An Uber Problem
Austin has always been a city with a mind of its own. Described by many as “Portland’s sister city in weirdness,” it is a liberal haven in a sea of deep-red Texas. From disagreements on the state of undocumented immigrants to its noncompliance with the state government’s business regulations, it’s no wonder that Austin is a hotbed for so many conflicts that occur between city and state.
On May 7, 2016, residents of Austin voted 56% to 44% against Proposition 1, a decision which no longer required rideshare companies to follow the local government’s requirements for background checks. People who voted “no” for Proposition 1 voted to keep fingerprint background checks, to keep vehicle labeling, and to not allow pick-ups and drop-offs in travel lanes.
This resulted in Uber and Lyft pulling their services out of Austin, as their background checks did not comply with Austin’s fingerprinting regulations. While there was much backlash from the Republican-dominated state legislature and the Uber and Lyft companies, this allowed for many local companies, such as Fasten and the nonprofit organization RideAustin, to step in and become established as the foremost rideshare apps of Austin.
In the absence of two mega-companies like Uber and Lyft, small and local companies began to thrive and grow. Austin has always been a city that supports the growth of small businesses, as can be seen with the city government’s small business program. This can also be reflected in the results of Proposition 1, as locals did not want large mega-companies taking over their small company haven.
Against all odds, Governor Greg Abbott signed a bill on May 29, 2017, which mandated that state governments, not local governments, are in control of the ridesharing industry. This also meant that Uber and Lyft were able to return to Austin without having to fingerprint their drivers.
This angered many Austin residents because in their opinion, it was a blatant disregard to what they were fighting for. Many Austin residents also believed that this movie was in a way symbolic of how little the state government cared for the good of their constituents. However, many supporters of Governor Greg Abbott’s power move argued that local governments interfering with businesses was not within their realm of power.
The purpose of this article is to see whether the return of Uber and Lyft is helping or hurting Austin. The conflict in this issue rises between the local companies and the larger, already established rideshare companies. Furthermore, it can also be construed as a conflict between government and its constituents (Bansal, Kockelman, & Singh, 2016).
Was the state government wrong in not listening to the testimonials of its citizens when it decided to override the regulations put forth by the local city governments? Or do they have a mandate to regulate all business and commerce-related matters due to the economic capital they bring to the state’s economy?
After the dramatic and much-publicized exit of Uber and Lyft, many Austinites were left without many rideshare options around. Once the dust settled, three companies emerged: Fare, Fasten and RideAustin.
Fare was the first rideshare company to come to Austin after the dramatized exit of Uber and Lyft. It debuted in Austin on May 20, 2016, and was one of the first rideshare comapnies who had the permission to pick up and drop off at the Austin-Bergstrom Airport. However, after the return of some of the biggest names in ridesharing in May 2017, they closed down due to lack of business.
Fasten was a company started in Boston, MA, and it was aimed at helping mostly college students. They adopted a different business model than Uber and Lyft, one that incorporated real-time updates on pricing and tipping. Fasten also incorporates a $1 per ride surcharge, rather than a percentage fee that is dependent upon how long a rider’s trip is (Davidson & Infranca, 2018). After the return of Uber and Lyft, however, business executives weren’t scared. Instead, they incorporated more creative ideas into their business model, such as FastenFest, a free music festival aimed at bringing their company more exposure in Austin.
RideAustin was started as a non-profit rideshare company by many high-profile businesspeople in Austin. One of their hallmark features in the round-up feature, which asks riders if they want to round their fare up to the next dollar in order to support local charities. When asked about how their company was faring after the return of Uber and Lyft, RideAustin’s vice president of strategic and programs and operations Bobbi Kommimemi told CultureMap that,
“We stated publicly that we need to have a market share that is about 20,000 rides per week at a minimum. We’re hovering at that mark right now, where we used to be at 50,000 per week.”
I also had the opportunity to talk to Robert*, who has been driving for RideAustin for a year and a half now about how the return of Uber and Lyft personally affected him.
So, you have been driving for RideAustin for about a year now. How’s that?
A year and half, almost to the day. I’m actually a retired lawyer who’s working on a novel, and my wife thought it would be a good distraction from sitting at home all day. I have gotten inspiration for my novel from many of my riders too. Anyways, it’s been great driving for RideAustin. They are a noble company who genuinely cares about the betterment Austin instead of making the big bucks. They also made sure I was fingerprinted before I started driving for them.
Why did you choose RideAustin?
Back when I first retired in June of 2016, it was the only company around! Well, there was also Fasten, but that’s it. I started driving for fun, but I just stuck with it because RideAustin is such a great company. Did you know they’re not-for-profit?
