Toronto Road War: The UberX Rebellion
Unlicensed bandit cabs are taking over the streets of Toronto by storm. But is that a bad thing?
A few years ago, Uber, a company that developed a mobile application to connect customers with car services, came to the city of Toronto. Soon followed by the now defunct Hailo, Uber took off as a way of speeding up both the location of a cab, and the automated payment of cab fares.
The company continued to grow and enjoy wild success… Realitively under the radar of governments and regulators, until they launched their crontrovertial UberX service.
UberX took things to a whole new level, now virtually anyone with a car could make money driving people around. No need for pesky things like taxi licenses or proper insurance.
We entered a very grey area… and obviously this infuriated the taxi industry.
The people of Toronto have been pissed off by what appears to be a very corrupt taxi cartel in the city. Drivers are often seen being reckless, driving aggressively, breaking traffic laws, and there are numerous stories of illegal fare practices. The public is screaming for some sort of alternative that’s both cheaper and better service.
Operating a cab in the city of Toronto can be very profitable, but it also requires a huge investment. At their peak, in September of 2012, a taxi licenses sold for $360,000.
Once you buy a taxi license from the city, it’s yours for life. Licenses did not cost that much for the original purchaser from the city, they’ve been resold, like any commodity, for a profit, many times over. (Which is why the taxi plates on shiny new cars often look so worn and rusted. Some of the plates are older than the drivers.) The original purchaser who originally got the plate (likely many owners ago) paid a mere fraction of that price when they bought the plate from the city. It’s simple supply and demand. The opportunity to make large sums of money as a cab operator is great, so the demand is high, but because the city doesn’t continually issue new ones, the supply is low. This means the price is high, and it’s a significant investment for cab owners.
The car that it’s attached to must be inspected at minimum every 6 months. Personal vehicles by contrast, only need to be checked when they’re being sold. Other commercial vehicles (transport trucks, buses, etc) are checked once a year.
This plate can be sold, or rented to another person, as it’s for the car only. Drivers have to be licensed as well. Every three years cab drivers are subject to police record checks that address both driving infractions as well as criminal offences.
A cab and its driver must also be commercially insured as they are driving for profit.
Enter UberX, a “ride sharing” program, where regular people pick you up and drive you where you want to go, in their own personal vehicle, for money.
Things get complicated now.
Competition
The streets of Toronto have been flooded with a whole new inventory of people providing personal transportation. This is something the public in Toronto is thrilled for, the wait to get a ride has dropped, regardless of if you’re using UberX or just a regular cab, because the cabs aren’t as busy now.
Competition is GOOD… But The Cabbies have a some very valid complaints.
UberX is a direct cause of Cab drivers losing upwards of 40% of their income. But in a fair conversation about the situation, one needs to remember that this is their livelihood. Most cab drivers do not own their taxi plate, they lease them at a cost approaching $2,000/month.
Add to this cost, the cost of fuel, insurance, the vehicle itself, and the costs of operating are very high. Yes, it’s just business, but it’s also like a whole bunch of small businesses out there on the road, that loss of revenue directly affects how that driver can feed their family, and put a roof over their head. It’s understandable why they’re panicking and causing such a fuss.
And, here’s the kicker; they are right. While competition is good, and we all know that our beloved (sarcasm) taxi drivers of this city would kick up a fuss no matter what, and did a while back when Toronto City Councillors decided to phase out the old traditional plate program. Now that investment made to purchase a plate may have become valueless. That’s a substantial loss to many people’s retirement plans. So when looking at it from their side, it’s also understandable. But back to UberX…
UberX is not fair competition.
While taxi drivers are faced with large expenses and operation regulations, UberX drivers don’t have any of that. When you have a bunch of people out there on the roads who do not follow the same licensing and regulation that cabs and limos have to, it creates unfair competition.
According to the Cab companies, UberX drivers ARE operating illegal cabs (or “bandit cabs”).
Or are they?
