Ride-hailing companies Uber and Lyft operated out of the Austin-Bergstrom International Airport (ABIA) under temporary permits during this year’s South By Southwest, although ABIA had originally said only Lyft would be allowed to operate.

The two companies signed an agreement with ABIA on March 13, allowing them to pick up and drop off passengers there for 45 days.

While Lyft signed a yearlong agreement ABIA offered to the two companies on March 6, Uber did not. The agreement on March 13, just a week later, nullified Lyft’s yearlong arrangement. 

“The airport granted Uber a temporary permit, so we could have more time to negotiate a permanent solution,” Uber spokeswoman Debbee Hancock said.

The terms of the agreements required the companies to give the airport 10 percent of their gross revenue, a common standard for concessions operating at the airport, ABIA spokesman Jason Zielinski said.

“We’re a City department, but we’re one of the few that doesn’t receive tax dollars,” Zielinski said. “Every business that operates at the airport provides a portion of their gross earnings to the airport.”

According to Zielinski, after Uber did not sign the yearlong agreement by the March 6 deadline, the company’s drivers faced consequences for operating at the airport without a formal permit.

“Lyft began operating under that agreement and Uber was not,” Zielinski said. “So on March 9, their drivers began receiving warnings. On the 10th, they started receiving citations. Under City code, operating without a permit is up to a $500 fine — a class C misdemeanor.”

After Uber was banned from the airport, many people were unable to use the transportation options they had expected to use, Zielinski said.

“We experienced a large number of warnings and citations, and that was leaving passengers without a ride,” Zielinski said. 

Airports around the country are struggling with how to regulate ride-hailing companies such as Uber and Lyft, Zielinski said. While taxicabs have been part of airport transportation for years, ride-hailing companies are a different animal.

“Cabs work on $1 per trip fee,” Zielinski said. “Cabs have different regulations within the city. … Every airport is struggling with [ride-hailing companies] because they’re unlike other transportation operators.”

ABIA’s proposal would have also required ride-hailing companies to follow all the same rules as taxicabs. 

Zielinski said Uber’s financial records would not have been made public with this proposal.

“The information we receive is private — it’s something we look at and don’t publish,” Zielinski said. “If we were to look at anyone’s books, it wouldn’t be public information [because] we would not publish.”

Lyft spokeswoman Mary Caroline Pruitt said Lyft was happy to be the official ride-hailing partner of SXSW.

“Austin is a city that embraces creative, innovative industries, and we were excited to be the first ridesharing partner authorized at Austin-Bergstrom International Airport,” Pruitt said. “We’d like to thank the ABIA staff for their leadership and commitment to preserving Lyft’s affordable, welcoming rides for Austin visitors and residents.”

Cris Nevares, math and actuarial sciences senior, has been a Lyft driver since July 4. For Nevares, being a Lyft driver allows him to connect with interesting passengers while scheduling his own hours.

Photo Credit: Amy Zhang | Daily Texan Staff

Days before the start of South By Southwest, Austin-Bergstrom International Airport officials said Uber will not be able to operate out of the airport during the festival next week.

Airport officials offered to form an agreement with two ride-hailing companies, Uber and Lyft, but Uber declined to accept, according to airport spokesman Jim Halbrook. 

“We offered both Lyft and Uber the same deal,” Halbrook said. “Lyft accepted it, and Uber has declined. I’m not in the negotiations, but what I am told from my business partners is they declined, and they didn’t give a reason.”

The agreement mandated the ride-hailing companies give 10 percent of their gross revenue to the airport, Halbrook said.

“That means, at a $25 fare, the airport gets $2.50,” Halbrook said. “The airport is a revenue generating facility. We generate our own revenue to pay for operating costs like water or electricity or road repairs and future improvements. When we build a new piece of terminal, we may get a grant, but we draw a lot out of our capital fund.”

All businesses working at the airport must have a formal agreement with the airport, according to Halbrook.

“Anybody doing business at the airport, whether they be a restaurant or ground transportation provider, has an agreement to do business at the airport,” Halbrook said. “That’s a city ordinance.”

