Honolulu’s old-guard taxicabs and new breed of ride-hailing companies, including Uber and Lyft, are similar in that they’re private transportation operations tethered to some city regulation, including safety assurances such as required background checks for drivers. The business platforms guiding the two types of companies, however, are a bit more apples-and-oranges.
Amid an ongoing clash between these two types over competitive conditions and consumer costs, the City Council recently passed legislation to cap fares, including “surge” pricing, which is triggered in Uber and Lyft operations during stretches of high-demand for rides. This week, Mayor Kirk Caldwell rightly vetoed Bill 35, which had the markings of regulatory overreach in a self-regulating marketplace.
And in an encouraging move — an apparent effort to simplify regulation so that all for-hire outfits play by roughly the same rules in an evolving marketplace — Honolulu Hale is now drafting a bill that’s expected to require both types of transportation operators to offer customers the option of securing a fare cost (in writing) for any ride in advance of climbing into a passenger’s seat.
What’s more, it would allow both to practice surge pricing — as long as drivers disclose upfront how much is to be paid, as is the practice now used by Uber and Lyft.
Caldwell’s pitch for leveling the playing field by allowing companies to set rates without government regulation — provided that the full price tag is disclosed — is ripe for fuller discussion before the Council and public.
App-focused ride-hailing outfits adjust prices based on supply-and- demand innovations tied to smart-phone technology. High demand, such as that touched off when nightclubs close, can prompt a surge in pricing. That, in turn, prompts the new-guard’s freelance drivers to hit the streets, making more cars available, and cueing a return to a standard fare. This practice is more transparent than the guesswork that comes with climbing into a cab without knowing when the meter will stop ticking.
Still, there are taxi customers who want to hold onto the current taximeter model — a reliable system that does not require a smartphone application. Caldwell maintains the proposed bill would make room for that option. Through it, a customer would not know the total fare until the end of the ride — and the maximum “all in” fare per mile would be set by the city’s Department of Customer Services. At this time, Honolulu may be best served by folding the old with the new.
Other cities are grappling with their own clashes between traditional taxis and emerging ride-hailing models. But had Caldwell let Bill 35 stand, the move would have marked Honolulu as the nation’s only city to ban surge pricing. Among the sensible reasons for refraining is concern that a ban could signal — whether warranted or not — worry about resistance to tech-related innovation. That, in turn, could discourage business growth.
A surge cap should be limited to emergencies in which public safety is at issue. For example, in 2016, a surge-pricing cap was in place during a New York City snow storm.
Also in New York, where city leaders are weighing issues of customer cost and convenience, a pilot program allows some city-regulated cab drivers to use surge-pricing, with up-front cost estimates, like their counterparts Uber and Lyft already can. The program was prompted by the growing popularity of ride-hailing, which has left the city’s yellow cab industry teetering on the brink of insolvency.
Earlier this month, Honolulu’s City Council voted 6-3 to approve Bill 35 — and six votes would be needed to override the mayor’s veto and enact the ban. Council members who may be wavering should not vote to override the veto.
