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By Allie Schneider
There was a time when the taxi industry had a monopoly over private transportation in Atlanta —if an Atlanta resident wanted a ride to the airport or downtown, the only option was a taxi. In recent years, however, Atlanta’s market has diversified to include a variety of upstart rideshare companies such as Uber and its competitor, Lyft, which offer sleek, convenient transportation at an affordable cost to consumers.
Thousands of Atlanta residents have signed up over the past few years to drive for Uber, a company that allows drivers to utilize an app and their own personal cars to provide rides to a generation of tech-savvy customers.
“It’s like having a part-time job with no boss,” Uber driver Akindele (last name withheld at source’s request) said. Akindele has been driving for Uber part time for four months, and has made over $10,000 outside of his full-time career as an IT technician. With two kids and a wife in nursing school, Akindele uses his job with Uber to supplement his income.
Though many Uber drivers work full time, Akindele’s situation is not uncommon. UberX (Uber’s cheapest car option) driver Rosanna Moss also works part time in order to earn extra money.
“I wanted to supplement my income and get a new car, so I decided to give it a shot,” Moss said. “It’s nice because you can quit whenever you want. You don’t have to give two weeks notice or anything like that.”
For Atlanta’s young population, Uber is an attractive option. It’s easy to use: you open the app, click a button, and an Uber car arrives at your location in minutes. Transactions are carried out online, so no cash has to exchange hands, and it’s usually cheaper than a traditional cab.
“I use Uber for its convenience,” Kira Lewitt, a junior, said. “The app and everything about it is just easy and simple. And I know I can trust them because of their rating system.”
Uber drivers work on a 5-star rating system, in which passengers have the opportunity to rate drivers after their ride, and drivers can rate passengers.
“In any other system, a 4 out of 5 is good. With Uber, it’s not. They want you to get a 5 out of 5 every time,” Akindele said. If a driver’s rating drops below a 4.6, he or she gets a warning and risks suspension.
Additionally, Uber drivers often respond faster than traditional taxi drivers.
“There’s no way a taxicab company can outrun an Uber because Uber has thousands and thousands of drivers,” Akindele said. “We can always get there faster.”
The Uber app notifies drivers of Uber requests in the area and when drivers are scarce or traffic is backed up, “surge” pricing, which can inflate fares up to two times the normal rate, draws drivers to that area.
Uber’s huge advantage in response time and low prices, while appealing to customers, is hurting the taxi industry in Atlanta and other cities alike. The main complaint from the taxi industry is that even though Uber claims to be a “tech” company and not a “transportation” company, it is acting as a taxi company, allowing it to avoid regulations and fees that taxis face while still providing transportation.
“[Rideshare companies] work exactly like taxi cab companies,” Rick Hewatt, president of Atlanta’s Checker Cab Company, said. “They claim they’re a special entity because they have this special app, but it’s all just smoke and mirrors.”
In Atlanta, taxis are regulated by a CPNC system, in which the number of taxis are limited by law to 1,582 taxis by the Atlanta Bureau of Taxis and Vehicles for Hire. Taxi companies pay a fee for each medallion, and each vehicle must have one. As a “tech” company, Uber is not required to pay that fee and is not limited by the 1,582 car cap.
“We have 140 CPNCs. All taxicabs are supposed to have one — including, in my opinion, Lyft and Uber — but the city allows them to operate without [the medallions],” Hewatt said.
Without the same overhead, Uber is able to charge lower prices to customers, while the CPNC system makes it impossible for taxis to compete, but Hewatt is not in favor of eliminating the CPNCs. Hewatt says that the city has gone through deregulation before, but says that it only floods the market and causes service to go down because taxi drivers’ salaries inevitably decrease significantly.
According to the Federal Trade Commission’s Bureau of Economics, the current CPNC system was put in place in 1981 after a period of deregulation, during which the taxi industry was open to entry. When taxis were deregulated in 1965, taxicab numbers shot from 700 to 1,400. By the 1970s, there were close to 1,900 taxicabs in the city, giving Atlanta the highest ratio of cabs to residents among United States cities.
Founded in 1947 by Hewatt’s grandfather, the Atlanta Checker Cab Co. steadily loses profit year after year to new rideshare companies sweeping the market, and according to Hewatt, the business is becoming harder and harder to run.
“It just comes down to economics,” Hewatt said. “If they don’t have the same requirements to provide exactly the same service, it’s going to cost us more money to provide service than it costs them. We’re trying to revamp as much as we can, but at the same time our revenues are dropping and our expenses are going up…any business man would tell you that’s a formula for disaster.”
While a law passed in July of 2015 did increase some regulations on rideshare companies and decrease the regulations on taxicabs, rideshare companies are still not required to purchase CPNCs.
“My 32 years and our 68 years in this business says that fairness and following the law is the right way and is important. Since they don’t do those things, I think ultimately that will be their demise,” Hewatt said.
Despite Hewatt’s prediction, Uber has been successful in the past few years, even spreading to other countries around the world, but not without some amount of tension. French taxi drivers met Uber with violent protests which resulted in the ban of rideshare services in France. Germany has imposed a ban, and American cities including New York, Washington D.C., and Los Angeles have restrictions on Uber drivers.
“Some European companies are having problems with it, but they have to understand [Uber is] the way of technology,” Akindele said. “I was in Nigeria over the summer… and I was using Uber.”
Taxi companies legally do still have a monopoly over certain markets, such as airport pickup, but according to Akindele, this may not necessarily be true.
“There are ways we can pick up people [at the airport]. We sit in the cell phone lot and then when the request comes in we call the customer and tell them to act like you know me, you know, give each other a hug or something,” Akindele said.
There are officers at the airport who explicitly watch for Uber drivers, and if drivers are suspected of working for Uber, they risk a ticket, but that isn’t a huge deterrent.
“One thing that I like about Uber is that if you get caught and you get ticketed, they pay for everything. They pay your ticket — you don’t even have to show up for court,” Akindele said. “Uber makes a lot of profit from the airport.”
Only time will tell the future of transportation in Atlanta, but in Moss’s opinion, Uber is here to stay. It comes down to economics, and Uber is able to provide high quality, highly available service at a lower cost.
“Really, it’s the smartest business plan I have ever heard of,” Moss said. “They are running a business where they are putting basically no money in. They have someone running their app but you’re using your car, your gas, your insurance.”
Although Uber insures every passenger up to $1 million, Uber drivers generally have personal, not commercial insurance for their cars — a risk in and of itself.
Even Hewatt cannot deny that Uber has a great product in high demand. He hopes that Atlanta will eventually regulate rideshare companies as other cities have done in order to give the taxi industry a fighting chance, but the growing consumer market for Uber and services like Uber give little hope to the future of the taxi industry in Atlanta. Both Moss and Akindele are convinced that Uber will only grow in years to come.
“It’s the American dream,” Moss said. “You come here and you get to give people more options. If taxis were on top of their game, and they were satisfying everyone’s demand, I feel like there would be no space for Uber to exist.”
