Ride-hailing companies like Lyft will not face caps on the number of drivers on B.C. roads or limits on surge pricing to raise rates during busy events, under rules unveiled Monday by the Passenger Transportation Board.
Board chair Catharine Read said unlimited fleet sizes and surge pricing are key to the models of ride-hailing companies and her independent tribunal decided to allow them.
“As data becomes available, fleet size may be re-addressed,” she said.
The board set the minimum charge for ride-hailing companies as the taxi flag rate — $3.25 to $3.95 in Metro Vancouver. Companies like Uber and Lyft will not be allowed to offer discounts or coupon savings to drive that price any lower, as they do in cities such as Toronto.
“There will be dynamic pricing,” said Read. “But there will be a floor at the taxi flag rate.” But, she said, ride-hailing companies are free “to charge higher prices than taxis and they will be able to charge prices that respond to supply and demand factors in the market.”
In addition, the board set much larger geographic regions for ride-hailing companies to operate in compared to municipal borders for traditional taxis. The “Lower Mainland, Whistler” region will include all of Metro Vancouver, the Fraser Valley and Squamish-Lillooet.
There will, however, be a ban on ride-hailing vehicles from picking up passengers around Canada Place on days cruise ships are in the terminal. However, the Port of Vancouver is exploring options for other pickup spots ride-hailing companies might be able to use.
The NDP government had asked the Passenger Transportation Board, an independent agency, to study and set the rules. The ride-hailing issue is fraught with political considerations, including the NDP’s promise to protect the traditional taxi sector in the 2017 election and the powerful taxi lobby’s control of significant votes in the key electoral battlegrounds of Vancouver and Surrey.
The Vancouver Taxi Association slammed the new rules on Monday.
“The government has broken its promise to the taxi industry that it would be treated equally with ride-sharing companies regarding the transportation of passengers for a fee,” said spokesperson Carolyn Bauer.
“Cheaper rates, cheaper insurance and as many vehicles as they want. All we ever asked for is a level playing field and we did not receive that.
“The first vehicles that will be parked will be the accessible taxis. Rideshare companies do not have to supply accessible vehicles, who is going to provide this service?
“The City of Vancouver will be in total gridlock with congestion. We are working with our lawyer to look at options.
“We are also requesting an urgent meeting with the premier to understand why his government is reneging on its commitment to an equal playing field in the passenger transportation industry.”
The association’s lawyers sent a letter to the Passenger Transportation Board asking it to reconsider its decisions.
Reaction from the government Monday appeared to indicate a level of unease with the board’s decision, despite the fact it was a decision of the NDP cabinet to allow the board to set the rules independently.
“We are concerned in particular about the cap on the fleet size,” said Solicitor General Mike Farnworth. “We think that’s something that we would have liked to see a cap in place.
“I would like to see, once the data is at the PTB, that they revisit that decision.”
The goal, said Farnworth, is to ensure a “level playing field” with taxies. “There’s a lot of people that work in the taxi industry and a lot of families that depend on that employment and we want to ensure that level playing field.”
Read acknowledged Monday that the traditional taxi sector will be upset with some of the decisions, especially cab drivers in Surrey who would like to pick up passengers beyond their municipal borders such as in downtown Vancouver.
“We did not want to go with municipal boundaries in Metro Vancouver because they are so small,” said Read.
Lyft, which announced it will apply to operate in B.C., said it was “really quite happy” with the new rules.
“We’re actually quite thrilled,” said Peter Lukomskyj, Lyft’s B.C. general manager. “We felt they were quite generous to the ride-sharing and just in general to the transportation mix that British Columbians deserve. We feel the boundaries, although we’d hoped for an all-province boundary, the boundaries are quite reasonable.”
The BC Taxi Association said it was disappointed and angry with the rulings.
“The association is very concerned,” said president Mohan Kang. “When we see that there is no cap on the (ride-hailing companies) that will be something like when you are flooding a market.”
The association wanted a pilot project for a few months with a cap on ride-hailing drivers, so that the board and government could gather data and decide whether to increase the number. “Once you give them something, you can’t take it back,” said Kang.
The geographic borders are “too vast,” he said. Taxi drivers generally make their money on the weekend and with new ride-hailing drivers on the streets that will dilute the ability for drivers to earn a living, he said.
But Kang ruled out a taxi strike in response. “No,” he said. “Strikes, people do for making a point. We can make a point without doing it.
“When there’s a strike or anything, you start with peace. It never stays peaceful. We are there to serve the people and earn their goodwill. If we are going to put them in such an awkward position… what sort of message are we giving them?”
The decisions are the last rules to be set before ride-hailing companies can start applying for licences on Sept. 3.
Read said she expects that once applications are made, it could take six to eight weeks for the board to review and decide whether to approve them.
“It expected that (ride-hailing) services will be available in some parts of the province later this calendar year,” she said.
The government previously announced ride-hailing drivers will need to obtain the same Class 4 commercial licenses as taxi drivers. Lyft also requires annual criminal-record and driving-record checks.
Ride-hailing giant Lyft announced last week it would operate in B.C., despite disagreeing with the Class 4 licence decision. Uber has yet to announce its intentions.
Taxis will still be the only vehicles allowed to pick up street hails.
The BC Greens praised the new rules but said they will keep an eye on the boundary issue and whether taxis should have their municipal boundaries relaxed in the future as well.