Airport officials have previously worked with Uber and Lyft to reach an agreement about their services at the airport since the two ride-hailing companies were permitted to operate in Austin last October. The likelihood of Uber reaching an agreement in time to operate at the airport during SXSW is marginal, according to Halbrook.

“If they come back with something, we could potentially continue to [negotiate],” Halbrook said. “We’ve kind of got what we want and how we like to do it.”

Uber drivers may receive citations if they operate at the airport. Uber issued a statement Tuesday to say it is working to come to a solution.

“With service in 292 cities in 55 countries, visitors arriving at Austin Bergstrom [sic] International Airport expect to be able to request a ride from the airport using the Uber app,” the statement said. “We are currently working with the city on a solution to ensure the tens of thousands of visitors arriving in Austin for SXSW have access to an affordable, hassle-free ride after they touch down. We look forward to working together to resolve this issue in the immediate future.”

City Council member Laura Morrison votes against an ordinance Thursday legalizing transportation network companies.

Photo Credit: Ellyn Snider | Daily Texan Staff

The Austin City Council approved an ordinance Thursday, in a 6-1 vote, to allow transportation network companies, or TNCs, to operate in the city. The ordinance will be in effect until August 2015.

The City Council, which has deliberated over the ordinance at its past two meeting, used Thursday’s third and final reading of the ordinance to fine-tune the language. Along with clarifying the language to ensure TNC drivers are covered by insurance whenever they log onto ride-sharing apps, the City Council also approved tweaks such as defining the 12-hour limit for TNC drivers. Council member Laura Morrison gave the lone “no” vote against the ordinance.

Following a proposal from Mayor Pro Tem Sheryl Cole, the City Council chose to adopt the Houston code of background checks, stating the TNC would provide the first background check, and the City would audit the report. 

According to Council member Chris Riley, the background checks that drivers at TNCs such as Uber and Lyft undergo are more rigorous than the background checks of taxicab drivers.

Uber General Manager Chris Nakutis said he trusted the outside background check companies more than a city’s vetting process.

“We know them to be reliable,” Nakutis said. “We vetted our background check company, and we know the quality of the company that we use. Even with city background checks, we would still use our own.”

April Mims, public policy manager at Lyft, said the company Lyft uses to vet drivers is more effective than Austin’s screening process.

“We feel confident that SterlingBackCheck has the safest way to hire, and that’s why 90 percent of the drivers who apply are screened out of the platform,” Mims said. “The concern is that 75 percent of our drivers are driving less than 15 hours a week, and, if they have to go through the process of being screened by the city, there will be a delay and also may not incentivize them.”

Mims also clarified what Lyft and Uber’s outreach to underserved areas meant in terms of the ordinance.

“We were looking at areas that don’t have as much access to transit, and those tend to be in areas of lower socioeconomic class,” Mims said. “We wanted to increase outreach in areas that are socioeconomically underserved.”

Riley introduced an amendment that specified TNC drivers would not need to obtain a chauffeur’s permit.

“Some suggestions that staff have would still require a chauffeur’s permit of all TNCs’ drivers, even though [the] substance of the permit is covered by other provisions of this ordinance,” Riley said. “Going through that process separately would be redundant.”

Riley also proposed an amendment to clarify how transportation network companies would work with transportation to and from the airport. Perla Compton, Austin’s ground transportation manager, said TNCs are subject to fees just as taxis and buses are.

Compton said charging TNCs ground transportation fees for providing rides to and from the airport would be simple through an electronic system.

“Every ground transportation provider must apply and use a transponder that we sell,” Compton said. “We keep track of who enters the airport to drop off or there to pick up. We would have to register each vehicle into our system. If you already have a toll tag, we have a computer system that works with the number on that toll tag.”

Council should vote no on TNC proposal

Cris Nevares, math and actuarial sciences senior, has been a Lyft driver since July 4. For Nevares, being a Lyft driver allows him to connect with interesting passengers while scheduling his own hours.
Cris Nevares, math and actuarial sciences senior, has been a Lyft driver since July 4. For Nevares, being a Lyft driver allows him to connect with interesting passengers while scheduling his own hours.

