It appears that both BC. Premier John Horgan and Surry Mayor Doug McCallum are both not clear on the concept of healthy competition. Owing to political expedience on both sides, they prefer fighting with each other over Uber than come to grips with the fundamental realities of the problem.
The problem is this: market fragmentation is an economic phenomina that is non other than an infectious disease that is guaranteed to kill a vital sector of the economy. Market fragmentation is the source of friction between Uber and the taxi industry.
Mr. Horgan obviously fails to understand that Uber’s business model fragments the industry as opposed to healthy competition. Here’s what he had to say: “I think the way forward for Surrey and for Mr. McCallum is to listen to the citizens of his community who want competition.”
Ride hailing is indeed a novel marketing innovation for the industry to follow provided that the taxi/ride hailing companies do not compromise the ability of drivers to earn a living wage by oversizing their fleets. Uber has so severely fragmented the market that neither taxi nor ride hailing drivers can earn anything even remotely close to a basic minimum wage. They simply cannot earn a living and both Uber and the Taxi companies know that and could care less.
The Vancouver-Surry taxi companies could, for the most part, care less about the impact of Uber on driver’s personal income, but they are concerned about something else, the medallion system and the monopoly it provides.
The medallion is a transferrable taxi license the number of which is limited by law in most municipalities and provides the current taxi companies in Surry and Vancouver a monopoly in a highly protected market. Its intention was to prevent the streets from being clogged with empty taxis and ensuring that drivers could earn a decent living and be an attractive career option for young persons entering the work force. In other words, the medallion system recognized taxi driving for what it is—a respectable profession.
Governments have thus unwittingly given the cab companies a lucrative monopoly to the detriment of drivers and the riding public. Fixed stand rents paid to cab companies and usurious subleasing fees paid by driver-owners to these companies rendered yet again impoverished and angry drivers and a severe deterioration of service quality to the public. Little wonder drivers and customers are flocking to Uber and Lyft like flies to honey.
Drivers, in general don’t see a significant improvement in fares but Uber does not charge them a fixed stand rent or subleasing fees. Their net income is somewhat higher but not high enough given the number of cars Uber et al insist on having in their fleet.
Consumers, on the other hand are attracted to Uber owing to faster response time—but a less well trained and professional driver behind the wheel unless he’s a defecting cab driver.
The BC government would do well to follow Quebec’s example with its new legislation Bill 17 which takes the regulation of public transportation by automobile away from municipalities and into the hands of a provincial taxi commission. It kills the medallion system and allows taxis and ride share to pick up fares in any jurisdiction in which they clear.
It’s a serious failure of leadership for governments failing to bring taxi regulation into the 21st century within the spirit and advice of Canada’s Federal Competition Bureau’s report of November 26, 2015 titled Modernizing Regulation in Canada’s taxi industry . Governments, please take the advice of the bureau’s advice to heart.
