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Uber, lyft and other taxis

How Via benefits from new regulations that hurt Uber and Lyft

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The past couple of months have been deflating for the city’s hired-car industry, but not for Via. The Manhattan-based pooled-ride service, the smallest of the city’s app-based operators, appears to have actually benefited from the recent regulatory shocks.

Uber and Lyft raised their fares at the beginning of last month to cover a pay increase mandated by the city’s new minimum-wage regulations for app-based drivers. Via, which functions as a shuttle service with dynamic routes designed to pick up the most passengers, kept its fares where they were. Alone among ride-hail services, its drivers already earned better than minimum wage.

Also in February, the state slapped a congestion surcharge onto cabs and app-based vehicles, adding $2.50 to every taxi ride and $2.75 to each ride-hail trip below 96th Street in Manhattan. Via got hit as well—but with a 75-cent per rider fee, the surcharge for pooled rides.

According to Lyft, its price increase has led to a drop-off in ride requests (Uber declined to comment). The Independent Drivers Guild, which represents app-based drivers, said members are complaining of slower business and a total absence of tips in Manhattan’s congestion zone.

Taxi and Limousine Commission data show a slight seasonal increase in the total number of yellow-cab trips in February compared to January, but it was about half the size of the increase that occurred in the previous year and could be partially due to more drivers being on the road in February.

A person familiar with yellow- taxi data said some cabs were seeing an average drop in trips of as much as 15% in February.

Via, however, reports that its business has been up 15% in the weeks since the new rules went into effect.

“We’ve definitely seen a bump,” said Daniel Ramot, co-founder and chief executive.

App-based service Juno, which has a slightly larger share of the market than Via, did not respond to a request for comment. Industry sources say parent company Gett is trying to sell Juno, which it bought for $200 million in 2017.

For Ramot, the increase in dispatched trips helps confirm the basic premise of Via’s business model, which he and co-founder Oren Shoval set out to prove in 2012: that they could create an economical form of public transportation—a sort of dynamic, on-demand bus system—that would reduce congestion while expanding access to rides by making efficient use of increasingly overwhelmed roadways.

Efficiency pays
Via’s model, which has customers walk a block or two to the pickup point and from the drop-off, works only if the company’s algorithms keep vehicles full.

“To do this well you have to have the right number of vehicles on the road to match the demand,” Ramot said. “And you have to create routes that maximize your ability to fill the seats—which you need if you’re going to run a really efficient public transportation service.”

Via did not have to raise its fares, which already were lower than those charged by Uber and Lyft, because the minimum-wage rules are based on utilization rates, which represent the amount of time per hour that a vehicle is carrying a passenger rather than cruising for one.

The more trips per hour—the higher the utilization rate—the less of the fare the service has to fork over to drivers to ensure they are earning minimum wage. Drivers also are spending less time clogging streets looking for passengers.

Via has a utilization rate of 70%, which doesn’t even take into account that most of the time its vehicles are carrying more than one passenger. Uber and Lyft, meanwhile, are at 58% utilization, according to a TLC-commissioned industry economics report during the summer.

Via drivers earned an average of $22.94 per hour, after expenses, while Uber and Lyft drivers made less than $15, the report said. The TLC now requires that drivers earn at least $17.22 after expenses, equaling the state’s hourly minimum of $15 once payroll taxes and paid leave are factored in.

One aim of the city’s rule is to encourage app-based companies to make their operations more efficient, rather than flooding the streets with vehicles, regardless of whether drivers can make a living, just to give customers shorter wait times.

“Our mission in some sense is starting to align with what regulators and cities and states care about,” Ramot said. “And, yes, that gives us an advantage.”
The advantage is not limited to Via’s business in New York, Chicago and Washington, where the company has been profitable in neighborhoods in which it has been operating longest.

When Ramot and Shoval launched the company in 2012, they were former Israel Defense Forces scientists with doctorates in neuroscience and systems biology, respectively. They had developed algorithms for a dynamic system that resembled a souped-up version of the sherut minivan shuttles in Israel, and they tried to license the software to public transportation agencies around the country.

Unable even to land a meeting, they built the service themselves, launching Via on the Upper East Side in 2013 with a flat $4 fare per rider that soon rose to $5. By 2017, armed with a successful track record and more advanced algorithms based on massive amounts of data, they went looking for deals again. They scored a series of high-profile public-private partnerships, starting with French transportation company Keolis.

German automotive giant Daimler invested $250 million in the company and began producing the seven-seat Mercedes Metris vans that Via now leases, through a third party, to individual drivers as well as to cities as part of its contracts.

By the end of last year, Via had 50 partnerships including ones in Berlin, Los Angeles, Singapore and Tokyo. By the end of this year, it expects to have 200.

