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It's going to be a bumpy ride!

Epic battle looms as ridesharing takes on 'Big Taxi'

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October 22nd, 2014
Lyft cars are distinguished by their pink mustaches.
Lyft cars are distinguished by their pink mustache

Hailing a cab in a busy metropolis has always been a challenge. The last time this reporter was in Manhattan, I was reduced to hailing a pedicab, (a bicycle version of a rickshaw) to make it to the train station on time. That was fun because the weather was beautiful, the driver was charming, and I didn’t have much luggage. Good thing I wasn’t on my way to the airport!

The universal hassle of finding a taxi is being addressed by a new tech-savvy group of entrepreneurs. Companies such as Uber and Lyft have figured out how to combine technology and speedy service to fulfill a need where traditional taxis were falling short. As a result, both companies are enormously popular, especially among college students and young professionals.

What is ridesharing?

Of course, the traditional taxi model has been the same for eons. In larger cities, step out to the curb and wave. If you’re lucky, a cab will stop and proceed to drive you to your destination. Outside of the city, hailing a cab requires a phone call and, depending on where you are, perhaps a significant wait. 

Like taxis, ridesharing services drive passengers to their destinations, but the way they are hired is entirely new. Uber, the biggest and most popular such service, designed a smartphone app to streamline the process of hiring a ride. Using a smartphone, a person “orders” a ride. The closest Uber driver in the area is assigned, and generally, within a few minutes, the passenger is on his or her way. Upon arrival, the passenger’s pre-programmed credit or debit card is charged and the transaction is complete. 

Another service, called Lyft (distinguished by the odd-looking mustaches affixed to the front of its drivers’ cars), is similar to Uber. Unlike taxicabs, Uber and Lyft vehicles are just regular cars owned and operated by individual drivers. They are considered independent contractors. They don’t have meters or rooftop lights or anything particularly special about them, aside from that pink mustache on the Lyft vehicles, that is. 

When you order a ride, you might get a Toyota or you might get a Cadillac. (Uber has recently invited traditional taxi and limousine drivers to join its workforce, but those options tend to cost passengers a bit more than a basic Uber car.) 

Unfair advantage

The growing popularity of ride sharing is cutting into taxicab profits and that is setting off legal battles around the country. Taxi companies complain that their drivers and vehicles must adhere to strict and often costly standards regarding insurance and liability issues. At the same time, the “independent contractors” working for Uber and Lyft are largely exempt from those laws. Without those expenses, ridesharing operations can charge less and, according to the taxi industry, have an unfair advantage in the marketplace. 

Generally speaking, ridesharing is somewhat cheaper than taxi service. A quick comparison of fees for an Uber in New York City was just slightly cheaper than what a standard taxi would cost. 

Allegations and warnings

While Uber and Lyft maintain standards for the drivers and vehicles they contract, a number of recent incidents have people questioning the safety of ridesharing vehicles and drivers. A spate of recent allegations against ridesharing drivers, including alleged assaults, sexual assaults, and kidnapping, have put ridesharing in the spotlight. Deficiencies in drivers’ insurance policies and vehicle maintenance have also raised red flags.

Six state insurance agencies have warned consumers about insurance coverage gaps involved in ridesharing. Many cities and states are pushing for legislation that would place more restrictions and standards of insurance coverage on ridesharing companies. 

Virginia has already taken action by negotiating a temporary agreement with ridesharing companies. The measure includes rigorous insurance requirements and thorough background checks of drivers. 

Battle plans

As the battle wages on, both sides have hired lobbyists and lawyers to protect their interests. Ridesharing companies created TaxiFacts.com, a website brimming with information about the dark side of “Big Taxi,” namely, taxi company monopolies and safety issues with cabs. 

Likewise, the taxi industry developed Who’sDrivingYou.com, a similar website devoted to highlighting the safety and insurance shortcomings of the ridesharing industry. And just in case you don’t think this is a political issue, strategist David Plouffe, campaign manager for Barack Obama’s 2008 presidential campaign, has been hired as Uber’s senior vice president of policy and strategy. 

In the months ahead, both the taxi industry and the ridesharing companies will undoubtedly hunker down and prepare to fight for their very existence. And if that battle is not enough, apparently the two leading ridesharing companies Uber and Lyft have declared war on each other. Reports of their recent battles include allegations that both companies have resorted to malicious pranks such as ordering 500 rides and then cancelling them just before the charges go through.  

Suddenly, that sweet little pedicab ride through mid-town Manhattan seems a lot more reasonable.

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