UberX drivers cannot pickup passengers from the street corner. They can only pick up passengers that have pre-ordered a ride. Much more similar to a “Private Car Service”. Interestingly, this service already exists in Toronto, and as an option within the Uber App itself. The Uber App calls it “Black Car”. Airports call it “Limo”. Typically “Private Car Services” operate more luxury vehicles (usually black), like Lincoln Town-cars.
Private car services in Ontario are traditionally a premium service. But they operate on a completely difference fare structure. If traveling a short distance, usually cost a bit more than a cab, but if you’re traveling from downtown out to Pearson Airport, the price is often similar, if not a little cheaper. But I digress.
But if we look to somewhere like London in the UK, they have a private car service as well. (A fantastic one that really helps get a drunk and lost GayRedBoi back to his hotel after an incredible night of UK Clubbing). They operate a bit differently, you tell them where you’re going, and the fare is collected in advance, NOT by the driver, but by an attendant standing outside the club. This attendant has a clipboard, records your name, your destination, and what car you got into. The driver is paid later by the service. Sounds a lot like UberX, except UberX is an app, and the driver doesn’t know your destination until after you’re in the vehicle. But the model is basically just a technological advancement of the same service.
It’s important to note, in London, these are NOT cabs. They are a (for lack of a better term) “discount” private car service. They don’t cost as much as a black car would, but they can’t be hailed off the street like a cab can, they must be pre-ordered. But they are licensed and regulated.
It’s a classification of service that does not exist in Toronto. This is where all the confusion is coming. We’re trying to fit a different type of service into existing definitions, and it’s not working.
The Court Challenge
Recently the city took Uber to court to try and get an injunction to stop the UberX service. They lost their case, but were also told by the court to go back and fix the laws.
Here’s where the city went wrong; they went after Uber, not the drivers. Uber technically is doing nothing wrong. The drivers using their service, arguably are. But the city is approaching that wrong too. They are trying to vilify UberX drivers as “Bandit Cabs”, which they aren’t. The way law works, the judge rules on the case before them. UberX is not a cab service. So the case would have been thrown out even if they went after the drivers instead of the company.
By our own definitions, it’s a private car service. So if they wanted to win, they would have to charge drivers as operating an unlicensed limo service. Then they might have won. Where they totally could have won was on the insurance issue. Driving for profit as a business, your vehicle needs to be commercially insured, and most are not.
That’s not what they did, but now the way they’ve gone about the court challenge (part of me thinks intentionally tanking it), UberX drivers are essentially safe until there’s a revamp of the entire system. (Thank goodness).
Uber is right on two fronts;
– They are NOT a taxi service, they are an app that connects people to a service. Remembering that Uber also connects you to licensed cabs, limos, black cars, etc.
– The market needs some alternatives and to be seriously revamped. The current system in place is outdated, and does not provide the service the public needs.
Cabs drivers are right as well;
– As it stands now, UberX is not fair competition, operating completely unregulated and unlicensed.
– In many cases (not all), they are also right that UberX is not completely “safe”, as many drivers are not insured properly, so in the event of an accident, passengers have no recourse and no funds coming to them to aid in medical and recovery expenses.
Mayor John Tory is right as well;
– the UberX service is an option the people of Toronto need
The entire system needs as serious revamp, from the ground up,
An UberX type service needs to be added as a new classification of “Private Car” type service. The service needs to be addressed for the drivers, new companies, businesses and models will come in very soon, Uber itself is just one App company.
The Taxi Cab Licensing system needs to be revamped (again), to take into consideration the addition of the new “Private Car” service in the market place. Licenses and plates need to be regulated by the city, not by the industry, and priced fairly for the market so cab owners/drivers can make a living.
Existing Private Car services need to be looked at again in the new marketplace to make sure that they have a fair regulation and licensing structure to reflect the new player entering the market.
Stretch Limo Services need to be allowed to have passengers legally consume alcohol while on-board. (ok that’s a whole different conversation.)
Everyone’s going to get hurt in the process. Cab owners will lose thousands in plate investments. Many UberX drivers will likely no longer be able to drive, not meeting whatever the new regulations are. But we will (hopefully) wind up with a more fair, stable and productive system that will better serve and protect the people of Toronto.
