Wednesday, November 12, 2014

Houston follows Nashville's lead and accommodates ride-share livery service at their airport.

Back in September ride sharing companies like Uber and Lyft were authorized to pick up passengers at the Nashville airport, making Nashville the first in the country to authorize such services. Under the regulations that allowed this service, the ride-sharing companies would pay a fee $3.50 each time they pick up a customer, with the service tracked through its geo-fencing technology.  I was proud of our city for being the first airport in the country to accommodate this new form of livery service.

Nashville had, had a terrible record of trying to stamp out competition to limousine service and taxi services. Nashville was one of the most anti-competitive cities in the country. When "Black cars" first appeared in the city a few years ago, the Metro Council passed a minimum fare regulation of $45 for a ride in a limousine and forced Black Cars to operate at if they were limousines. Black cars had been charging as little as $20 for a ride downtown from the airport.  They were licensed by the State and approved at the airport but the city tried to force them out of business.  What has come to called "Black Cars" are nice clean vehicles with no company name on them that are much nicer than a cab but not as ostentatious as a stretch limousine. When the city voted to impose price-fixing and protect the limo companies from competition, not a single member of the Metro Council voted against it. Even the so-called conservatives on the Council voted for this anti-competitive price-fixing.

In addition to the $45 minimum, the city imposed other irrational restrictions on this new form of livery service, such as prohibiting them from taking more than one fare an hour and ridiculously requiring the vehicles be centrally dispatched. When this restraint of trade and price-fixing was challenged in court, there was a long drawn out and expensive court battle with the Institute for Justice representing the Black Car operators. Unfortunately the city won that court battle.

While Nashville was defending price-fixing and opposing technological innovation and new livery service business models, the city build a convention center and needed more reasonably priced livery service. During this time, Lyft, Uber and Sidecar came on the scene in cities across America and the world and found their way to Nashville. The public embraced this new form of livery service and visitors to our city expected it.  In Janissary 2014 the Metro Council reversed itself and lifted the $45 minimum fee and other onerous regulations and allowed vehicles to charge by time instead of miles and allowed point-to-point fees.

I have now used Uber a few times and love it. I was slow getting a "smart" phone but now have one and have downloaded the Uber app and used it. If you are not familiar with it, here is how it works. When you download the Uber app, you register the credit card you will be using. If you need a ride, you click the app and put in your destination. The technology tells Uber where you are. Uber sends you an estimated pick up time and a picture of the driver and the make and model of the vehicle. The vehicle picks you up, takes you to your destination.  No money changes hands and there is no tipping. The fare is charged to your credit card. 

I have used the service about 5 times and it is quick and easy and cheap.  I usually have a car at my door within three to five minutes. To park downtown off lower Broadway can be $20. I can get downtown for less than $5 and if I leave at anytime other than right at the time the bars close I can get back for about $5. If there is high demand then there is  a higher fare charge but you are told in advance.  The higher fare charge causes more drivers to get on the road. This is really a demand-supply market in real time.  The drivers I have met were people who were doing this between "real" jobs or college students making some extra money.  Uber drivers work for themselves and work as little or as much as they want and work their own hours.

Some cities are still fighting to keep out this app-based ride-share type of service and the Black Car service. Nashville went from being one of the worse cities for livery competition and innovation to one of the best.  I don't think the change of policy was the result of a change of ideology.  I don't think suddenly our Metro Council became principled and embraced a market economy and freedom.  I wish I could say that I thought our Metro Council had done that, but I don't think that was it.  I think as a response to demand and a need to accommodate the tourist coming to town, that the city pragmatically decided to change course. Once it is here, I don't think there will be any going back. There may be some modest regulation over time, but I don't expect the city to try to drive this service out of business or fix prices.

Today Houston Texas became the second city to accommodate ride-share livery service at their airport and the Houston Chronicle said of this development, "The Houston rules are similar to those in Nashville, Tenn."  I am proud to see that.

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