By Patrick O’Brien (AIMS On Campus Student Fellow)
Uber is a service that many consumers want to bring to Halifax, Canada. Even though consumers advocate for the ridesharing service to be implemented, cab companies certainly do not. The taxi service in Halifax is an effective monopoly, whereby there are only two taxi companies that absorb all the business. These companies pay provincial fees to operate in their designated area, special taxi licenses, and have a large overhead cost in their contact centers. When you incorporate all these expense into the revenue that the taxi service provides, it doesn’t leave much room for competition amongst other companies. Uber poses a large threat to the monopolistic business, as the ride-service contractors (your Uber drive) are not regulated by the province as ordinary taxi service providers are, and therefore don’t have to pay regulatory fees, have a much lower cost of operations, and can offer cheaper rides.
When discussing benefits for consumers and why they would choose Uber versus a normal taxi, majority of people do so because a quick and cost effective alternative. The bigger concern many consumers should ask themselves, but don’t, is whether they are safer in Uber compared to a taxi? According to an article written by Postmedia Network Inc. majority of Uber drivers are not properly insured when in accidents, as ordinary taxis must be insured to carry passengers legally. Aviva insurance has introduced a solution. A new type of insurance called ride-sharing insurance which protects the driver carrying passengers in the event of an accident. The requirements are limiting, which means many drivers will not be able to qualify. To qualify, a driver must hold a license for a minimum of six years, is only eligible to work 20 hours a week, and eligible only for residents driving in the province of Ontario. The problem is many young/new drivers with good records won’t be able to qualify, and If this was a full-time job for the individual, then they need to reduce their hours in half, which naturally will not happen for those who depend on the income full time and therefore won’t be covered during an accident past 20 hours.
What is the result of Uber breaking into the taxi industry? A study published by Forbes Magazine gathered data about the effects of uber on the income of taxi drivers in multiple U.S cities. On average salary for taxi drivers decreased 10%, while self-employment increased over 50%. This is a drastically contradicts the widespread theory or thought, that Uber is destroying jobs and killing the market. In fact, as shown by this study, it is doing the exact opposite. When looking back to a small city like Halifax, the effects may be different. While the market is largely dominated by two taxi companies, (Casino Taxi & Yellow Cab) there are independent drivers in Halifax, who pay large fees for their license in order to operate independently with the use of a call center that provides the service of referring clients to them.
With that being said, Uber had the possibility to change jobs, and the costs for independent drivers by allowing them to enter the market with greater ease. Even though it disrupts the taxi industry, maybe that change is needed, and should be embraced. Just like major companies that need to adapt to new technology and laws to remain competitive against their peers, why should taxi companies be exempt from this?