Local cabs struggle with rise of Uber

As Uber has become increasingly popular in Durham, some local cab companies have struggled to keep up.

Durham's Best Cab was founded in 1999 by a group of close friends, and it has since become a 15-year stalwart of the Durham taxi scene. However, the company suffered a major hit in August 2014 when Uber and Lyft took off in the Triangle, said to Husam Hasanin, president of Durham's Best Cab.

“It was mostly a revenue issue amongst the students,” Hasanin said. “When students started using Uber, we lost 30 to 40 percent of our business.”

Hasanin added that this took a toll on Durham's Best’s drivers, who struggled with longer waiting times between calls and were unable to sustain their standard of living.

“A lot of our drivers had a hard time making money to maintain their basic life and we had to dig deep into our pockets to try and help them stay afloat,” Hasanin said.

Many Duke students have praised Uber, saying that it is more flexible and efficient than the traditional taxi system.

“I always use Uber because its easier and everything is managed through my cellphone and credit card,” said Diana Arguijo, a freshman.

But it is not just students that prefer Uber to traditional taxi options—many professors have begun using the service as well.

“I’m not sure when I’m going to get picked up, it's stressful and the drivers are often extremely rude and don’t speak English,” Munger said of traditional cab companies. “I also have to give detailed directions about where I’m going, whereas Uber integrates both the payment and the GPS, so I don’t have to tell the driver anything.”

Addressing these concerns, Hasanin said that Uber has pushed Durham's Best to educate its drivers on how to interact with customers. Durham's Best has also created a mobile app to compete directly with Uber. The app includes a description of the customer's cab, the driver’s name and the cab's estimated time of arrival. Customers can now schedule their taxi from the app as well.

“I think we work with the same concept as Uber,” Hasanin said. “Since we started the mobile app, business has improved a lot. The waiting times have decreased, and our efficiency has improved.”

'An unfair disadvantage'

Many taxi companies have complained that they are at an unfair disadvantage compared to Uber. Unlike traditional taxi companies, Uber is not regulated by either Durham or North Carolina, and cab companies argue that the regulation places arduous administrative burdens on them that their competitors don’t need to deal with.

“I have some sympathy for the taxi companies, because they’re playing by the rules, they’re paying their taxes, they’re accepting the regulation, and Uber is getting around all that,” Munger said. “To the extent that the government said that only people with special licenses are allowed to drive to provide transportation, the government lied. The government is not enforcing the rules.”

For a while, drivers feared this uneven playing field would force Durham’s Best to shut down, Hasanin said. He added that pride and legacy were some of the key reasons drivers didn’t leave Durham’s Best when the climate soured.

Hasanin also added that, in the long run, he thinks the unregulated nature of Uber will benefit Durham’s Best and other traditional cab companies.

“Anything that’s not regulated is just going to blow off,” Hasanin said. “Our taxi cabs and drivers must be certified by the state, meaning background checks, drug tests and driving tests. The fare is regulated by the city—there is a certain amount we cannot exceed. Uber does not have this stuff. People who use Uber have to worry about their safety, about surge pricing, and that’s going to have an effect sooner or later.”

To the extent that the government said that only people with special licenses are allowed to drive to provide transportation, the government lied." — Michael Munger

In an email, Uber spokesperson Kaitlin Durkosh wrote that Uber currently has a number of security procedures in place, including background checks, insurance, driver identification and GPS tracking.

"Ensuring the safety of our riders and partners is our number one priority," Durkosh wrote.

While Uber is currently unregulated, it has drawn the eye of legislators in the General Assembly. State Senator Mike Woodard, Democrat, said that the state is definitely looking into the possibility of regulating Uber similarly to taxi companies.

“I’ve been talking with some colleagues about how we might react to this,” said Woodard, who works as an analyst for Duke's Administrative Systems Management office. “If we were to take it on, we would look at registration, background checks for drivers, adequate insurance, surge pricing and the possibility of fees being charged to Uber drivers.”

Woodard added that security is one of the reasons regulation might be necessary.

“I’ve heard people say, 'How do you know who Uber drivers are? Do you keep an eye on them? Do we know what kinds of vehicles they have? Do we have any background checks?'” Woodard said. “I think people are looking for assurances that they’re going to be as safe in an Uber vehicle as they would be in a traditional taxi.”

Durkosh wrote that Uber would be in favor of "smart, sensible regulation" to protect riders.

"[We] welcome the opportunity to work with local and state officials on regulations that encapsulate our innovative new business model," she wrote.

Thomas Powers, an attorney for the city of Charlotte, said that one of the reasons cities currently don’t regulate the service is because North Carolina law prohibits it. Powers said that the 2013 Regulatory and Administrative Reform Act prohibited municipalities from regulating digital dispatching services such as Uber.

Powers also acknowledged the fact that any regulation might serve to decrease the number of drivers who sign up for Uber, but added that this should not be the primary concern of regulators.

“I think the issue is not whether or not it leads to a decrease,” Powers said, “But rather whether the community is assured of the public safety, and that’s solely the concern of regulators. We leave the rest to the private market.”

Impact still debatable

Not all taxi companies have been aversely affected by Uber’s rise. Bell Belahouel, president of Charlene’s Safe Ride, noted that he actually advises his drivers to sign up for Uber in addition to fulfilling their normal duties. In this way, Charlene's Safe Ride has managed to make some money from the increased Uber traffic.

“We encourage all our drivers to sign up for Uber, so if I lose a customer from Charlene's, that customer will come back to us through Uber,” Belahouel said.

He added that Charlene's has taken advantage of Uber’s surge pricing model.

“When requested by Uber, I took someone from East to West for 25 dollars. With Charlene's, it would have been eight,” he said.

Unlike Belahouel, Hasanin has firmly instructed his employees not to sign up for Uber.

“Uber really tries to control the market, and when they control the market they can change their policies,” Hasanin said. “We didn’t want Uber to wipe away our identity, because we also play by the rules, and we didn’t want to break any rules.”

Ultimately, Hasanin said he feared what would happen to the city if Uber does eventually drive out the traditional taxicab industry.

“We are available to everybody. Uber does not serve the underprivileged that live in the city, people without credit cards or smartphones,“ Hasanin said. “In case our kind of company isn’t available, I think a lot of people are not going to be able to make it to their work everyday.”