Some observers say that despite its achievements, Via is still proving itself.
“The fact that it has had success in New York—which is very difficult—is great,” said Gabe Klein, a former transportation commissioner for both Chicago and Washington and co-founder of business strategy firm CityFi. “Whether that will translate into a nationwide business, I don’t know.”

Scaling issues
The most frequently heard criticism of Via is that its model requires population density to work. Although it now offers rides 24/7 across the five boroughs, a trip to a remote point in the outer boroughs from Midtown, for instance, could run triple the $12 that a shared trip from Crown Heights, Brooklyn, to the West Village might cost.

Ramot said Via eventually could develop a big enough ridership in less-populated neighborhoods to become economical. Until that happens, however, one solution could be to offer a subsidized shuttle service similar to the ones it operates through public-private partnerships in other cities.

He said he is hoping to have a conversation with the MTA about launching such a service in New York.

Klein said he didn’t know how many cities Via could extend its consumer business to beyond New York, Chicago and Washington. In addition, Uber and Lyft continue to work on improving their own pooled-ride systems, and they have the resources to make them more competitive.

And although Klein is impressed with how well Via has handled its microtransit public-private partnerships, he points out that those are still essentially pilot programs, and no partnership anywhere has yet rolled out a full-scale program that might prove the model works.
“The jury is still out,” he said.

Via continues to innovate to keep its edge on the competition, Ramot said, adding that it is still expanding its consumer business, launching in four cities in Europe in the past year, including Berlin and London.

Even though the public-private partnerships are still pilots, they are demonstrating potential. Officials in Arlington, Texas, for instance, would like to see Via expand in the coming years from its current 26-square-mile zone to encompass the entire 99-square-mile city.

“There seems to be support for that,” said Alicia Winkelblech, senior officer in the Arlington Office of Strategic Initiatives. The expansion would mean an increase in Via’s contract to an estimated $8 million from its current $2.1 million.

The city of nearly 400,000 people, located between Dallas and Fort Worth, had no public transportation of any kind when it put out a request for proposals in 2017. It had tried running a traditional commuter bus line but found that too few people had access to it.

“We were looking for a nontraditional, innovative, technology- based solution,” Winkelblech said.
Possibly Via’s biggest selling point was that it could handle everything for a city with no resources to spare and little experience in transportation. The company connected the city to its provider of Mercedes Metris vans, recruited the drivers and runs the software.

The model can change with each city. In Tokyo, Via provides software but plays no part in operations. Such flexibility has been key to the program’s growth.

“You have a full spectrum of ‘transportation as a service,'” said Lior Prosor, general partner at Hanaco Ventures, who was an early investor in Via. “Every city needs a different package.”

Prosor sees a lot of room for growth in what is potentially a much-higher-margin business than the consumer service.

“It could be in hundreds of large cities as well as in thousands, if not tens of thousands, of small cities and towns,” he said. “The number of deployments can be very large and global.”

Source: https://www.crainsnewyork.com/transportation/how-benefits-new-regulations-hurt-uber-and-lyft

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Uber, lyft and other taxis

Michael Cohen was $22M in debt because of his taxi medallions

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Michael Cohen owed $22 million in loans against the taxi medallions he owned — and allegedly lied in order to try to clear the massive debt, according to court documents unsealed Tuesday.

The extent of the financial woes racked up by President Trump’s former personal attorney and fixer emerged in just-unsealed filings related to search warrants in special counsel Robert Mueller’s investigation.

The documents show that federal prosecutors in Manhattan and the FBI were zeroing in on Cohen’s taxi businesses — including “misrepresentations” and omissions he made “in connection with a transaction intended to relieve Cohen” of the $22 million debt.

The investigation, which began in July 2017, found that Cohen lied about income from consulting work in 2017 in order to avoid paying back loans and failed to disclose “tens of thousands of dollars” he received in other monthly income.

“By making these misrepresentations and material omissions, Cohen avoided making monthly payments on his loans, and attempted to fraudulently induce the banks to relieve him of certain repayment obligations and personal guarantees that Cohen and his wife had signed,” the papers said.

It had been previously reported that Cohen was in the hole from borrowing cash from banks and credit unions against the medallions.

The once-rare taxi medallions — which at their peak were worth as much as $1.2 million apiece — tanked to just an average of $200,000 each after ride-share services like Uber and Lyft exploded in the city.

Cohen has pleaded guilty to tax fraud and campaign finance violations, as well as to lying to Congress.

He’ll begin serving a three-year sentence in May.