I actually did know that, and that’s amazing. Has the return of Uber and Lyft affected the amount of riders you get substantially?
You know, I tried to stay optimistic for a while, but you could clearly tell that there was a change in the dynamic after Uber returned. People started riding with us less and we had to lower our fares. It doesn’t really matter for me since I’m retired, but it’s rough for the other guys, you know?
I’m sorry to hear that. Do you have anything else to say about this issue?
Nothing much. Just the fact that I hold out hope for those companies who are doing the right thing out there.
One of the foremost reasons why Uber and Lyft were also voted out was because of their lack of security regulations when it came to background checks for their employees. People who lived in Austin specifically voted for Prop. 1 due to their concerns of safety when it came to rideshare drivers all over the city (Feeney, 2015).
After Lyft returned to Austin in May 2017, it partnered up with The University of Texas at Austin’s SUREWalk program to create SURE Ride, a program that provides free Lyfts to students who live off-campus 7 days a week from 11 pm to 4 am. It can also be seen as one of the positive effects of Lyft returning to Austin, as many students feel safer now that this program is in place.
I asked Sophie*, a sophomore public relations student here at UT Austin, how she felt when it came to the safety of SURE Ride:
Honestly, I feel super safe whenever I take SURE Ride. All of the drivers have been very accommodating and have never made me feel uneasy. I still think we need some type of security measures to screen drivers, but it has not affected me personally so far.
Safety is a large issue for residents of Austin, students included, and Lyft’s willingness to offer solutions to this lack of safety is demonstrative of the new directions that rideshare is going in.
Similar to Lyft’s new partnership with SURE Walk, other rideshare companies seem to be trying new business models in order to entice their customers. RideAustin is now accepting Bevo Bucks, a cashless form of payment accessible through a UT student’s ID card. This is sure to draw in more students, as many of them already have Bevo Bucks preloaded onto their card.
So far, companies seem to be adapting to the ever-changing market of ridesharing, as can be seen by their new business models and partnerships in order to expand their user base. Perhaps in the future, we will witness the triumph of one rideshare company over the others. But for now, there doesn’t seem to be leniency from anyone.
“Ride-sharing in Austin right now is looking great. It’s a unique place in the world,” Fasten CEO Kirril Evdakov says. “We’re here to stay.”
References:
Peer-Reviewed:
Bansal, P., Kockelman, K. M., & Singh, A. (2016). Assessing public opinions of and interest in new vehicle technologies: An Austin perspective. Transportation Research Part C: Emerging Technologies, 67, 1–14. doi:10.1016/j.trc.2016.01.019
Cramer, J., & Krueger, A. (2016). Disruptive Change in the Taxi Business: The Case of Uber. American Economic Review, 106(5), 177–182. doi:10.3386/w22083
Davidson, N. M., & Infranca, J. (2018). The Place of the Sharing Economy.
Di, X., Fabusuyi, T., Simek, C., Chen, X., & Hampshire, R. C. (2017). Switching Behavior in Response to Re-Entry of Uber and Lyft: A Revealed Study in Austin, TX.
Feeney, M., & companies Uber, R. (2015). Is Ridesharing Safe?.
Other Sources:
Byknish, D. (2017, June 06). ‘Loss of business’ forces rideshare company Fare out of Austin. Retrieved February 23, 2018, from http://kxan.com/2017/06/06/loss-of-business-forces-rideshare-company-fare-out-of-austin/
Coffin, Cori. “Austin, San Antonio file challenges against Texas ‘sanctuary city’ law.” USA Today, 2 June 2017, www.usatoday.com/story/news/politics/2017/06/02/texas-sanctuary-city-lawsuit/366448001/.
Kate Knibbs, Alyssa Bereznak, Victor Luckerson, and Justin Charity. (2018, February 06). Uber vs. Airbnb: Which Is Causing More Harm? Retrieved February 09, 2018, from https://www.theringer.com/tech/2018/2/6/16980324/airbnb-uber-damage-harm-communities
Oregonian, L. R. (2011, April 24). Austin is Portland’s unofficial sister city and sunny alter ego. Retrieved February 22, 2018, from http://www.oregonlive.com/travel/index.ssf/2011/04/austin_is_portlands_unofficial.html
Small Business Program. (2018, January 03). Retrieved February 09, 2018, from https://austintexas.gov/department/small-business-program
Uber, Lyft Return to Austin as Texas Gov. Abbott Signs Ride-Hailing Measure into Law. (2017, May 29). The Texas Tribune. Retrieved February 22, 2018, from http://www.highbeam.com/doc/1G1-493355013.html?refid=easy_hf
*names have been changed for the purpose of privacy
