Peer-to-peer car-sharing company FlightCar has a nifty business model: combine the need for airport parking and airport car rental into a company the facilitates the sharing of resources. I’ve written about them a few times. The basics: Car owners get free airport parking, a car cleaning and a gas card, while visitors get inexpensive car rental and a wide array of vehicle types to choose from.
Last month, the City of San Francisco and the San Francisco International Airport formally filed a complaint against FlightCar in court. They want FlightCar to pay as if they were an airport car rental company, and are seeking 11.1 percent of FlightCar’s profits and $20 per rental. FlightCar currently uses a contract limo service to deliver car owners and renters to and from the airport which requires them to pay $3.65 per trip to the airport. A single rental requires four trips: 2 pick ups and 2 drop offs, so every rental results in $14.60 in payments to the airport.
This move by the City of San Francisco and SFO signals to other startups that they are not interested in innovative solutions to transportation and infrastructure problems. Its important that the Bay Area continue to be the location where new technology is launched and incubated, and not seen as over-regulated or a place where outdated regulations are enforced to prop up existing business models.
For many car-owners and car-renters, FlightCar will be the first time they use a car-sharing service. Car-sharing has been shown to reduce vehicle miles traveled and car ownership because it makes not owning a car a more convenient option. Exposing more people to car-sharing will likely lead to increased use of car-sharing.
This isn’t the first time a new transportation technology has faced legal challenges, and FlightCar will likely find other legal issues as they expand to additional airports.
The full complaint against FlightCar is below:
2013-05-31 – Complaint for Injunctive and Other Relief
Peer-to-peer ridesharing services have already had many legal challenges as they disrupt existing transportation services and work within regulations that were not written with them in mind.
On June 26, Lyft, Sidecar and Uber received cease-and-desist letters from the Los Angeles Department of Transportation (LADOT). (full letters here, here, and here). They already went through a similar situation with the California Public Utilities Commission (CPUC) last year. After negotiating with the CPUC, an agreement was reached in January of this year allowing all three companies to operate in the State of California.
LADOT threatened in the cease-and-desist letter that it would arrest drivers and impound their cars for up to 30 days, although this has not happened yet. All three companies continue to operate in Los Angeles. Lyft is asking anyone who enjoys using their service in Los Angeles to contact key city officials to voice support.
In spite of any California setbacks, Lyft announced their San Diego launch on July 3rd. Lyft now operates in three California cities: San Francisco, San Diego and Los Angeles as well as Boston, New York and Chicago.
On the same day as the California Public Utilities Commission (CPUC) reached an agreement with peer-to-peer ridesharing service Lyft, it also signed an agreement with on-demand limo provider Uber to allow them operate ridesharing services while the CPUC’s rulemaking process for ridesharing is underway.
The New York Times reports that Uber CEO Travis Kalanick said that Uber will start to incorporate ridesharing into its app in California.
Including Uber, there will be four peer-to-peer ridesharing services in San Francisco: Lyft, Sidecar and Tickengo being the other three.
Uber gets to navigate arcane local, county and state laws and corrupt taxi monopolies in every city where it launches. Denver is no exception.
The Colorado Public Utilities Commission has proposed regulations that will make transportaion services like Uber effectively illegal (or too costly to be viable).
- Non-taxis can only be chartered by time, not distance (section 6301)
- Non-taxis can not be located with 200 feet of a hotel, motel, restaurant airport, or bar, effectively excluding non-taxis from dense areas of cities (section 6309)
- “partnering with local sedan companies will be prohibited” – not exactly sure how this is interpreted, but it sounds bad (section 6001 ff)
It will be interesting to see how this proceed. At this point, Uber has become fairly accepted in most other major US cities, after several other legal battles.
Peer-to-peer ridesharing company Tickengo has retained former San Francisco mayor Willie Brown to serve as their legal council in dealing with the cease-and-desist letters that the California Public Utilities Commission (CPUC) has been sending lately. According to Forbes, Brown is suggesting that it be legal for private citizens to offer peer-to-peer rides in their car and collect “donations” for this up to a maximum of the full cost of car ownership. AAA puts this at $8,776/year for an “Average Sedan” in an average location. As soon as drivers earn more than this in a year, they would become illegal under Brown’s proposed rules.
There are a few problems with this approach:
- Will users with more expensive cars (which cost more to own) be allowed to drive more than users with smaller, less expensive cars?
- Owning a car in a dense metropolitan area can be significantly more expensive than average, with parking and insurance costs being higher
- What if a driver owns more than one car? Will they be allowed to use one car up to the $8,776/year and then switch to their second car?
- Will this maximum apply to the driver or the car? Can the same car be used by someone else to achieve their yearly maximum?
Tickengo competitors Lyft and Sidecar did not follow the CPUC’s cease-and-desist letter (and $20,000 fine) arguing that the they don’t actually operate the cars or employ the drivers. These are just technology companies matching people up for carpooling (much like the government sponsored 511 Ridematch attempts to do). Tickengo removed its “instant ride feature” and the CPUC subsequently dropped the cease-and-desist. Lyft announced today that they have reached an interim agreement with the CPUC that allows them to operate while the CPUC debates rulemaking for ridesharing in California. (see official letter)
The CPUC doesn’t regulate “passenger vehicles carrying passengers on a noncommercial basis” – so the question is whether or not peer-to-peer ridesharing is commercial. If it turns out that matching up drivers and riders is illegal this may also imply that the Bay Area’s casual carpool is also illegal. It may also mean hiring a Task Rabbit or Exec to drive you somewhere isn’t allowed either.
Tickengo currently supports trips in six other non-california cities as well as Los Angeles, so even if ridesharing is declared illegal in California it can stil flourish elsewhere. However, given San Francisco’s compactness and high proportion of tech early-adopters, not allowing innovative transportation to operate in California would make it more difficult for services like Tickengo, Sidecar and Lyft to get off the ground.
If you haven’t yet tried peer-to-peer ridesharing, give it a try. A high-quality ride with reliable pickup, and the suggested donations end up being less-than-taxi prices.