Los Angeles Mulling Idea Of Uber-Like App To Make Taxi Industry More Competitive

Two weeks after Los Angeles and San Francisco sued Uber for an array of issues, one of the cities is mulling the idea of making their own taxi system more like the ride-sharing service with a mobile app that would allow customers to hail and pay their fare with the press of a button.

The Los Angeles Times reports that three years after Uber hit the streets in Los Angeles, the city’s Board of Tax Commissioners is set to vote on an order aimed at leveling the playing field between traditional taxis and the increasingly popular ride-sharing companies.

Since Uber and other ride-sharing companies Lyft and Sidecar began operation, the city’s nine licensed cab companies have reported a 21% drop in trips in the first half of 2014 compared to a year ago.

In attempt to recoup some of those trips, city officials have proposed an order that would require drivers to use a mobile app that would essentially create a more Uber-like taxi system.

For passengers, the new app would allow them to hail a cab and pay their fare from the phone. Riders could also review drivers and share their experiences with fellow travelers.

The new app would also reward drivers for their efforts in servicing lower-traffic areas. If drivers provide more service to those neighborhoods they could be earn trips to LAX, where transportation officials say drivers can earn half of their take-home pay.

Taxi regulators say the proposed app would create a more efficient supplement to traditional taxi dispatching methods used in the city.

Taxi commission president Eric Spiegelman tells the Times that new app would make using city cabs easier for consumers because GPS technology would connect drivers with the nearest fare, something that is currently unavailable through traditional dispatch systems.

Additionally, regulators say the new app could create a safer environment for passengers and drivers.

For example, if a driver were to receive a serious moving violation or was accused of a violent crime they would be cut off from using the app.

Officials say the app would also create a more streamlined process for reviewing consumer complaints, as the issues would be instantly submitted to the taxi commission for review.

Still, even if the proposal gains approval from the Taxi Commission Board in January, it might not be enough to provide a turnaround for the taxi industry, specifically its bottom-line and driver take-home pay.

The Times reports that taxis in Los Angeles charge $2.85 when a ride begins, and $2.70 for each subsequent mile, while Uber and Lyfy charge $0.80 for a base fare and $1.10 per mile or $0.21 per minute.

Jacqueline Leavitt, a UCLA Luskin School of Public Affairs professor, tells the Times that studies have shown many Angelenos believe that cab companies rake in huge profits based on their fares.

But while the cab companies do well, Leavitt says most drivers barely get by because of their status as independent contractors who must pay for their own gas, insurance, cars and dispatch services before making a profit.

For that reason, Spiegelman says it’s unlikely that taxi fares would decrease with use of the app.

L.A. seeks to keep taxis competitive with Uber, Lyft [The Los Angeles Times]

Want more consumer news? Visit our parent organization, Consumer Reports, for the latest on scams, recalls, and other consumer issues.