A proposed change in city law that would clear the way for Uber, a mobile-phone-based ride service that’s popular in other cities, to begin operating in New Orleans would damage the operations of existing limousine and taxicab companies and put consumer safety at risk, opponents told the City Council’s Transportation Committee on Tuesday during its first public debate on the proposal.
Supporters, on the other hand, said the change would lead to more and better transportation options for New Orleans residents and visitors.
Current law prohibits the service and others like it from entering the market. But Mayor Mitch Landrieu’s administration has proposed making at least a segment of Uber’s service available locally.
The proposed changes in the law are intended to give New Orleans the ability to keep up with technological advances in the transportation industry and to provide rules to govern those advancements, Landrieu senior adviser Ryan Berni said.
The committee took no action Tuesday, despite four hours of presentations, discussion and public comment. Committee Chairman Jared Brossett said the meeting was just the first of many on the topic. The panel will revisit the matter at its July meeting, he said.
In the meantime, he asked the administration and those on both sides to submit more information to the committee. The administration, specifically, was told to submit additional “legal analysis” of Uber’s operation in other cities.
The proposed ordinance focuses exclusively on limousine and luxury car service in New Orleans. It would remove the requirement that limousines be reserved for a minimum of three hours and would adjust the rate structure to make shorter trips more practical.
Currently, hiring a luxury car costs $35 to $65 an hour, depending on the type of vehicle. The three-hour minimum requirement means it actually costs at least $105 to reserve a luxury car in New Orleans.
Berni said that rate “significantly prices large amounts of the public out of the market and does not reflect the changing business models that are existing in the for-hire transportation market elsewhere.”
The proposed changes would encourage users to hire luxury vehicles for shorter trips and for travel to the airport and would make those shorter trips more practical, Berni said.
Instead of setting a flat hourly rate, the ordinance proposes allowing limousine companies to provide quotes to customers based on time, distance and demand. It establishes a price floor for the luxury service to provide for some separation between the luxury vehicles and ordinary taxicabs.
The proposed change does not create a new class of Certificate of Public Necessity and Convenience, or CPNC, the permit required to operate a taxicab or other for-hire vehicle in New Orleans. Instead, companies like Uber would be required to partner with existing CPNC holders and licensed New Orleans drivers. There are 322 limousine CPNCs, the administration said.
Despite the supposed focus on luxury vehicles, the meeting quickly turned into a general hearing on the merits and failings of Uber, the app-based ride sharing service now operating in 140 cities worldwide. The service allows people who need rides to bypass traditional taxi services and connect directly with drivers by using an application on their mobile phones that, among other things, can tell the rider exactly how close a car is and who is driving it. Riders also use their phones to pay with credit cards, with the company and the driver each taking a cut.
Uber offers both a premium service called Uber Black, staffed by professional drivers, and UberX, a low-cost option operated by individuals who drive their own cars. UberX has been the subject of numerous complaints of unlicensed and ill-qualified drivers across the country and also is seen as the greater competitor to taxicabs.
The revised ordinance would clear the way for only Uber Black, the luxury car service, to operate in New Orleans.
But opponents voiced concerns that Uber would use its Black service to gain entry into the local market and then force UberX in as well, taking advantage of the city’s limited ability to enforce many of its laws.
Uber New Orleans General Manager Tom Hayes fielded questions along those lines from the City Council for more than 40 minutes.
The sharpest exchanges were between Hayes and Councilwoman Susan Guidry, who tried to get Hayes to admit that the company had used that tactic in other cities and would try to shoehorn UberX into New Orleans as well. Guidry said she was generally supportive of the regulations the administration has proposed but concerned that Uber would exploit those rules and put residents and visitors at risk.
Guidry pointed out that the company is taking applications for UberX drivers in New Orleans on its website. Hayes said that’s something the company does in markets across the country, whether or not it operates there, to gauge interest and demand.
Still, when challenged by Guidry to promise that Uber wouldn’t bring UberX to the city unless a law were passed specifically to allow it, Hayes declined.
“What I can say is that we are committed to continuing discussions,” Hayes said. “That’s what I can commit to right now.”
“So you cannot commit that Uber will not bring UberX into New Orleans illegally?” Guidry responded.
“What we can commit to is if rules and laws are put in place and strictly enforced, and essentially laws are followed and enforced so that it levels the playing field with all ride-sharing services and they are treated in a way that the law is upheld in a consistent way, we will follow that,” Hayes said.
Ike Spears, an attorney for United Cabs, likened Uber Black to a so-called gateway drug, which supposedly leads users to turn to more dangerous drugs.
“Uber Black is a gateway product. When you let Uber Black into this market, before long they will follow with UberX and any other Uber they can create,” Spears said. “If you let Uber loose on this market, shame on you.”
Beyond concerns about UberX, 17 of the city’s 20 limousine companies are opposed to the ordinance, said Michael Brinks of the Greater New Orleans Limousine Association.
The opposition is partly because Uber and similar outfits argue they are not transportation companies and instead are just links between drivers with vehicles and customers who need a ride. That means they are not subject to the same regulations as taxicab and limousine operators, Brinks said, and aren’t required to take on the same level of operational risk.
Other limousine operators said the cost of partnering with Uber Black, which would take a cut of each fare, would be too great.
The high cost of maintaining pristine limousines and luxury sedans does not lend itself to the continual, multiple-use operation common to taxicabs, said Milton Walker Jr., who owns Alert Transportation & Limousine Co. The change in rate structure would put pressure on the limousine industry and lead to layoffs, he said.
“By taking less money to do trips, somebody is going to have to get cut,” he said. “We can’t supply taxi service with limousines. Our business is designed for people who prefer to pay for a more specialized, unique transportation.”
But supporters, including the economic development organization Greater New Orleans Inc., said the proposed service would provide needed competition and more consumer choice in the for-hire market.
“It’s important that regardless of how people are choosing to get around the city, that we are supporting them in a safe, reliable and convenient way,” said Trevor Theunissen, president of Ride New Orleans, a local transportation nonprofit that advocates for greater transportation options. “Using technology to increase the number of convenient and efficient private and public transportation options for residents and visitors will continue to enhance the quality of life in New Orleans. We are confident that any issues of regulation and cost can be resolved as they have in many other cities.”
In Baton Rouge, the Metro Council is expected to vote Wednesday on ordinances designed to attract ride-sharing services like Uber, Lyft and Sidecar to that city. Council members supporting the ordinances say there are too few taxis in Baton Rouge and the existing ones are slow to respond. But traditional transportation providers say the new companies won’t be saddled with the same regulations they must deal with.