Parisian cabbies have unleashed hell on Uber cars over the last week, smashing windows and slashing tires. They see Uber as unfair competition…
One of the reasons we love the sharing economy is its ability to turn an entrenched industry on its head for the greater good. Generally the entry of a sharing economy concept into an industry means more efficient, cheaper access to a service and often new economic opportunity for enterprising individuals. It also often results in less consumption of energy or material as people “rent” goods like tools or even cars rather than owning them.
However, turning an industry on its head is not always a graceful maneuver.
Lets take taxis. Taxis are a notoriously entrenched industry in most cities. Heavily connected and governed by deeply bureaucratic rules and complicated commissions, their numbers, fares and availability are highly regulated. As a result, in many cities, getting a cab can be both expensive and difficult – and in the case of San Francisco, futile. New companies like Uber, Lyft and Sidecar have created a secondary market for rides, powered by fast, reliable mobile technology and generally driven by independent people who simply happen to own a car and are looking to make a few bucks on the side. The result has been a huge increase in available rides at competitive prices – and a lot of upset bureaucrats and cabbies.
So are taxi drivers justified in being angry?
On the one hand, losing one’s monopoly is bound to be painful – especially in the case of a city like New York, where taxis are governed by a “medallion” system that sells the right to operate a cab for close to a million dollars each. That money and more is paid to local governments who grant cabbies the privilege to offer rides to people. As a result, the pinch that new sharing economy startups put on cabs is also felt by local governments right in the wallet, adding a second level of complexity to the issue.
However, it’s hard to have much sympathy for the mafia-style tactics that some cab drivers and companies have employed to slow down change. Smashing Uber cars in Paris is only the latest example. Cab lobbies have used their influence in local government to force cease and desist letters upon startup companies and created bizarre rules like a mandated 15 minute waiting period for ride share companies in Paris before picking up a ride (they want to add even more time). Cab lobbies are the reason the Las Vegas monorail stops short of the airport, creating an immeasurable waste of fuel and time as people wait up to 45 minutes for cabs at the terminal. They allegedly did the same thing to the Green Line at LAX.
Hence the open door to competition
These aggressive tactics, combined with high prices and poor service are what have left the industry vulnerable to competition from disruptive technology, and from the looks of the market, traditional cabs are dinosaurs. There’s simply no objective line of reasoning that suggests traditional taxi systems have any advantages over new startups. So what’s a taxi owner, who holds a million dollar medallion to do? That’s a question that will need to be solved by taxi companies and the local governments they’re in bed with. My idea would be to ramp up their professionalism and offer the standardization of service that some people crave (not everyone is comfortable with random people picking them up).
The hotel industry has compensated for Airbnb by offering things no homeowner can provide – luxury, room service, awards points etc… Car rental companies have compensated for car-sharing services by buying them and embracing hourly rentals. I’m certain that somewhere down the line there’s an opportunity for traditional taxis to join the party, but kicking and screaming certainly isn’t going to help them get there.
Anyone got ideas?