Editor's Note: As previously mentioned, Horwitz previously contracted work for the Clifford Group, a Houston firm that lobbied on behalf of Yellow Cab over the summer. He left the Clifford Group Aug. 22.

This evening, the Austin City Council will vote on a proposal by City Council Member Chris Riley to legalize so-called Transportation Network Companies, such as Uber and Lyft. Simply put, given the realities of the current proposal, the Council should vote no.

Uber and Lyft, app-based companies that serve as a decentralized sort of taxi option, first showed up here in May. At that time, they began operating in defiance of the city's local ordinances, which require strict safety regulations such as 24/7 insurance and metered fares. Originally, Mayor Lee Leffingwell set up a task force full of some of the most capable stakeholders in the community, charged with spending 180 days coming up with a good-hearted piece of legalization that would welcome the TNCs but still protect competition and safety.  

Facing an uphill battle for the newly crafted District 9, Riley has tried to abruptly force this issue for a vote, ignoring the valuable work the task force is doing. In a last-ditch effort to attract the student vote, he merely talks in broad platitudes about "transportation options" without actually addressing any of the real problems or details.

Austin obviously has a taxi problem. There are far too few cabs on the road, leaving many people stranded or having to wait for excessive periods. But the number of taxis are capped by the city, and when a proposal was recently floated to raise the cap, Riley voted against it.

We should not be in such a rush to increase transportation options that we damage the livelihood of the average consumer. Last week, the editorial board of this paper expressed its desire for 24/7 insurance requirements for TNCs. Representatives from Uber soon met with us, and expressed their opposition to this and other taxi-centric requirements, proudly exclaiming not only that they are not cabs, but that they do not even compete with cabs. I have trouble agreeing.

If you are an on-demand vehicle for hire, be that a taxi or a TNC, you should carry 24/7 insurance that protects pedestrians and other cars from being trapped in a donut hole of non-coverage. Uber whined about the price tag involved, but a company that might be worth as much as $18 billion and hires some of the most expensive lobbyists in Texas should be able to pony up with relative ease.

Furthermore, Uber desperately defended its so-called "surge pricing," where they charge multitudes of their regular fares — often with little or no warning — just because. Recently, a short trip in Denver cost a local passenger $443. Call it "supply and demand" if you want; it sure sounds like price gouging to me.

I want Uber and Lyft in Austin, but they need to follow some rules first. Riley's proposal takes care of many of these, including background checks, vehicle inspection and customer service support. But commercial insurance and price stability are absolutely necessary before the green light can be given. Ideally, this should come from the capable task force, not a rushed gimmick by an out-of-options politician.

Horwitz is an associate editor.

City Council Member Chris Riley announced his plan to move toward legalizing ride-sharing apps in Austin. According to local laws, the only way ride-sharing companies, such as Lyft and Uber, are legal in Austin is if they operate under ground-permitted transportation services.

“Uber and Lyft’s current operations present both a concern and an opportunity,” Riley said. “Austin should be leading the nation in embracing new transportation options. If we can be assured that a company like Uber or Lyft is operating safely, we ought to work cooperatively with them to make this kind of service legal and readily available.”

The Austin Police Department has been impounding ride-sharing drivers’ cars, as well as handing out citations for lacking a proper permit. The Austin Transportation Department announced in May that APD would cite and impound cars of drivers who do not have a city chauffeur’s permit.

Jahnavi Shriram, a Plan II and public health freshman, said she used Uber for the first time in San Francisco, the birthplace of the app.

“I was visiting [a friend], and she and a couple of her other friends were getting Japanese food, and we thought we would be able to walk home,” Shriram said. “For some reason, we realized the walk was so much longer and really difficult. We called an Uber cab and it was nice and really convenient.”

Shriram said she thought regulations would be fine but should not be too strict.

“The company should make sure that the people they hire are absolutely safe people,” Shriram said. “The beginning of the implementation of this — there should be a third party that does background checks, make sure its completely safe. But, beyond safety measures, I think it should definitely be legalized.”

Riley was joined at a press conference Monday by several supportive groups, including members of startup incubator Capital Factory, the Austin Technology Council, the Downtown Austin Alliance and Student Government. Riley is scheduled to speak at Tuesday’s SG meeting.

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.