American taxi companies join Uber, Lyft in ride sharing

Bloomberg

Taxi companies across the US waged a bitter, high-profile battle to keep Uber Technologies Inc. and Lyft Inc. from bringing the sharing economy to cabs.
They lost. Now the cabbies are adopting an if-you-can’t-beat-them, join-them-strategy. Pittsburgh Yellow Cab, for example, rebranded itself last year as zTrip. A century-old fixture in Steel City, it launched an app and offered a hybrid of services: accepting cash along with credit cards, letting rides be hailed from a corner or scheduled online and forgoing Uber’s controversial surge pricing during peak periods.
“The pie’s bigger,” said Jamie Campolongo, the company’s president. “So why not get over in that segment?”
Campolongo was able to do that, in part, because of regulatory changes the ride-sharing companies championed. Uber and Lyft have spent millions of dollars to win approval for their web-based business model in nearly all 50 states. In many cases, this allowed them to escape more onerous regulations put on cab companies, such as background checks with fingerprinting and requirements to carry commercial insurance.
The effort changed both industries. Across the “rides” industry, the number of independent contractors has grown by 174 percent in five years, compared with only 21 percent for cab company drivers, according to a Brookings Institution analysis. Along the way, as in other industries disrupted by technologies, the ride-sharing services drove some old-line taxi companies into bankruptcy while clearing the way for others to compete with them head-to-head.
“A perfect example for us was the last home Steelers game,” Campolongo said. ZTrip had 300 of its cabs out along with 126 independent contractors to ferry football fans around. “We would have never had 426 cars on the road. The ebb and flow of this business allows the company to kind of expand and contract.”
The Taxicab, Limousine and Paratransit Association, the industry’s leading trade group, once fought ride-sharing, going as far as starting a website “Who’s Driving You?” questioning the safety of passengers using the services. Now the new head of the TLPA, Michael Pinckard, believes it is the industry’s future.
“It’s obviously clear for the last 12 months that TNCs and ride-sharing are here to stay,” Pinckard said. “I think it’s safe for people to begin adopting those differences in their business models without fear of being regulated out of business.”
Ride-sharing companies began their push in California in 2013, where the state’s Public Utilities Commission released the country’s first state-level regulations for the industry, using the term “transportation network companies” or “TNCs” to define the services as distinct from taxi and limousine companies.
In the years since, 43 states and Washington, DC, have passed broad-based laws governing everything from permits and fees to background checks. The vast majority have used the TNC designation to define and regulate the companies’ activities, according to the Texas A&M Transportation Institute.
For Uber and Lyft, the emergence of hybrids highlights a threat to their business: it’s relatively easy to get into.
The completion of an ambitious project to legalise the ride-sharing model from coast-to-coast will only enhance this threat. Meanwhile, the companies still haven’t reached profitability.