Demand for Uber puts spotlight on Ottawa's taxi system
Carys Mills, Ottawa Citizen
Published on: October 13, 2014, Last Updated: October 13, 2014 5:38 PM EDT
Five minutes after a cab was supposed to pick up Jasmine Attfield, she started to panic. The taxi, which she booked the night before her big interview, wasn’t there. When she called she was told a Blueline taxi would not be coming.
Attfield, a 25-year-old University of Ottawa law student, got to her appointment late after flagging down a stranger for a ride. It turned out her interviewers were also late.
Despite the stroke of luck last week, the experience shifted the way Attfield sees taxis and Uber, the app-based company that started operating in Ottawa this month and has put the taxi industry and city officials on high alert. Uber doesn’t follow city taxi regulations, arguing it’s a technology company, not a cab firm.
The city disagrees and has so far charged two drivers. But that doesn’t sway Attfield’s new support for Uber. “I realized that you’re always getting into a stranger’s car,” Attfield said, adding she’d rather be able to track the driver on an app and rate them, as Uber allows her to do.
Taxi operator Coventry Connections chief executive Hanif Patni said he’s sorry for what happened to Attfield, which was “extremely rare” and due to a “freak rainstorm,” when 1,003 calls were processed in less than two hours.
But the demand for Uber shows there’s something wrong with current systems, not just in Ottawa but everywhere the company has disrupted the industry, said Joshua Gans, a University of Toronto professor of strategic management.
“The fact that they have any traction at all is telling you that there’s something wrong with the existing regulations,” he said.
So just what does Ottawa’s taxi system look like now and how could it improve?
Plate required
To legally drive a cab in Ottawa, drivers need a taxi driver license, a vehicle licensed as a cab and they must work with a licensed broker. They also need one of the city’s 1,188 taxi plates, which is how the city limits the number of cabs on the road. Most plates are standard but there are 187 accessible ones, which require the driver be equipped for disabled passengers. They’re the only type of plates that have been added to the road in more than a decade.
There are 2,641 licensed taxi drivers in Ottawa, meaning more than two drivers for every plate. Some use their own plates, others rent them full-time or share them with another driver. Capping the number of taxis is the norm across North America, although systems differ. Ottawa has a population formula, but final decisions rest with city council.
“At the end of the day, for us it’s important the plates are in operation and they’re with licensed drivers,” said Susan Jones, the city’s general manager of emergency and protective services.
A plate’s worth
There are 488 drivers on the city’s waiting list for accessible taxi plates, anticipating the next release. But when an existing plate owner decides to sell, their private sale isn’t regulated by the city, so price is left up to the market.
Patni said the vast majority of drivers are first-generation Canadians and likened plates to retirement funds.
Despite business being up from this time last year, Patni said Uber has created a lot of uncertainty.
“Before Uber came and kind of destroyed their livelihoods and the value of all the work they’ve done, I would have said that a taxi plate would have gone for about $300,000,” said Patni, whose company owns Blueline and operates other Ottawa brands. “It’s like buying a mortgage and investing in the plate and this, of course, was a system that was sanctioned and arranged by the regulators and by the city.”
He said Coventry owns about seven per cent of Ottawa’s taxi plates. His company also dispatches drivers who own their plates or are renting elsewhere, for a fee. “There’s a misconception here that Coventry controls all the cars, it has a monopoly and it gets all the revenue,” Patni said. “It’s simply not the case.”
Why is this so complicated?
If you’ve ever had trouble getting a cab, you might wonder why the city limits the number of plates.
“There’s a good reason why we limit the number of taxis, and it’s just particularly to avoid market collapse and a flood of new entrants when there’s an economic depression or recession,” said Dr. Dan Hara, president of Ottawa-based Hara Associates. “But of course, once you do that, monopoly issues ensue.”
Hara has studied taxi regulation across North America for more than 20 years. Some cities experimented with total deregulation in the 1970s, but it was “disastrous,” Hara said, adding that most cities turned back to regulation because of public safety considerations, plus the number of taxis went down and prices went up.
Ottawa doesn’t seem to have the issues some other cities do, said Hara, who last studied Ottawa’s taxi supply for the city in 2004. Some other cities have neighbourhoods where cabs won’t go. Others have vast cab shortages, such as San Francisco, the birthplace of Uber and competitor Lyft.
But there’s a more widespread problem emerging throughout North America. On weekends and holidays, older people are more responsible and opting not to drink and drive, while young people no longer see car ownership as a right of passage, Hara said.
“Suddenly the profile of demand is shifting.”
What now?
Hara said that, with modern technology, it would be possible to introduce part-time drivers to alleviate heightened demands on weekends, without the massive kind of city enforcement that would have required in the past. Cab companies now track where their drivers are and when they’re working, Hara said, which is data that previously would have required an army of bylaw officers.
Beyond that, he said, it’s likely time to re-examine taxi regulations overall, to allow greater flexibility and competition without abandoning lessons of deregulation. One possibility would be shifting from capping the number of taxis to requiring fees be paid to the city, which are high enough to deter excess entry but not so high that taxi demand is suppressed.
“What we do need to do is not only modernize our legislation to recognize the distinction between shared ride and a taxi — and to make sure a shared ride stays a shared ride — but we also need to recognize the changing demographics that are driving the need, not only for more taxis but for licensing them differently,” Hara said. “And we need to achieve all this while respecting the investment that the current drivers and taxi companies have in the industry.”
Jones expects to report back to council on an existing taxi review, which includes whether there’s a way to collect money on plate sales, early next year. Uber can then explain what kind of regulations it wants, Jones said. As well, she said that if people are having trouble getting cabs, they need to speak up. “We haven’t had a lot of complaints,” she said. “But if we start looking at having more complaints, where service levels can’t be met, then you look at different models.”
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