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Hailing frequencies closed

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Rob Shaw: BC’s decision to reject Uber in Kelowna and Victoria has succeeded in pleasing exactly one stakeholder group – and nobody else.

Almost no one is happy with a new decision by BC’s Passenger Transportation Board to reject Uber Canada’s ride-hailing services in Kelowna, Victoria and other parts of the province outside Metro Vancouver — not the police, anti-impaired driving advocates, local mayors, or the passengers themselves who keep opening the app looking for a ride.

But the taxi sector — with its deep ties to the governing BC New Democrats — is very pleased. It scored a major victory out of the quasi-independent transportation agency with the ruling this week which allows a small number of taxi companies to retain their monopoly control on local transportation services to the public.

Kelowna Mayor Colin Basran publicly declared he was “baffled” by the board’s decision to reject Uber. Victoria Mayor Lisa Helps told her local newspaper she was disappointed, and the city’s growing tech sector has been advocating for Uber for years.

Indeed, in addition to evidence that tens of thousands of people were opening Uber’s app in Kelowna and Victoria hoping for a ride, there was a strong backing of local support for Uber’s application.

The Victoria Police Department, MADD Canada, Ending Violence Association of BC, Tourism Kelowna, Greater Victoria Chamber of Commerce, City of Langford and BC Federation of Students all submitted letters of support to the board arguing in favour of Uber’s approval.

But the Passenger Transportation Board (PTB), which under BC law reviews and approves transportation applications, thought differently.

It took 16 months to analyze Uber’s application, before declaring: “In the current circumstances, however, the Board is not convinced that there exists a public need for the service applied for. Further, the Board considers that the application, if granted at this time, would not promote sound economic conditions in the passenger transportation business in BC.”

It sounds like bureaucratic bafflegab.

But the PTB is required under law to consider those specific things when approving a new bus service, limo company, taxi fleet or ride-hailing operator.

That’s the system BC’s New Democrats kept in place when they reluctantly agreed to allow ride-hailing into the province in 2019.

The party was in a no-win position, buffeted on one side by immense voter interest in companies like Uber and Lyft that operate successfully in many North American cities, and on the other side by long-standing donors in the existing taxi sector who didn’t want the competition and exerted enormous political pressure through some BC NDP Lower Mainland MLAs to try and stop it.

The BC NDP cut a middle position on the issue, allowing Uber and Lyft into Metro Vancouver but only if drivers obtained onerous Class 4 commercial licenses and received approval from the PTB.

The PTB is, on paper at least, an independent public body. But its board is selected by cabinet.

After an uncomfortable bit of tension between government and chairperson Catharine Reid at the start of ride-hailing in 2020, the BC NDP quietly removed her from the role and replaced her with Carmela Allevato, a former lawyer from the BC Teachers’ Federation and Canadian Union of Public Employees, who was also a secretary business manager of the Hospital Employees Union. Her long pedigree working as in-house counsel for BC NDP-friendly public sector unions is much more aligned with the current government’s world view.

That set the stage for Uber’s second application in August 2020, to expand its services outside Metro Vancouver to the rest of the province.

The board felt it couldn’t make a decision on that issue without examining the impact of COVID-19 on the taxi sector first.

It commissioned an independent report that found ride-hailing trips by Uber and Lyft in Metro Vancouver now exceed taxi trips, and that while business for everyone dropped after the pandemic started, ride-hailing companies more quickly recovered than taxi companies. Consequently, ride-hailing companies now have a bigger share of the market.

This might just seem like the way of the world – an antiquated business like taxis overtaken by upstart tech-savvy global ride-hailing companies. But BC’s laws don’t allow that to happen. They pledge to create a kind of artificial equilibrium in the market, and to prop up the taxi sector into a position of competition even if passenger choice and basic economics don’t support it.

That creates all sorts of bizarre and complicated situations.

One is a driver shortage. BC businesses in all sectors are facing labour shortages, with restaurants and retail outlets having to boost pay and benefits to attract limited applicants.

But those simple market economics don’t apply in taxis.

“In normal conditions an equilibrium will be reached,” wrote consultant Dan Hara in his report the PTB used to make its decision.

“But, during an ongoing driver shortage, it is possible that taxi company margins will be squeezed by fixed meter rates to the point where they cannot retain drivers even though taxi demand justifies it. The drivers will then tend to move to TNS (ride-hailing companies) where the hourly earnings are higher because of the higher average rates and the high customer demand.”

Put simply: A limited pool of drivers can make more money at ride-hailing companies, and so they are increasingly choosing to drive with them in Metro Vancouver.

Sounds reasonable, but BC’s bizarrely-regulated transportation system can’t allow that to happen, because it has to maintain faux-balance in the market. So the PTB makes decisions designed, in part, to push some drivers back into lesser-paying taxi jobs by shooting down expansion of ride-hailing vehicles that could pay drivers more because they provide a service the public actually prefers to use.

It makes very little sense – unless you are in the taxi sector, or a BC New Democrat, apparently.

The government thought it got rid of its political headache on ride-hailing in 2019. But this latest PTB decision shows there’s still major problems in the system that it will one day have to address.

Rob Shaw has spent more than 13 years covering BC politics, now reporting for CHEK News and writing for The Orca. He is the co-author of the national best-selling book A Matter of Confidence, and a regular guest on CBC Radio.

rob@robshawnews.com

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