Why Doesn’t Calgary Work for Uber?

Council recently approved bylaw amendments that allow for Transportation Network Companies (TNCs), like Uber, to legally operate in Calgary.

Shortly after Council ended, a representative from Uber sent me this email:

Dear Councillor Keating,

I wanted to forward you the message that was sent to registered Uber users in Calgary following Council’s decision.

If you have any questions, concerns or comments do not hesitate to reach out.

Best regards,

Today, City Council forced through regulations on ridesharing that have the taxi industry cheering, but deprive regular Calgarians of more choice. These new rules create too much unnecessary red tape (examples here) and they prevent our ability to offer a reliable service. Given this unfortunate Council decision, Uber will not relaunch its operations in Calgary at this time.

We know Calgarians want new transportation alternatives that are reliable and affordable, and we are humbled by the support we have seen over the past months.

We’ll keep you informed of developments and promise to continue to press for progress.

 

Uber has sent numerous emails like this to their members over the past few months.  Uber points to regulations that don’t fit with their business model, but don’t seem as interested in talking about what is in the best interests of Calgarians.

Uber is a profitable corporation.  Uber wants rules that maximize profitability.  I totally understand why Uber would want to focus more on regulations that fit a business model instead of placing a priority on public safety.  If Uber is interested in profits, The City needs to take up the role of being interested in safety.

The link in this email brought me to a chart that explained what Calgary did that was unworkable vs what Edmonton did that is the alleged golden standard of ride sharing regulation.  There are a number of aspects of this chart that need to be addressed:

Chart 1

There are basic administrative fees that are required to process registrations and enforce the bylaw in place.  The City needs to create a cost recovery structure that makes sure Calgarians aren’t subsidizing a system so that a private corporation can make more money.  The structure that Edmonton is using does not allow for the cost recovery model to work.

It is estimated that many Uber drivers only stay on the job for a few short months.  If The City were to have a per-ride fee, they would not be able to recoup the administrative costs of registering and enforcing drivers.  High driver turn over would shift the burden of fees from the operator to the taxpayer.

Uber has suggested that an upfront fee for drivers may deter them from signing up as a driver.  In the long run, Uber would actually be saving money with per-driver fees instead of per-ride fees.  There is nothing preventing Uber from subsidizing the registration costs for their drivers and recovering the costs from drivers over time.

Council and administration both promised to consider alternative fee structures that Uber might propose as long as they have a full cost recovery model.  The proposal for Edmonton does not fully recover costs.  The fee structure for Calgary is less expensive than many other jurisdictions.  Uber is claiming the fees would be $600 annually, which is not correct.

The fee breakdown is:
Transportation Network Drivers Licence = $220
Police Check = $30
Vehicle Inspection = $140-$190
This gives a total of roughly $440 which is less than New York City, New Zealand, London and many other jurisdictions.

In comparison, here is the fee structure that taxi drivers must follow:
Licence = $135
Police check = $41
Driver training = $300
Vehicle inspection = $140-$190
Taxi Plate Licence = $877
The total fee for a taxi driver is $1493-$1543

Chart 2

 

Background checks is one area where Uber has been using some very theatrical language.  It is Uber’s belief that Calgary should allow them to use a third party service that is acceptable by the Girl Guides of Canada and Hockey Alberta.  For reference, here is the background check form that the Girl Guides use: http://www.girlguides.ca/WEB/Documents/AB/Forms/AB-BackCheck-Order-Form-2014.pdf

I’m having difficulty with Uber’s issues on this topic.  Security clearances absolutely need to happen, and local police services are the most appropriate to carry out the background check.  In some cases the service that Uber uses could be as many as two years out of date.  When Uber illegally launched in Calgary last year there was a driver who passed the security clearances that had charges against them for assault.

There isn’t a background check available that eliminates all risk.  With that being said, I would feel much more comfortable having Calgary Police Service carry out the checks.  I suspect the majority of Calgarians would agree.  Uber drivers have comprehensive background checks in most other jurisdictions including Portland, London and New York City.

Chart 3

Uber has concerns about how onerous the vehicle inspection process was.  Twice a year seemed unreasonable, and I entirely agreed.  Council amended the proposal to ask for annual vehicle inspections, or once every 50,000km.  Many Uber drivers are on the road for less than ten hours a week.  Moving the vehicle inspections from biannual to annual only seemed like the fair thing to do.

I have spoken with Uber regarding the quality of the vehicle inspection.  Uber has suggested that the vehicle inspection should not be as onerous because all of these vehicles are already on the road.  I don’t accept that rationale because that assumes that every vehicle on the road is certified as safe.  This is simply not the case.

Chart 4

Uber’s opposition here is questionable at best, and I believe they are grasping at straws to point out flaws that aren’t really there.  In Edmonton drivers will be required to have a Class 4 licence.  In Calgary drivers will be required to have a Class 4 licence.  The only real difference is that Edmonton’s is tied to the provincial requirement and Calgary’s is more explicit.  If the Provincial regulations change, The City of Calgary may have to revisit their bylaw and make needed amendments.

How Does Calgary Compare to Other Cities?

Uber is able to remain profitable in many other jurisdictions that have much more stringent regulations.  The chart below shows how Calgary stacks up to many other cities around the world:

Chart 5

So What Comes Next?

Uber claims that they will not operate in Calgary under the current regulations.  Uber has made this same claim numerous times in numerous other cities.

Uber operates in other jurisdictions that have less competitive fee structures and regulations than what The City of Calgary has proposed.  It is important that we remember that Uber is a profitable corporation.  Less regulation means greater profits, but compromises safety.  We need to find a balance that allows for ride sharing to be profitable, but it cannot be at the expense of public safety.  I believe the bylaw Council approved finds that balance.

Insurance still remains a big question for ride share companies like Uber.  You may recall that Uber suggested that they have an adequate insurance policy to protect riders and drivers.  That tone appears to have changed as Uber is now working with The Government of Alberta to build an insurance product that meets the needs of ride sharing.

The insurance question has given Uber the opportunity to give another regulatory body an ultimatum.  Uber has threatened to leave Alberta (including their operations in Edmonton) if the province doesn’t make a move on insurance.  I find Uber’s continued approach to opposition very concerning.  Governments should be doing what is in the best interests of citizens, not surrendering to corporate bullying tactics.

You can find some more information on exactly what this bylaw entails here: http://newsroom.calgary.ca/private-for-hire-vehicles-will-perate-in-calgary/.  I encourage you to review the regulations that have been approved and honestly ask yourself, which of these are unreasonable?

We have established a framework for ride share companies to thrive in Calgary.  I would remind Calgarians that Uber is not the only ride sharing company in the world.  If Uber doesn’t feel they can operate here in Calgary, perhaps another company can.

Here are some of my earlier blog articles on this topic:

Let’s Make Uber Work for Calgarians

Calgary Takes Steps That Would Allow Uber to Legally Operate