CEO's Message
Imagine you’re an established restaurant owner that over the years has invested hundreds of thousands of dollars in infrastructure, equipment, and supplies. Layer in monthly expenses for labour, training, rent, marketing, taxes, insurance and other fixed costs, it literally took years for you to realize a return on investment, especially given the relatively low margins in this highly regulated sector.
One day, a private homeowner down the street uses a universal app to attract hungry patrons from across the city to his pop-up diner to serve essentially the same food as you’re serving. Night after night until the wee hours of the morning, diners flock to this new ‘
eatery’ because the food and personal service are decent, the atmosphere less formal, and the prices slightly or well below what you’re able to offer.
The pop-up proprietor fancies himself as a chef but has no formal training,
Serving it Right or
Food Safe certifications, business license, or commercial insurance, nor is his home zoned for commercial purposes or regularly inspected. Yet, it appears he’s essentially given carte blanche to do whatever he wants while you’re left with all the same costs and restrictions as any licensed business, not to mention a dwindling customer base.
As a veteran restaurateur, you accept that consumers desire other options, but remain concerned that you can no longer compete because of the legal obligations you’re bound by under city and provincial regulations. Although competition is inevitable and even welcome at times to spur innovation and continual improvement, in this case you have no choice but to either tolerate the rogue operator, shutter your restaurant, or lobby for changes that allow for both types of dining formats to exist on a relatively even playing field.
Sound familiar? That’s because this scenario is similar to the one being played out by ride-hailing proponents and the commercial passenger transportation sector, specifically the taxi industry. While one is bound by extensive regulations and expensive entry and operating costs, the other is seeking to operate with little or no restrictions under the guise of consumer demand in today’s gig economy. At the very least, that appears to be the goal of transportation network companies (TNCs) who manage ride hailing services.
Let’s pause for a minute to consider other actual tourism examples for the sake of argument. Thanks to technology and the proliferation of apps, one can find and book services online for unlicensed, uncertified, and underinsured fishing guides, boat charters, whale-watching excursions, accommodation, or any number of ‘experiences’.
Many people fall for slick marketing by ‘legitimate tech platforms’ and getting a better deal…which seems fine until something goes awry like the house burning down or the boat sinking. Unfortunately, without consumer protection in the form of regulation, there is little or no recourse to recover the damages in these rare but real scenarios.
Back to the restaurant analogy…allow me to pose a few questions. Is the pop-up diner a commercial operation (i.e. defined by a consumer paying an individual or entity for delivering a service)? Should it be bound by similar regulations as the neighbouring business? Why or why not? Can both exist and thrive? If so, how? Should extensive regulations applied to restaurants be relaxed? Should anyone, anywhere be allowed to operate an in-home, pop-up, unregulated diner?
To be sure, there are many other questions like these that can be applied to multiple scenarios within the sharing economy.
As for ride hailing, the big question for TIABC has always revolved around how,
not if, both TNCs and traditional commercial passenger transportation providers can co-exist in British Columbia. To that end, what are the primary factors to consider?
For starters, we know that consumers like and want ride hailing. Among other reasons, it’s convenient, provides quick access to services, is typically more affordable, has transparent advance payment options so passengers know how much they’ll be charged, and a ratings system that works for both drivers and customers.
At the same time, we’re keenly aware that ride hailing raises many legitimate concerns. For example, passenger safety, as well as driver experience and training; inadequate insurance coverage for drivers, passengers and third parties; variable demand pricing that exponentially increases rates during peak times; and increased traffic congestion as more commuters forego public transit.
In the context of these pros and cons, the debate revolves around whether TNCs should be given a clear and easy path to enter the commercial passenger transportation sector without applying similar regulations to those of existing providers. Based on the restaurant analogy, the short answer is no.
Conversely, should we change some of the regulations for taxis to allow them to continue to operate in this evolving transportation sector? The short answer is yes. And it's why TIABC has called for extensive changes to regulations governing the taxi industry, as well as other passenger transportation services in British Columbia. It stands to reason that applying certain regulations to TNCs while eliminating others for taxis is one way to somewhat level the playing field to allow both services to thrive.
The BC government has been taking its fair share of criticism for introducing ride hailing regulations that they believe make both taxis and TNCs viable. Unlike some of our tourism industry counterparts, TIABC supports government’s well thought-out rules to maintain the safety and security of all stakeholders. Regulations are put in place to protect consumers, industry sectors and individual businesses…sometimes even from each other. At the same time, we subscribe to the notion of avoiding onerous regulations. Generally speaking, less is more…but not always, and particularly not for ride hailing.
The introduction of ride hailing regulations was long overdue. But in our view, taking the time to study new data, conduct extensive consultation, and review the best and worst implementation examples from all over the world, has allowed BC to unveil the right framework for TNCs to co-exist with taxis for the benefit of residents, workers, businesses, and visitors.
We anticipate that we’re a few months from seeing regulated ride hailing officially rolled out in British Columbia. Those who wish to supplement or augment their income by driving passengers from one point to another will do so by overcoming the
sky is falling barriers and submitting to regulations such as a Class 4 license…the same minimum standard as other commercial passenger drivers.
In the meantime, as witnessed all over the world, TNCs will likely continue to fight to eliminate so-called barriers to entry while also attempting to avoid regulations and taxes. Then once established, they’ll endeavour to squeeze out established commercial operators by undercutting rates and flooding the market with drivers whose incomes are temporarily supplemented by the TNCs themselves until investors tire of losing billions of dollars annually.
Many ride-hailing proponents want to simply hand the proverbial keys to commercial passenger transportation services to TNCs regardless of the implications or the cost. Fortunately, it appears we're avoiding mistakes other jurisdictions have made that didn't bother to apply the regulation rigour that BC has.
If you take nothing away from this message, please hear this: Even though the BC hotel and taxi sectors are valued members of TIABC and we advocate for their interests, we are not against ride hailing or short-term vacation rentals. Nor are we adversaries to the technology platforms that promote these services. We are, however, opposed to some of their business practices, especially given the absence of regulations.
In my view, no company in the tourism space should get a free pass to conduct business here to the detriment of the regulated sectors and businesses whose billions of dollars in investment have literally paved the path for these services to set up shop here.
Regulated ride-hailing makes sense. Let's get moving.
Walt Judas
CEO, TIABC