Source: https://nypost.com/2019/03/19/michael-cohen-was-22m-in-debt-because-of-his-taxi-medallions/

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Uber, lyft and other taxis

Lyft’s driver wage lawsuit in NYC continues

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As Lyft gears up to list its stock on the NASDAQ, the transportation company is facing ongoing litigation regarding driver wages in New York City. Today, a judge denied Lyft’s motion for an injunction blocking the recent ruling that sets a minimum wage for drivers. Still, the judge said she’ll think it over and file a written ruling in the next 30 days. This comes shortly after a number of drivers protested Lyft’s lawsuit against the city of New York earlier this morning.

“We are pleased the judge denied Lyft’s motion to block the wage protection rules for now and we hope she will uphold the city’s rules in her written decision,” Independent Drivers Guild member and Lyft driver Tina Raveneau said in a statement. “Eighty thousand New Yorkers serve as professional drivers for apps like Lyft and we deserve the protection and the dignity of a livable minimum wage. It is like a punch in the gut to us, the drivers who helped build this company, that Lyft stood in court suing to block higher wages at the same time as they moved toward an IPO at a $23 billion valuation. We are finally making more than we have in years thanks to the new pay rules, but Lyft wants to bring it back to the way it was before, poverty wages.”

Lyft filed the lawsuit earlier this year, arguing the new rules give an advantage to Uber, will reduce driver earnings and exacerbate congestion. At the time, Lyft said its suit was “not directed at the law passed by New York City Council, but rather at the TLC’s complex formula for implementation.” Lyft is a proponent of a weekly pay standard but argues the TLC’s approach does not take into account things like drivers who use multiple apps and fluctuating demand.

“We support the New York City Council’s minimum earnings goal, but oppose the TLC’s specific rules because they actually hurt earning opportunities for drivers, and provide advantages to certain companies over others,” Lyft spokesperson Campbell Matthews said in a statement. “We appreciated the opportunity to make our case in court today, and look forward to the judge’s forthcoming ruling.”

The suit came after the NYC Taxi and Limousine Commission in December approved new rules to offer a minimum hourly wage of $17.22 (after expenses) to drivers who work for ride-hailing companies like Uber, Lyft, Via and Juno. The two-year campaign for minimum wage was spearheaded by The Independent Drivers Guild, a labor organization that advocates for drivers. The rules require companies to pay drivers according to a formula based on mileage, time and utilization rate (average percentage of time drivers have passengers in their cars).

Lyft has recently said that it is committed to increasing the earnings of drivers and supports the NYC council’s minimum earnings goal. But it filed the lawsuit, Lyft said in a recent blog post, “to correct the flawed implementation of the law by NYC’s Taxi & Limousine Commission.”

These rules legally went into effect in February. Since then, Lyft says there has been a negative impact on driver earnings. That’s because, Lyft says, the cost for passengers increased 24 percent, which led to rides dropping 26 percent and driver earnings dropping 15 percent. Lyft had to then take “action to stabilize the market largely through the use of passenger discounts. We won’t do this forever, but knew it was important for both the driver community and Lyft while the lawsuit progressed.”

Source: https://techcrunch.com/2019/03/18/lyfts-driver-wage-lawsuit-in-nyc-continues/

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Uber, lyft and other taxis

Gett Could Follow Lyft to IPO Market in 2019

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Israel-based taxi-hailing app Gett Inc. may follow Lyft to the market with an IPO in 2019, reports said.

Ride-hailing company Lyft confirmed Monday it plans to sell 30.8 million Class A shares on Nasdaq in an initial public offering with a price range of $62 to $68 a share. The IPO would value Lyft at between $21 billion and $23 billion, TheStreet reported.

“We will see how Lyft goes, we believe there’s a lot of public capital waiting for the [technology] darlings [Uber and Lyft], but we also believe that our business model makes sense,” Gett founder and CEO Dave Waiser told the Financial Times.

Unlike Uber and Lyft, Gett books rides through established taxi operators, such as New York’s yellow taxis and London’s black cabs. More than half of Gett’s revenue comes from about 20,000 business accounts.

Formerly known as GetTaxi, Gett acquired Juno, New York’s third-largest ride-hailing app by market share in April 2017, but may be trying to sell it off, reported Crain’s, which cited a person familiar with the matter. The source also said Gett was losing $1 million a day in its New York City operation.

Gett is aiming to become profitable in every market in the first quarter of 2019, said investor Vostok New Ventures Ltd, which held a 5.6% stake as of June 2018. Stockholm-listed Vostok reported in a 2018 report that Gett generated $1 billion in revenue and performs 100 million rides per year globally. The app is available in more than 120 cities, including London, Moscow, Israel and New York.

Gett could list its IPO either on the London Stock Exchange or in Israel, Waiser said.

Lyft will market the offering to mutual funds and hedge funds in meetings in New York and other cities. The shares could be priced as soon as March 28.

Source: https://www.thestreet.com/technology/gett-could-follow-lyft-to-ipo-market-in-2019-14899196

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