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The Circle Bastiat

Las Vegas taxi drivers face high tech challenge

Taxis have long been the main transportation method in Las Vegas. Now a San Francisco company called Uber Technologies Inc. wants to challenge their dominance through a transportation service based on smartphones. 

By Douglas FrenchGuest blogger / March 30, 2012

The Las Vegas Strip is seen looking southward from the Stratosphere Tower. The plans of a San Francisco company to introduce a high tech livery service in the city is concerning to local taxi drivers, French says.

Robert Harbison/The Christian Science Monitor/File

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Las Vegas has the reputation as being a libertarian city, but like anyplace else, certain business interests would rather use the force of government to stifle competition rather than compete in a free market.  Cab drivers in Las Vegas have immense political power.  In 2005, then Governor Kenny Guinn vetoed a bill that would have outlawed cabdrivers from receiving kickbacks for delivering customers.

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“Taxicab drivers contribute greatly to the economy of this state,” Guinn said.  “I cannot support Section 133 of AB 505 because it singles out and hurts the financial well-being of taxicab drivers.”

Visitors to Vegas will notice that there is no public transportation from the airport to the hotels, or hotel shuttle buses for that matter.  The Las Vegas Monorail doesn’t even come close to McCarran Airport.  If it did maybe someone would ride it.

Now a San Francisco company called Uber Technologies Inc. wants to challenge the livings of Las Vegas cabbies.  Joe Schoenmann reports for the Las Vegas Sun that Uber offers a high-tech livery service in nine cities.  The company “runs dispatch centers that customers access via a smartphone. To provide the rides, the company partners with licensed companies that use sedans, SUVs or limousines, using those vehicles during the companies’ down time. No cash changes hands — the transaction, including tip, is paid for using the phone.”

Uber provides a smartphone app that allows customers to view a map and follow where their vehicle is and how long before it arrives.

But the problem is that southern Nevada livery services are required by law to charge $40 to $45 per hour, with a one–hour minimum, making them uncompetitive with taxis for short rides.

Uber has never encountered these high minimum charges anywhere else.

The Nevada Taxicab Authority, which regulates the taxi industry, has its eye on Uber, according to Schoenmann.  Charles Harvey, Taxicab Authority administrator, told the Sun, an “unregulated, unlicensed quasi-taxi operator is a concern,” and that the agency is doing research on the company and talking to the limousine regulator, the Nevada Transportation Authority.

Uber could request a lower minimum rate, because the Nevada Transportation Authority approves rates for each operator.  “But even if a livery company figures it can make a profit with a minimum hourly rate of, say, $15,” writes Schoenmann, “sources said opposition from the powerful cab companies would make it difficult, if not impossible, to get regulators to go along.”

Local Taxi-cab strongholds are nothing new.  In the June 1988 edition of The Free Market, Sam Wells wrote,

Taxi monopolies are powerful on the city level.  They lobby government to make new drivers go through lengthy procedures or acquire expensive licenses to own a taxi.  These laws don’t exist to protect the public; they protect a privileged industry from competition and work against the public interest.

The tourism business in Vegas still has not recovered.  Allowing cash-strapped tourists options for transportation would help.

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