UberX targeted by cab companies with ad campaign over safety

Cab companies have channelled their anger about a new competitor into a national movement. Seven taxi operators in cities across Canada have launched an advertising campaign to discredit cheaper rideshare services — namely UberX — that threaten to drive them out of business.

The campaign will jump-start this Saturday with a plea to Canadians in the Globe and Mail and La Presse newspapers.

An open letter warns readers to "think" before they take the rideshare route and to be aware of "the risks of using an unregulated service. Is the car safe? Is the driver fully trained?"

The letter also applauds the safety, security and value of the regulated taxi industry where, it states, drivers have proper insurance and certification, and their cars meet all safety requirements.

"I wouldn't get into a plane knowing that there was an amateur pilot that was flying this. I wouldn't get into a train if it wasn't a regulated system … so why would you even take that risk and go into an unregulated vehicle?" asks Carolyn Bauer, spokeswoman for the newly formed Canadian Taxicab Companies group.

Why would you even take that risk and go into an unregulated vehicle?—Carolyn Bauer, Canadian Taxicab Companies group

In a news release, she states people using unregulated rideshare services are "literally risking life and limb."

The UberX factor

The campaign doesn’t target UberX by name, but it’s widely considered to be the biggest threat to Canada’s taxi industry. The rideshare service, the latest incarnation by the U.S.-based taxi alternative company, Uber, already operates in Toronto and Ottawa, and just last week started its engines in Montreal.

UberX uses a smartphone app to connect passengers with drivers who are not licensed cabbies. Those drivers can escape the overhead and licensing costs of the established industry and offer lower fares.

But Uber says its service is safe and reliable. The company states that participating drivers must pass both stringent background and motor vehicle record checks, and that the company carries extra auto insurance on top of a driver’s own coverage.

"In the absence of any regulation on ridesharing, we've been very diligent about making sure we have safety in place," said Ian Black, general manager with Uber Toronto.

But often when UberX drives into town, cab companies and many local politicians are quick to condemn the unregulated service; in Montreal, Mayor Denis Coderre declared it "illegal."

We have to follow the regulations, they don't.—Cabbie Vestas Absa Mwakyeledzi

Fears of UberX coming to Vancouver already have provincial politicians prepping for battle. It has also prompted the city's four taxi companies to file a lawsuit this week to try to block the service from setting up shop there. Uber fired back in a statement, calling the lawsuit "a prime example of the Vancouver taxi industry's singular goal: protecting its own cartel."

Taxi drivers are also on the offensive. Ottawa cabbie Vestas Absa Mwakyeledzi fears the encroaching competition will jeopardize his ability to support his family. "There's a lot of people that make a living at this [whose lives] are at stake and the company, Uber, is not really fair competition for us," he said.

Consumers will decide

But UberX fan and business professor Joshua Gans says that no matter what the critics charge, market forces will decide the service’s fate. 

"One big interest group, consumers, tends to like it. And if they become devotees of Uber or any other similar service, that's going to have some political weight," said Gans who teaches at Toronto’s Rotman School of Management.

According to Uber, Canadians are already flocking to UberX, which, it says, typically costs 30 per cent less than a traditional taxi ride. The company said that since it launched the service this past September in Toronto, it has attracted tens of thousands of users in the city.

Gans tried UberX in the U.S. and said he felt safe thanks to its customer review system: "The thing that keeps a check on safety for Uber is they've got a very strict ratings system. Basically, I get to rate every driver. I don't get to do that with cabs."

But in its efforts to fight off the UberX factor, the Canadian Taxicab Companies group is soliciting customer comment. Its national campaign includes a new website, Taxitruths.ca, which encourages customers to provide feedback: "We want to serve the public. We serve it so wonderfully every day, but if there's things that we need to change, we'd love to hear from you so that we can make those changes," said Bauer.

She said the group also plans to launch a national app for Canadians to hail a taxi.

But Mwakyeledzi, the taxi driver, fears UberX will eventually win out, as long as the service has the key competitive advantage: lower prices owing to less overhead.

"It's not fair competition because we have to follow the regulations, they don't. And that's really the key point. We don't mind the competition, but let's be fair."