Will Madrid be next?
By Don Quijones, Spain, UK, & Mexico, editor at WOLF STREET.
Less than a year has passed since Uber returned to Barcelona, after a three-year leave of absence. But it’s already planning to leave the city again in the wake of renewed conflict with the city’s highly mobilized taxi drivers as well as the passage of unfriendly regulation.
Late last week the Catalan regional government unveiled legislation that would force customers to request the services of ride-sharing firms 15 minutes before travelling. It wasn’t enough to placate the taxi representatives, who wanted the period to be extended to between 12 and 24 hours. Donned in yellow vests reminiscent of recent anti-government protests in Paris, they called a strike on Friday and hundreds of taxis occupied Gran Via, one of Barcelona’s two busiest thoroughfares, bringing traffic to a standstill.
In retaliation hundreds of Uber and Cabify vehicles occupied a key section of the city’s other main artery, Avenida Diagonal, resulting in three days of gridlock.
On Tuesday representatives of Uber and its Spanish rival Cabify announced they were considering abandoning Spain’s second largest city after Catalonia’s regional government unveiled legislation that would force clients of ride-hailing services to book their vehicle an hour in advance, which would essentially negate the whole point of operating a ride-hailing service in the region. Some are calling it a de facto eviction.
At 4 a.m. today, the taxi drivers voted to accept the regional government’s proposal to force customers to book ride-share services an hour in advance.
Even more worrisome for Uber and Cabify, Madrid taxi drivers are also on strike and are calling for a similar clampdown as the one proposed in Barcelona. On Wednesday the striking taxi drivers targeted Madrid’s annual international tourism fair, one of the biggest in Europe, as hundreds of them parked their cars outside the conference center where the event was taking place, hampering the arrival of participants.
If the City’s authorities capitulate, thousands of Uber and Cabify jobs could be on the line. Representatives of both firms have made it clear they will seek damages for their drivers and any lost business. In Barcelona alone, the total bill for compensation, including interest, could reach as high as €1.2 billion according to a study by Ernst&Young. It’s a bill that will inevitably be picked up by Spanish taxpayers.
In Spain the central government has given regional and local authorities carte blanche to set legislation for ride-hailing vehicles. Barcelona has long been unfriendly territory for the likes of Uber and Cabify. Uber’s three-year absence from the city was triggered by regulatory issues as well as the hostile welcome it received from local taxi associations.
If Uber thought its return to Barcelona in April 2018 would be less fraught, those hopes were quickly dashed when dozens of advertisements announcing its return with the words were defaced by taxi drivers. Alberto ‘Tito’ Álvarez, spokesperson of the taxi Elite Taxi Barcelona, delivered a stark message to the company: “Uber and Cabify drivers, welcome to hell!.”
But Uber would not be deterred. With its huge tourist influx and potential for business, Barcelona was a highly coveted market. When it announced its return to the city last April, the company tried to strike a more conciliatory approach by meeting with representatives of Catalonia’s regional government, parliamentary groups, competition regulators and also with the Barcelona City Council.
But Barcelona’s taxi drivers were not mollified. Last July, at the very peak of the city’s high tourist season, they called a week-long strike to protest against the number of rideshare vehicles on the streets and failure to enforce national regulations that are supposed to limit private hire vehicle numbers.
By Spanish law there is supposed to be a maximum of just one ride-hailing vehicle for every 30 taxis on the road licenses but in many places that number is much higher. In Barcelona the ratio of taxi licenses to VTC licenses, the permits that enable ride-hailing vehicles to circulate, is 4.8 to 1 while in Madrid it is just 2.4 to one. In Spain as a whole there are 66,000 taxi licences compared to 13,000 VTC licenses, according to the Ministry of Trade and Industry.
Spanish authorities have clearly not been abiding by their own rules. Due to loopholes in Spanish law, companies have managed to rack up indecently large profits by buying up batches of VTC permits from local councils for as little as €32 a piece and then selling them on in the secondary market for tens of thousands of euros. In Madrid VTC licenses can sell for as much as €65,000 each.
Taxi driver associations complain that the ride-sharing vehicles flout the law in other ways, including by fishing for customers in the street without being formally hailed. There’s also frustration at how Uber and Cabify are able to operate under less onerous regulations, while also paying little, if anything, in taxes. Arguably the biggest competitive advantage rideshare giants like Uber enjoy over local taxi firms is their ability to burn through cash at a blistering rate. With deep-pocketed investors eager to subsidize each and every ride, Uber can operate well below cost by offering customers rates that taxi companies have zero hope of being able to match. By Don Quijones.
