July 30, 2014
More cabs on a cold night are a good thing.
Competition is the rider’s best friend.
And you can’t hold back the future.
Or, as Ald. Joe Moreno (1st) put it on Monday, this is a battle “between the Flintstones and the Jetsons.”
When all is said and done, that’s the whole story of why innovative app-driven “ride-share” companies such as Uber and Lyft have moved into the Chicago area in the last three years, why they will continue to undermine the privileged position of the old-style cab companies, and why they will not go away anytime soon.
Nor should they go away.
Ald. Edward Burke (14th) and Anthony Beale (9th) held a hearing Monday on a resolution to require ride-share companies to play by the exact same rules as cab companies, which effectively would run them out of town. Anything less, the alderman argued, would endanger riders. But the only great danger we see is to the bottom line of traditional cab companies, which have enjoyed a lock on the lucrative taxicab business in Chicago for some 75 years, doing the riding public no great favors.
Every Chicago cab has been required to have a city-issue medallion, of which there are 6,800, driving up the price of a single medallion to the current $260,000. The result for the customer is a chronic shortage of cabs.
We much prefer an ordinance proposed by Mayor Rahm Emanuel’s administration that attempts to impose reasonable standards and restrictions on the new ride-share businesses, giving them room to flourish while protecting public safety and preserving a competitive advantage for regular cab companies.
The ordinance also includes provisions intended to assure that ride-share companies adequately serve low-income neighborhoods and people with disabilities. If these provisions prove insufficient, they can be beefed up.
But let’s face it — traditional cab companies are not famously wonderful, either, about answering calls from the tougher parts of town.
Ride-share companies would be restricted to bringing drivers and riders together via smartphones, as they do now, and would not be allowed to own or lease their own cabs, as traditional cab companies do. Drivers would have to undergo regular criminal background checks and drug testing, and their vehicles would receive annual 21-point inspections. Ride-share companies would have to carry general liability insurance for each driver of at least $1 million per accident.
The city’s hurdles for traditional cab companies are higher and would remain so. Cab drivers, for example, still would have to pass a certification program at a local community college. But that said, only regular cab drivers — not ride-share drivers — would be allowed to work O’Hare and Midway airports and McCormick Place, and only they would be allowed to pick up riders who hail them from the street or at a cab stand.
Would this give cab companies enough of a competitive advantage to protect the value of their medallions, as the mayor’s office feels confident it would? We don’t know. But it would soften the blow of such a big and sudden infusion of new competition.
The criticism most often heard of ride-share companies is that they set no ceiling on the price of a ride. On a hugely busy night such as New Year’s Eve, ride-shares have been known to quadruple their basic rate. Not to sound uncaring, but we don’t see the problem. All rate information must be stated clearly in advance on the rider’s smartphone and the ride-share company’s website, and that rate cannot be kicked up during the ride. And it is the chance to earn bigger money that gets more drivers out the door and on the road when they are needed most.
The mayor’s balancing act of an ordinance is a work in progress, but its priorities are right — more and better transportation service for Chicago.
Watch out, Fred and Wilma. George and Jane are coming.