Chicago taxi owners honking mad about Uber's cab-hailing app, service

City Hall in middle as taxi industry claims startup isn't playing by the rules

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Chicago's taxicab owners, led by business partners Pat Corrigan and Michael Levine, are throwing everything they can at a technology startup called Uber.

The app is disrupting the taxi industry nationwide by allowing people to directly hail cabs or town cars with the touch of a few buttons on their smartphones. That means no more flailing on the curb or sitting on hold waiting to speak with a dispatcher. The exception might be when it's raining.

Uber bypasses old-line dispatchers, placing it and similar apps (Hailo, SnagCab) among the most-liked online technologies because they reduce passengers' wait times and allow them to prepay on a credit card. Receipts are emailed and no cash is exchanged, although a mandatory 20 percent tip is added to the bill.

Drivers who have signed up with these dispatch apps rave as well, saying they reduce their time hunting for passengers and eliminate their own payment hassles.

But taxi operators, including Corrigan and Levine's large affiliate network, which includes brands from Yellow Cab to Blue Diamond, and the city's largest taxi medallion owner, Simon Garber, have banded together to try to beat back Uber. One of the threatening aspects is Uber's town car service, in which a Mercedes or Lincoln arrives at the speed of a taxi.

"The technology has made limos viable alternatives to taxis," said Uber CEO Travis Kalanick. "And the taxi industry is not used to having an alternative. It's not used to having to compete. It's used to going to city officials and lobbying them to protect their business and keep competition out. And that has resulted in poor service in most cities across the country."

In the middle is City Hall, which regulates Chicago's taxi industry and reaps millions in annual fees from it. The city is trying to ensure Uber follows the rules — ahem, doesn't crush established players to the point that it threatens city revenue — but also flourishes.

Tech startups like Uber further burnish Mayor Rahm Emanuel's effort to position Chicago as a hub of innovation and entrepreneurship.

Emanuel's policy chief, David Spielfogel, wants Uber to stay.

"We did point out a few things they had to change, but we haven't found any significant regulatory issues on the taxi side of the service," he said. But using the app to hail a town car, known as Uber Black, is another matter. Spielfogel said city officials are trying to "find a way to preserve the innovative nature of Uber, which makes it much easier to get around the city, while also respecting federal and local laws."

Spielfogel, who is the point person on this issue for Emanuel, said the city will try to find "a middle ground" during the first quarter of 2013.

Corrigan and Levine have lined up a bevy of powerful figures to press for the approval of proposed regulations that would shut down Uber's town car service. Corrigan and Levine have hired Norma Reyes, who ran the city's Department of Business Affairs and Consumer Protection for seven years under former Mayor Richard M. Daley. The department is now led by Rosemary Krimbel, Reyes' former deputy.

They've also retained a lobbyist, Jay Doherty, who is better known as the president of the City Club of Chicago, which books government officials and policy experts as speakers. He is helping open doors at City Hall for Corrigan and Levine.

Then there's ASGK, the politically connected public affairs firm. The taxi industry has retained it too. And there are lawyers, who have filed a federal lawsuit against Uber on behalf of the taxi industry, as well.

Uber, meanwhile, is arriving in cities around the country and not asking permission first.

"In effect, Uber is mooching our cars, our insurance and our infrastructure," Corrigan, who lives in Connecticut, said in a phone interview in which he answered few questions due to the pending lawsuit. "And they're not even licensed (as a taxi company) even though they make all of their revenue from drivers delivering transportation services and not the app."

But Uber is figuring out how to fight back. The San Francisco-based startup has applied for and received a dispatch license.

It also just hired a lobbyist, Chicago lawyer Michael Kasper. Kasper helped Emanuel defeat a legal challenge that would have removed him from the 2011 mayoral ballot. In June, the Chicago Sun-Times reported that Kasper's business has boomed ever since.

Kalanick said Uber plans to allow customers to select the amount of gratuity they pay an Uber driver. That would wipe out one of the taxi industry's complaints, which is that Uber violates a city code that makes it "unlawful for any person to demand or collect any fare for taxicab service which is more than the rates established by the ordinance. ..." (For now, the 20 percent gratuity is automatic, and Uber takes 10 percent of the metered fare, which is equivalent to half the gratuity, as a marketing fee.)

Uber, however, has little need for public relations help. It has easily leveraged its devoted customers and drivers. The company collected 6,000 signatures on a petition submitted to City Hall last month after the consumer affairs department proposed regulations that would shut down Uber Black.

Still in dispute is whether Uber Black is legal. The taxi industry cites in its lawsuit city code, which states that it is "unlawful for any person to operate or drive a (livery) vehicle equipped with a meter that registers a charge of any kind." Kalanick, seemingly splitting hairs, argued that Uber's GPS-enabled iPhones, which track a car's location and are used to help calculate the fare, do not meet the definition of a meter.

"We have a dispatcher; I have permits, certificates," said Garber, who lives in New Jersey and is president and CEO of Chicago Carriage Cab Co., which operates about 800 cabs in the city. "Everything follows consumer service rules. (Uber) comes in without complying. I don't think it's fair. Anybody doing business in America should follow the rules and laws. That's it. It's very simple. And as long as they don't follow rules, I don't think they should be in business."

Garber's industry could apply even more pressure. In addition to pursuing its lawsuit if city regulators act in Uber's favor, cab owners could impose greater restrictions on the drivers who lease their vehicles. The restrictions could include a ban on using apps, such as Uber or Hailo, according to an Oct. 29 letter from Krimbel to Levine.

But Uber Black driver Antonios Pouyoukas, a 65-year-old former semitrailer driver, doubts such pressure would work.

"The technology, there's no stopping it," he said.

History would seem to support that claim.

Melissa Harris can be reached at mmharris@tribune.com or 312-222-4582. Twitter @chiconfidential or facebook.com/MelissaMHarris.

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