“The PTB has honoured the integrity of the process that we undertook as a committee,” said Green MLA Adam Olsen, who sat on an all-party committee that studied ride-hailing. “For too long decisions about this industry were based on politics. Now we’re making progress in a way British Columbians can be confident about.”
Liberal MLA Peter Milobar, who also sat on the all-party committee, said the geographic borders, fleet size and pricing decisions all make sense and were endorsed previously by MLAs. He zeroed back in on the NDP’s instance of Class 4 licenses as the main problem.
“What really it’s going to boil down to is this adherence to the Class 4 designations,” said Milobar. “You are likely going to see a shifting of drivers from the taxi industry to ride-hailing companies which will be further harm to the taxi industry in terms of their ability to compete.
“It doesn’t help the travelling public any if that just happens. We won’t see any more cars on the road we’ll just see different branding.”
Monday’s ruling by the Passenger Transportation Board came after the board released discussion papers on the topics in July and held public consultation meetings with taxi companies and ride-hailing organizations this month.
What taxis wanted: Taxi companies did not want ride-hailing companies to get permission to operate in large areas, because taxis are confined to municipal boundaries. The companies told the board during public consultations that they were worried Uber and Lyft drivers in big geographic areas would simply rush into peak locations at peak times and take trips away from taxi drivers.
But taxis also failed to present a united front to the board during public consultations last month. The larger B.C. Taxi Association called on municipal taxi borders to be eliminated so taxis could better compete with ride-hailing companies, especially those from growing centres like Surrey. Eliminating borders could solve problems like “deadheading” — where taxis from Surrey, for example, take a passenger to downtown Vancouver but can’t pick up anyone there for a return trip because of licensing restrictions.
The Vancouver Taxi Association argued that the current boundaries for Vancouver should remain. Uber and Lyft should be restricted or else their drivers will flood the downtown core at peak times, congesting the roads, frustrating the travelling public and stealing taxi fares, the Vancouver association claimed. It could also dramatically decrease the value of the 882 Vancouver taxi licences.
What ride-hailing companies wanted: Uber and Lyft wanted no boundaries but told the board during public consultations that they would settle for regional boundaries if they were developed based on traffic flow patterns. In Metro Vancouver, for example, the companies wanted Aldergrove, Abbotsford and Chilliwack included.
What the Passenger Transportation Board decided: There will be five large regional boundaries in B.C. for ride-hailing companies:
• Lower Mainland, Whistler — including Metro Vancouver, Fraser Valley, Squamish-Lillooet
• Capital Regional District — excluding the Gulf Islands
• Vancouver Island — excluding the CRD
• Okanagan-Kootenay-Boundary-Cariboo — including the Central Okanagan, North Okanagan, Kootenay Boundary, Shuswap Cariboo, Thompson-Nicola and Columbia.
• B.C. North Central and all other regions of B.C.
Monday’s decision did not change the existing borders for taxi companies, which are confined along municipal lines in Vancouver, Surrey, Richmond and elsewhere. The board cited a lack of available data and the contentious nature of changing taxi borders, noting it would take more time to consult than was available.
The decision means taxi companies will operate with smaller borders, whereas ride-hailing companies will have much more freedom of movement around Metro Vancouver.
What taxis wanted: Taxi companies argued that ride-hailing companies should have the size of their fleets capped so that they could not overwhelm the number of traditional taxis on the road and devalue taxi licences. The Vancouver Taxi Association proposed companies like Uber and Lyft should only be allowed to operate half the number of vehicles as taxi licences — so a combined 441 ride-hailing cars in Vancouver compared to the existing 882 traditional taxi licenses.
The association told the board that if it failed to put a cap on ride-hailing fleet sizes from the very beginning, “it will be virtually impossible to put the genie back into the bottle.”
In Victoria, the large taxi companies proposed fleet sizes for ride-hailing companies should only total 10-15 percent of the size of the taxi fleet in the city.
What ride-hailing companies wanted: Uber and Lyft said they did not want any cap on fleet size because their “dynamic model” of business requires variable numbers of drivers at peak times.
Smaller ride-hailing companies told the board during public consultations that they were fine with fleet sizes, though they wanted the board to monitor the impact of whatever was selected so the cap could be adjusted for market conditions, congestion and the ability of drivers to do enough business to earn a living wage.
What the Passenger Transportation Board decided: No limits on fleet sizes for ride-hailing companies. Instead, the board will monitor data collected and re-evaluate the fleet size issue in future years.
What taxis wanted: The taxi companies feared Uber and Lyft would “use their deep pockets to subsidize trips until they have irreparably hurt the taxi industry,” according to a summary of the public consultation meetings. Taxis called on the board to set the minimum ride-hailing rate as at least the same as the taxi flag rate, to prevent “predatory pricing.” The Vancouver Taxi Association went further, suggesting ride-hailing be priced 10 percent higher than traditional taxis.
What ride-hailing companies wanted: Ride-hailing companies in most markets use “surge” pricing that can fluctuate from during a day depending on traffic, vehicle availability and market conditions. Uber and Lyft asked for no minimum rate on rides but admitted they do operate in some areas where governments have set minimum rates. The smaller ride-hailing companies told the board they would be fine with a minimum rate set at the taxi flag rate.
What the Passenger Transportation Board decided: Ride-hailing companies will have to set the minimum fare on rides at the taxi flag rate — roughly $3.25-$3.95 in Metro Vancouver. Coupons and discounts will not be allowed. But surge pricing and variable pricing higher than taxi rates will be allowed. That means prices could jump way up for a ride after a concert, sports game or during a busy time of day.