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Balancing Transportation Innovation and Regulation

Economics, innovation and improved resource utilization are combining to revolutionize how we travel on the road. The biggest barrier to new business models taking hold is finding the balance between regulation and innovation.

Ride-hailing companies, car-sharing and ride-sharing services, and professional driver companies have re-ignited discussions on the purpose of for-hire vehicle laws. While statues vary by country and localities, the main purposes are:

Passenger safety: These laws include criminal background checks and checks of driving records. In addition, many cities require taxis to be a uniform color, like New York’s iconic yellow, for easy identification of approved vehicles.

Price controls: Metered rates for distance and waiting time, fees for airport access and tolls for bridges and tunnels let all customers know what to expect.

Customer service: Many laws forbid taxis from denying service to any passenger or address within their service area.

Congestion relief: London and Berlin are two cities that permit taxis to use bus lanes, speeding up their rides.

Anti-competitive laws

Many regulations, however, fall outside of these essential frameworks. The result is protection for the taxi industry, even if unintended.

In Germany, for example, taxis enjoy a seven percent VAT, compared to nineteen percent for other for-hire services – even though both transport passengers from one place to another. German law also says chauffeured vehicles must return to their base after a ride.

The intent is to protect taxis from competition at airports and train stations, and to keep non-taxis from picking up passengers on streets, but the unintended consequences are tens of thousands of extra kilometers driven – wasting time, money and gas, and adding congestion.

Several U.S. cities have stringent price controls, too. For example:

Austin, Texas mandates that “the holder of a limousine service operating authority shall charge a customer a minimum of $55 per hour, or portion of an hour, as a base rate excluding other fees and gratuities for the first six hours of service provided to a customer.”

Miami, Florida requires that “limousine minimum rates shall be no less than three and one-third (3-1/3) times the hourly rate of taxicabs.”

Portland, Oregon set a minimum fare of $50 between PDX airport and Portland’s Downtown Core.

More options bring consumer and industry benefits

In many cases, innovators introduced new transportation categories before legislators could update laws, but by this point, it is long past time to allow more options.

Similarly, new laws should not favor any class of transportation, either. Proper regulations can support passenger safety, reduce congestion and ensure service to everyone.

Customers will win with more choices, and the greater mobility sector will grow, too. For instance, people may use car sharing to go to dinner, and then ride a taxi back home. Simply put, the more mobility options in a given city, the more people will use all of them.

Leave a comment: Do you think more mobility options will improve the accessibility? Why?


Please note that this article expresses the opinions of the author and does not reflect the views of Move Forward.

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