Opinions

Anchorage should consider downsides of exempting Uber from taxi laws

Within the past several decades, I have performed more than two dozen city taxi studies, providing me with the opportunity to work with many communities. I have written a textbook on taxi operations in the U.S. and Europe, "Taxi! Urban Economies and the Social and Transport Impacts of the Taxicab." More specific to Anchorage, in 2008 I performed a statistical analysis of your Anchorage taxi services, rendering a report on the favorable quality of service and ability of the (then) taxi operations to meet the demand for taxi services in and around Anchorage.

Given this background, it is my belief that the Municipality of Anchorage should delay for at least two years any discussion about what will amount to open entry into its taxi industry, in the form of "Transportation Network Companies" (TNCs). The municipality is being asked to allow a potentially dangerous taxi-type service to operate within its city. The city is being fed a series of half-truths, misleading statements, and promises by so-called ride-sharing representatives, promises which in other cities have not materialized or been kept in practice.

These company representatives argue they are not taxi companies -- that they are technology or ride-sharing companies and thus should not be subject to taxi regulations. Nothing could be further from the truth. These companies are taxi transportation brokers who use the same technologies as used by your local taxi companies today. They have an "app" for use in calling a cab. The "ridesharing" scheme is also bogus. The claim that this "taxi-type" service is just part of the new sharing economy is completely false. True ridesharing is when two or more people headed in the same direction share the common costs of the trip.

I recommend that Anchorage use purely common sense and separate the smoke-and-mirrors arguments being placed before you by Uber's high-priced lobbyists and, instead, recognize the reality of what you are being asked to do. You are being asked to completely open your city to unregulated competition for taxi-type trips. Attempts at deregulation of your taxi industry are not new; indeed, a referendum to do just that was on a city-wide ballot in 2009 and was soundly defeated by an almost 2 to 1 margin. The people of Anchorage spoke very loudly -- they did not want open, deregulated entry into their taxi market!

Moreover, you are now being asked to allow these companies to provide no accessible service to Anchorage citizens in wheelchairs, to serve only people with credit cards, to accept only those lucrative trips they choose, and to be given greater pricing flexibility than regulated taxicabs by allowing them to use variable "surge" pricing -- "gouge pricing" as some have referred to it.

These companies will also argue that their drivers are only part time, filling in and supplementing the taxi services when needed -- that taxi drivers will not suffer. Some of their drivers may not work full time but many others drive full time and then some, since there is no limit on the number of hours these people operate. Uber's drivers will skim off the most lucrative taxi trips that cross-subsidize the rest of the trips that taxis are required by law to serve -- the less profitable or even unprofitable local doctor or grocery trips taken by the less affluent citizens of Anchorage -- many of whom pay in cash. Allowing this type of selective taxi broker into your market will not increase the demand, it will only disperse revenue per vehicle through a much larger number of service providers, and taxi fares will have to go up in order for service to all to remain economically feasible.

In areas and cities where these companies have been operating legally and illegally for some time, such as San Francisco, taxi trips have decreased by 65 percent. In the cities of Chicago and Detroit where they have been allowed to operate, taxi fare hikes are being requested. This is why some observers like me argue that under the proposed dangerous "ridesharing" operating model, the poor pay more for transportation.

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There is also a very real and serious question as to whether the drop-down secondary insurance policy Uber uses from James River is protecting anyone except the Uber company itself. It appears that this (James River) insurance has not yet paid off on any claims -- including the claim against an Uber driver who killed a 6-year-old girl and severely injured other members of her family.

These, and other reasons, are why the number of lawsuits against the business model used by TNCs is constantly growing. Why would the citizens of Anchorage permit such a new and unproven company with so many lawsuits pending and with outstanding questions regarding insurance and integrity to operate within their city -- let alone give it preferential treatment over its existing legitimate taxi operations?

The people of Anchorage should recognize these companies for the dangerous business model that encourages anyone with a four-door car to go out at night and play taxi driver. Certainly, this is nothing you want to try without first considering the experiences of others. I would recommend that Anchorage table considerations which would effectively deregulate your taxi industry for at least two years to see how it may work elsewhere, to see if the TNCs' insurance is really protecting anyone except their own company, and to continue to work with and improve the regulated taxi services that residents voted for.

Dr. Ray Mundy is a professor of Transportation Studies and director of the Center for Transportation Study at the University of Missouri, St. Louis and has been a taxi consultant for numerous American and Canadian cities and airports.

The views expressed here are the writer's own and are not necessarily endorsed by Alaska Dispatch News, which welcomes a broad range of viewpoints. To submit a piece for consideration, email commentary(at)alaskadispatch.com.

Ray Mundy

Dr. Ray Mundy is a professor of Transportation Studies and director of the Center for Transportation Study at the University of Missouri, St. Louis and has been a taxi consultant for numerous American and Canadian cities and airports.

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