“Peak Tourism” has already set in. Brits account for 22% of tourists in Spain. Now add Brexit. Read… Brexit’s Ironic Twists Hit Spain’s Biggest Industry
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So once the investors money dries up… then what?
These taxi drivers are digging their grave? Order an hour ahead? Who the hell do they think they are dictating how a consumer is to purchase a service. No wonder, everyone hates them. Never had a good experience with traditional taxi. Never used them that I have a choice. I would rather pay more for Uber than ride in a taxi.
uber and lyft openly violate state laws with impunity in u.s.
sad to see what happens when no one follows LAW
yet if you or I try to do it – we get bitch slapped by govt
Shortly before they run out of cash they IPO to cash out and dump the business on uninformed investors who “want in on Uber”. All the early investors and employees cash out and laugh all the way to the bank while the stock plummets shortly afterwards. At least that’s my theory. Why anyone would want in the IPO at any price let alone the prices being thrown around is baffling to me.
Used Cabify for a trip to the airport in Madrid. Service was outstanding and incredibly cheap. I think I paid about 6.50 Euros for a 25 minute trip. No way the driver could buy fuel, maintain the car and pocket decent money at that rate. So I’m guessing Cabify is subsidized also.
Yes, they are happily burning through capital kindly supplied by VC and PE. The biggest investor however is Rakuten, which is also heavily invested in Lyft. Rakuten has been throwing money around like confetti lately, including investing a few millions in MetroResidences (think the SE Asian rival of AirBnB), Bitnet (exactly what you think), Acorns (“invest your spare change automatically!”) and much more. For Rakuten this is basically free money (courtesy of the Bank of Japan) and if one of these companies becomes the next Netflix they’ll make the proverbial killing.
Well either Taxi service is regulated or not. I was just having this conversation with a driver an hour ago. They pay a biggish price for a licence, numbers are tailored… then you start selling new licences to competitors and sure someone is going to feel conned. The alternative is a free market in taxi services, but I think that might result in a chaos. Do you picture authorities returning licence and investment costs to established drivers ? Also taxi is one of those traditional services, along with say rail or water, which fall into the category of more or less essential services to the public, and hence carry something of a notion of being a public service in terms of being regulated to many people. Not really arguing either way, you go from unicorn eating zombies through to speculative slave-tech, and taxi drivers put themselves out enough on that front I think…
Taxi drivers simply have to out last free money from Central Banks.
Stravation is more likely to happen than free money disappearing!
Proper regulation would better serve the public, protect the income of the drivers, exclude racketeers, and make the government look good.
It wouldn’t be that difficult to do, but unfortunately regulations so rarely enacted to accomplish reasonable purposes that it’s difficult to come up with any examples.
That can usually be attributed to competing corrupt influences in government. For that it is easy to come up with examples, discussion of which normally results in heated arguments.
Seemingly, Spain is ungovernable as a matter of pundonor, a point of honor, like Texans squared. The best parts of the country are those containing remnants of the enlightened Moorish culture before los Reyes Católicos took over, if you can avoid the tourists.
Where the cab drivers are obvious scammers that refuse to adhere to the rules (Kuala Lumpur, I’m looking at you), I’m okay to use ride-sharing. Serves the cabbies right! Elsewhere, I prefer taxi drivers.
See, here’s my reasoning. Taxi drivers have tried to do everything according to the law. They subjected themselves to training, regulation, extra costs around getting a taxi license, and so on. They went through all that to be a taxi driver. Don’t they deserve some recognition for the extra work and effort? A ride-sharer driver isn’t regulated, can basically behave however s/he wants, works for shit wages, and is being exploited by Silly Valley “unicorns” who have as much humanity in their entire bodies as my dog has in a single hair on the tip of her tail. It’s a completely warped and evil economic model. Why should I help perpetuate it?
I always talk to taxi drivers wherever I go. It’s a tough life, from Silesia to Singapore, and I think they deserve support. As a woman travelling by herself half the time, I don’t mind paying extra to support them and their families and to feel a bit safer myself. My husband agrees.
Automated taxis are immanent. Humans are the weakest link.
But computers do not vote and do not take to the streets beating on their pans.
Yes, lets make sure that all those ‘weakest links’ are starving and unemployed. That’s progress! At least the corporate world thinks so.
Glad to hear those drivers already have their yellow vests. Sounds like they need them to keep from being run over by rapacious companies who want to destroy their lives.
Driverless cars on the highway is easy
Driverless car between some hotels and convention center/airport is possible
Driverless car between two random city addresses is not something i expect to see in the next two decades.
