Business

Cabbies draw support against Uber, Lyft

Ride-sharing services such as Uber, Lyft and Sidecar have stormed into the paid-transportation business with superior price points. But now, with the help of local politicians, cab companies are striking back.

On Tuesday, Los Angeles City Council members Paul Koretz, Gilbert Cedillo and Paul Krekorian threw their support behind state Assembly Bill 612, as angry cabdrivers protested at City Hall. If the bill is passed, it would force ride-share services to have the same requirements as traditional cab companies. That includes vehicle inspections, drug testing, background checks and primary insurance for all its drivers.

Koretz, councilman for District 5, said the bill will make these services safer to riders. “The insurance isn’t adequate, the background checks aren’t adequate, and we’re finding there are felons on the road,” he said.

Uber released a statement calling the protest an attempt to “distract from the facts.”

“While Uber is focused on offering a safe, convenient and reliable transportation alternative, Big Taxi is choosing to spread misinformation and line their pockets,” the statement said. “This legislation is not about safety or consumers; it’s about protecting entrenched Sacramento special interests from competition. Californians across the state support innovation, consumer choice and economic opportunity – it’s time for the legislature to listen to the voice of people over the voice of the status quo.”

Since Uber sprang up in March 2010, that company and other smartphone app-driven transportation services have grown rapidly. Uber and its lower-cost UberX provide services in 40 countries and 58 U.S. cities. The company has been in Los Angeles for two years and in Orange County since September.

Last Friday, Uber said it had raised $1.2 billion from investors, giving the company a stunning $18 billion total valuation.

While traditional cabs are regulated by cities and counties, ride-share services are looked after by the California Public Utilities Commission. Among other things, cabdrivers are required to have permits to pick up customers. Uber lets passengers pay without cash, through Internet accounts, and eliminates tips.

That has disrupted incumbents such as Gardena-based Yellow Cab. Now that company is throwing its weight behind the bill, said Marco Soto, Yellow Cab’s vice president of marketing and public affairs. He said Uber and other companies are able to avoid buying insurance that his company and others are required to have.

“They’re able to undercut the price of taxicabs significantly because insurance is a third of the cab company’s cost structure,” Soto said.

Contact the writer: williamdurso@losangelesregister.com or 562-453-7332

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