cost-wise they're not so different, but amenities-wise Lyft and Uber far outweigh a taxi service.”

According to Uber Spokesperson Lauren Altmin, the TNCs provide an alternative to drunk driving. The company estimates that the entrance of Uber in Seattle caused the number of arrests for DUI to decrease by more than 10 percent. In a city that made 46 DWI arrests during the July 4 weekend alone this year, TNCs could provide much needed relief to an already burdened Austin taxi fleet.

TNCs have found an underserved on-demand transportation market in Austin which has allowed them to thrive, a market whose demands Kargbo thinks the cab companies can meet.

“Our hope is that the city leaders, as a byproduct of this, recognize that there is a need for more taxi cabs because they provide the same service,” Kargbo said. The city currently has a cap of 756 registered cabs that can be in operation at all times. “[Consumers] want more on demand transportation providers. We hope that over the course of the next few months the city takes action to stop the illegal operators.”

Because of the sheer demand for on-demand transportation providers, the city has not completely given up on TNC alternatives. “Our team has been meeting with representatives from TNCs, the taxi industry and a handful of other stakeholders to discuss a possible pilot program for TNCs in Austin,” Alexander said. “We intend to bring that back to Council this fall or early winter, and then it will be at the City Council’s discretion as to what the next steps could be.” This fall will be pivotal in the Austin transportation world with the continued debate over TNCs as well as the fate of the proposed urban rail plan being decided. The TNC debate in Houston found a solution Wednesday, allowing taxis hailed through an app to fluctuate their prices depending on demand while taxis hailed on the street must adhere to the metered rate. While this specific solution has its own unique concerns, it presents a creative precedent that welcomes innovation and opportunity for Houstonians. Acknowledging regulatory and equality concerns, the city of Austin must consider a tailored solution in its pilot program that integrates TNCs into the existing system to provide the efficient and affordable transportation network Austin needs.

Haight is a Plan II and linguistics senior from Austin.

This column has been updated to reflect the Houston City Council's decision on TNCs.