The Uber’s of this world have some excellent technology which has shaken up the ability to hire a ride. No more standing in the rain waiting for a vacant black cab in London. (when it rains in central London you have better odds on the Lottery than finding a vacant cab!!).
However this technology is also used to avoid taxation because all of Uber UK’s credit card billing is done through Amsterdam in Holland and the payments to the drivers is made from Holland to driver bank accounts in the UK OR ELSEWHERE. Uber fees are are not subject to UK tax because they pop up in Holland and then get forwarded elsewhere.
The EU investigation in to Apples EU financial merry go round found that a substantial amount of Apple earnings in the EU ended up in a “brass plate” company in Ireland which was not registered in any tax domicile.
Your black cab London taxi driver spends up to 2 years “doing the knowledge) which is learning from memory where every street in London is. Your Uber driver needs a satnav to find where they are going!!
Which Uber technology helps against the flood of users when it rains?
Having to many drivers to be profitable is not technology.
When it comes to southern Europe, I’d be much more trusting of an Uber driver than a regular taxi driver. I remember in Rome being cheated by a taxi driver who I had handed a large bill. He switched it rapidly into a small bill, saying I had shortchanged him. I thought I had made a mistake and I gave him another bill. Only when I was in my hotel room did I realize what I had done.
The primary reason ride share services exist at all is that there is a shortage of transportation available. If taxis are an essential service than one would expect that as a population grew the availability of access to that service would also increase. This has not happened with taxi services, usually due to those who control that service trying to limit competition. If a service cannot keep up with demand or technology they should expect competition, and forcing the customer to adjust backwards to profit an obsolete business model rarely has a satisfactory ending. The idea that 66,000 taxis can provide all the required need of the Spanish public, not counting tourists, is ludicrous. If taxi companies want to retain their market they need to increase their service (availability, quality, and pricing), or see the public turn to someone who can.
Dead right. It is a racket and it’s time it ended. I don’t think Uber’s business model is ideal for society but the glaring exploitation has to stop.
In what way is it a racket? Taxi business isn’t exactly highly profitable.
Here in Santa Clara I had to go about 4 miles to pick up my car from the shop. I thought, “What the hell, I’ll just take a taxi.”
The taxi and the driver were filthy and the driver was trying to text on his cell phone the whole time. Next time I’ll use Uber or Lyft.
Most of the decisions about taxi vs Uber et al get Mae by regulators (who LOVE to regulate and get paid, frequently bribed, for doing it it) and taxi drivers (who want a monopoly on the market). Almost never are the considerations of the customers taken into account.
Crappy taxi service thrives in this bureaucratic monopoly with cab drivers at the mercy of the regulators.
At no point in time are customers happy.
It is more Uber that wants (needs) a monopoly (to be profitable)
Taxi drivers are rarely monopolies, even duopolies are rare in taxi markets. But calling all the taxi’s a monopoly because the follow the law is peculiar. It is like calling the airlines a monopoly because they follow FAA rules.
You may get crappy taxi service with regulators but with Uber you will end up with unbelievable crappy taxi service
Does an Uber driver take cash?
Simple fix. The playing field has to be at least sort of level.
When Uber loses money on every ride, how can legitimate cabbies compete. Uber and others “win” by cheating. Sure they offer an interesting proposal to the customer, but is not “real”. Stop the predatory and tax evading tactics of the Ubers and AirbNbs of the world and we may get back to some sanity. Capitalism will always drive to the lowest common denominator and likely make all of us slaves unless we enact some restraints.
It’s not cheating, it’s a strict interpretation of the laws. If you truly level the playing field taxi’s will die, and those in the business know that.
You can’t call changing the laws to benefit just taxi services “leveling”. The fact remains that they are too limited to offer a reasonable level of service, outmoded by today’s technology, and their pricing is based more on the cost of their license than on the true value of the service they provide.
If the laws were changed to allow one taxi driver per 100 people in the local population, fares limited to no more than twice the Federal per mile per diem allowance, and the cost of licensing no more than twice the cost of a standard car license most ride services wouldn’t complain; taxi services, on the other hand, would have a coronary.
I don’t see the argument against UBER or other alike setup. Aviation has been doing it for decades via Ireland TAX evasion companies the same goes for Spain. They are all hypocrites. ;”Me and my family got cheap air fair tickets, so I don’t care” ever wonder how they can be that cheap. Italy, Greece, Spain, Portugal, Ireland etc they are all bankrupt and so much in debt that ECB money PRESS can’t keep up, the beginning of the END. Aviation in all of Europe only exist through Social Dumping”. The rest of the world is no different. All is going for the lowest denominator.