The post-Uber Austin rideshare experience

Texas Monthly notes the issues that some people faced during SxSW hailing a ride, and considers the rideshare landscape in Austin post-Uber and Lyft.

But the thesis that Austin is experiencing a crisis around ride-hailing apps is an old one, and it’s incomplete. RideAustin, which as a non-profit makes all of its numbers public, gave its millionth ride in February. Drivers are happy with the rates they make on RideAustin (which gives them the full amount of the ride) and Fasten (which takes a flat fee out of each ride, rather than a percentage like Lyft does). Most of the year, the companies’ servers can handle the load, and it’s likely that they’ll each be improving their servers based on what happened at SXSW.

Still, despite the fact that the city seems much happier with the current state of its ride app regulations than the tech fellas who come in for SXSW, things might end up getting a lot friendlier for Lyft and Uber anyway. That’s because the disruptive innovators in the tech world have an ally in the Texas Legislature, which seems increasingly likely to pass statewide regulations that would prevent cities like Austin (and Houston, which has a similar ordinance—and which keeps Lyft, but not Uber, from choosing to operate in the city) from determining what the rules that drivers and the companies through which they find passengers will have to follow will be in each city.

There are three different bills in the Lege, all of which would create a statewide rule that would supersede local regulations, and the Senate began debating them last month. (Similar legislation was proposed in 2015, though it ended up dying without a vote.) This time, though, momentum is on the side of the companies that hope to see the legislation passed—the Texas Tribune reports that “at least one of the bills is widely expected to eventually move on to the full Senate for a vote,” which, in an environment that’s increasingly hostile to the idea of local control, has a strong chance of passing.

All of which is to say that the question of whether or not Austin’s leadership “ruined” ridesharing is ultimately the wrong thing to focus on. It’s true both that Austin tends to get around pretty well without Uber and Lyft, and that the two companies are pushing hard for legislation that would change the dynamic there dramatically. Perhaps the real question, then, is what happens to Fasten, RideAustin, and the rest if Uber and Lyft come back?

That’s a tougher question to answer, but it’s the one on which the future of ride-hailing in Austin hinges. For now, RideAustin and Fasten are doing a job that satisfies customers and drivers. But if Uber and Lyft decide to cut costs to consumers for six months, eating the expense of the service, they could easily make RideAustin and Fasten seem like overpriced relics of a bizarre moment in the city’s history. It may not prove sustainable (currently, Uber’s passengers pay for only 41 percent of each ride, and the company was projected to lose $3 billion in 2016), but it doesn’t have to be sustainable: it only has to chase away the competition.

I have mostly resigned myself to the fact that the Lege is going to pass a statewide rideshare law that will forcibly overrule the ordinances passed in cities like Austin and Houston regarding these services. The bills that are being considered have some good points to them, and there is certainly an argument to be made that a uniform statewide approach makes more sense and will serve customers better. But I think that latter part will only be true if there is robust competition among multiple rideshare companies, ant not just an Uber/Lyft duopoly with a legacy cab service for a declining share of riders. As such, I have two hopes for what happens after Uber and Lyft make their mandated returns to Austin. One is that they will find a market that isn’t as into them as before thanks to the presence of many other viable services, which forces them to innovate and compete not just for riders but also for drivers. And two, if Uber and Lyft take the approach of trying to kill off their competition instead by leveraging their billions in market capitalization to subsidize their service until they’re the only players left standing, that the Legislature recognizes this anti-free market in a way that some people say taxi regulations are, and take action to correct it. Let’s just say I have more hope for the former than for the latter.

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One Response to The post-Uber Austin rideshare experience

  1. Joshua ben bullard says:

    App ride services survive on forced fees from “major people platforms ” in which the law forbids people from being able to hire the driver DIRECT,example NRG stadium should of had a vehicle 4 hire lane with set rates 15% to 20% below app prices,convention centers ,major hotels, downtowns ,Airports ,all places where local government could allow people to board and hire the driver direct and save that 25% fee for other expenses,the state should allow citizens to hire the tnc drivers direct at their own liability. Toyota center has over 1000 people getting surged and paying 30% to one guy ( Travis uber )even though the car and driver are already there. Sylvester Turner should have repurposed all taxi zones to vehicle 4 hire zones ,set the rates from those zones 15% lower than app rates with no surge,ever.I can see where vehicle 4 hire zones would make perfect since in residential subdivisions, if you don’t want to app,walk 2 blocks to the vehicle 4 hire zone and save 20%.the fact that we have major corporations at George r brown and force everyone to app ,wait take the surge is crazy.all major people platforms should have cost effective,immidietatly board vehicle 4hire zones ( formerly taxi zones). And I still don’t think Sylvester Turner is going to kill the taxi medallion system that houstonians hate and the state is now also rejecting.what ever happened to turners “move Houston forward “??? In regards to his vision to nowhere in hired transportation, he’s lost.

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