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Austin's Post-Uber Plan: Break Up the Taxi Cartel

Uber and Lyft have pulled out of the city, but a new proposal to deregulate taxis could change what kind of rides Austinites take.

Downtown Austin, Texas. (Earl McGehee/Flickr Creative Commmons)

Earlier this month, Austin voters delivered a decisive “no” vote on Proposition 1, a ballot measure supported by Uber and Lyft. The measure would have freed the ride-hailing companies from a fingerprinting-security ordinance that the city adopted last December. After the companies threatened to leave if they didn’t get their way on Prop 1, Austin voters called their bluff.

Uber and Lyft immediately made good on the threat to pull out, leaving Austinites who depend on these services—both for convenience and employment—deep in the lurch. The companies won’t stay gone for long. As The Economist notes, the ride-hailing industry’s perpetual stand-offs with cities usually end in face-saving exercises, from New York to Houston and San Antonio.

But leaders in Austin aren’t sitting on their hands waiting for them to return. Austin is mulling a new proposal to deregulate the taxi-cab industry in the city, a move that could open up the number and kind of rides Austinites can expect to take.

“The city of Austin started discussing this last fall,” Austin Mayor Steve Adler tells CityLab. “We want to make sure the city’s not picking winners and losers.”

In a memo last week, Robert Spillar, director for the Austin Transportation Department, outlined his thinking. In order to achieve a more “level playing field,” he writes, “the current ground transportation regulations for taxis and limousines should be evaluated and brought into alignment with those for transportation network companies”—also known as ride-hailing companies.

Deregulation would make it that much easier for an Uber or Lyft clone to thrive in Austin, for as long as they’re gone. This latest development gives lie to the pro-Proposition 1 argument that Austin only ever meant to submit to the taxi lobby. Of course, planning it is one thing and passing it is another, but the plan as it stands would introduce serious change to the taxi industry, as Spillar’s memo explains:

A transition from the current system of managed competition to an open entry system would provide a truly competitive marketplace. This would require the City of Austin to abandon the taxi franchise model for an operating authority system. The final step of that transition could be to revoke the existing franchise agreements after all operators are conforming to the new operating authority approach. These modifications represent a deregulation of the taxi and limousine industries in Austin and would allow these mobility providers to compete in the open market, with the transportation network companies and with each other.

For years, taxi drivers and taxi franchises have argued about the appropriate way to license cabs in Austin. Taxi drivers have long argued that the city should permit drivers directly. The city opened up to driver-owned taxi co-ops back in February, a first step in the direction of direct permitting. Taxi franchises, on the other hand—Austin Cab, Lone Star Cab, and Yellow Cab—prefer a system that gives them control over all 915 total taxi permits, leases for which drivers must pay dearly. In Austin, as in just about every city in the country, the taxi industry lobbies hard (and effectively) to maintain the status quo.

So needless to say, the taxi franchises (and their advocates) may not be thrilled with the proposal. “We’ve had one taxicab company that’s weighed in expressing displeasure,” Adler says. “The others have been very silent on the raising of the issue.” (Representatives from Yellow Cab, Lone Star Cab, and Austin Cab did not immediately return my calls for this story.)

In the absence of regulation, how would private ground transportation work in Austin? At a minimum, taxi operators and ride-hailing drivers would be required to submit to the fingerprint-security screening that spooked Uber and Lyft. Beyond that, more details remain to be determined; after meetings with stakeholders and committee presentations in June, deregulation is bound for the Austin City Council’s agenda in August.

Adler says that one of the city’s goals is to push what he describes as a “third-party, cross-platform validator badge”—a security-screening system that could work to guarantee not just ride-hailing and taxi drivers but also Airbnb hosts, Craigslist sellers, hell, maybe even Tinder matches. Austin is leading that push, he says. While the city works to fill the gap left (however temporarily) by Uber and Lyft, leaders hope to anticipate better ways of working with peer-to-peer platforms and legacy industries alike in the future.

“My sense is we were innovating too quickly for Uber and Lyft,” Adler says. “You get to be a big company, you’re less nimble. But these companies have to expect disruption.”

About the Author

  • Kriston Capps
    Kriston Capps is a staff writer at CityLab. More

    Kriston Capps is a staff writer at CityLab, where he writes about housing, art and design. Previously, he was a senior editor at Architect magazine.