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What a free market in ridesharing looks like

It looks like Austin right now.

Uber

When Uber and Lyft left Austin last month, they thought they were sending a message to the Austin City Council and other local governments looking to regulate them. Instead, their departure may pave the way for a revamp of ride-hailing in Austin that could draw the notice of other cities.

At least six new companies have launched in Austin, all emerging from the ashes of the Proposition 1 election that left the capital city without the two industry giants in vehicle-for-hire apps, which are also sometimes referred to as transportation networking companies.

“What [Uber and Lyft] have left us with appears to be the only open TNC market in a major city in the world, maybe,” said Austin Mayor Steve Adler. “In the marketplace, when you have a monopoly, or in our case a duopoly, that leaves town, what you would expect to see in the market is innovation and competition. And that’s what we’re now seeing happening in Austin.”

[…]

While other companies offering similar services had operated alongside Uber and Lyft, none had seen anywhere near the same level of success. An estimated 10,000 drivers found themselves out of work after the two companies ceased operations.

Newer faces have quickly flooded the market. There’s Arcade City, getme and Fare. There’s also Fasten, Wingz, zTrip and RideAustin. And InstaRyde will have its official Austin launch later this week.

Many of these companies, most of which have business models similar to those of Uber and Lyft, are still finding their footing, rushing to get drivers on the road and apps on Austinites’ phones in the race to emerge as the face of peer-to-peer transactions in the city. Some sprouted roots in Austin before Uber and Lyft left but have seen a recent boost in business.

Yet all of these firms still operate in the shadow of the two ride-hailing giants, struggling to distance themselves from their competitors while still offering comparable services. Even now, it’s unclear if any of these new companies will be able to offer the same level of coverage or see similar success.

[…]

Despite the turmoil from the election, Adler said he stands by the council’s decisions, even as the fallout has captured national attention.

“I have talked to mayors from around the country about this issue,” Adler said. “My position on this is that cities need to be as innovative and creative as are the industries and businesses and economies that it intersects with … There’s a suggestion that what’s happened here demonstrates that Austin is not an innovative city, and I don’t think what happened here indicates that at all … Austin is where ideas go to become real.”

Adler said it was unclear what the ride-hailing environment will look like down the line, but he said he is certain there will be “choices operating at scale in the city.”

The future could depend on whether the Legislature decides to take action on the issue next year. Immediately following the departures of Uber and Lyft, Sen. Charles Schwertner, R-Georgetown, said he will file legislation on the issue next session that emphasized a free market. Other GOP lawmakers expressed similar concerns on social media after the election.

Adler said while statewide regulation is “certainly an option” the Legislature can use, the atmosphere in Austin has already significantly shifted since the election.

“I think that when some of the legislators initially spoke, it was uncertain as to whether or not Austin had adopted something that would prevent the market to function,” Adler said. “I would say the evidence at this point would at least suggest that the market is working well.”

There’s little the Legislature can do until the 2017 session, but the House Committee on Business and Industry is holding an interim hearing on Wednesday to discuss “how Texas can support shared economy growth in the state.” Uber General Manager Sarfraz Maredia has been invited to testify.

In the meantime, the future of Austin ride-hailing will be determined by the market, Adler said, “as opposed to government deciding.”

Boy, wouldn’t that be a kick in the pants? I wonder if Sen. Schwertner and his Republican colleagues will recognize it if it is happening. I’ve been harping on all this for awhile, so I’ll try to restrain myself here. I don’t expect all these companies to be successful – frankly, if one or two of them make it, that will be great. Austin represents a unique opportunity for these companies. Let’s see what they can do.

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