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Las Vegas: Strung Out on Uber

by Roger Lanctot | Jan 08, 2020

Three transportation-related events occurred in the first week of January 2020, coincident with the opening of the CES 2020 at the Las Vegas Convention Center. These events have immediate bearing on the transportation decision making of event attendees.

A)   Beginning January 1, 2020, Las Vegas taxicabs are required to charge flat-rate fares between McCarran International Airport and resorts on the Strip.

B)   On January 6, the Regional Transportation Commission of Southern Nevada (RTC) launched Uber Transit ticketing, enabling Las Vegas Valley riders to seamlessly buy and ride local transit – all from within the Uber app.

C)   Also on January 6, taxi operator Kaptyn rolled out a fleet of 30 Tesla vehicles, including Model 3’s, S’s, and X’s, to target high-end customers traveling between McCarran Airport and local resorts, (who might otherwise hail a limousine or black car service).

Two of these events directly bear on the increasing dependence of Las Vegas residents and visitors on ride hailing providers Uber and Lyft.  As a gambling town, Las Vegas is the kind of place where service providers and citizens are looking to “work the angles” to get the best deal on everything from a hotel room to an all-you-can-eat buffet.

It doesn’t take a mathematician to see that the transportation network serving the city is being disrupted in ways intended and unintended. The big winner is Uber … and Lyft.

The bizarre nature of the dilemma confronting Las Vegas is underscored by the fact that most resorts, hotels, the airport, the convention center, and other entertainment venues, are served by lines of taxicabs – parked at the curb and ready to take riders wherever they’d like to go. The concept of “hailing” an Uber of Lyft to come to a venue for a pickup would appear to be an inconvenience.

The fact of the matter is that Uber and Lyft are simply too inexpensive to ignore. The historical misbehavior of taxi operators are renowned. And regulators are increasingly blinded by the sophisticated and coordinated lobbying of Uber and Lyft and, more recently, the growing revenue stream from ride hailing operators.

The first event that occurred, the airport flat fare regulation, was instituted in response to consumer complaints regarding “long hauling,” the practice by which cab drivers extend the length of a drive to increase the fare. The solution, flat fares from the airport to local resorts, may have solved the long-haul problem but firmly established that the taxis will now, under the new regime, be charging often twice as much as Uber or Lyft for runs from the airport.

So anyone taking a taxi from McCarran is quite simply foolish. It may take a bit of effort to locate the ride hail pickup zone – but it is clearly worth the effort.

Figures reported by the Las Vegas Review-Journal paint a stark picture:

  • Data collected by McCarran shows that ride-sharing use at the airport has increased in each of the three years it’s been in use in Las Vegas, while taxi use dropped each of those years.
  • Pickup counts for ride-hailing companies jumped from 1.03M in 2016, the first full year of ride-hailing service in Las Vegas, to 2.78M in 2018.
  • During those years’ taxicab pickups fell from 3.82M in 2016 to 3.23M in 2018.
  • The decreases in seen in 2016, 2017 and 2018 were the first year-over-year decreases in taxi pickups at McCarran since 2009. Taxi pickups almost doubled between 2009 and 2015 at McCarran, before ride-sharing became available, going from 2.9M pickups in 2009, to 4.1M in 2015.
  • In 2015, the last full year before ride-hailing options were approved for Nevada, 27.5M rides were provided by the 16 Southern Nevada cab companies. In 2018 taxi rides given in the Las Vegas area were down 37.5% compared to 2015, logging 17.2M trips.
  • Accordingly, revenue dropped for the cab industry at a similar rate. The cab industry raked in $425.1M in 2015, but saw that fall to $260.3M in 2018, representing a 38.8% decrease since ride-share options were allowed.
  • There are 41,869 active transportation network company drivers in Nevada, according to Nevada Transportation Authority Chair Dawn Gibbons.
  • By comparison, there are 7,150 permitted cab drivers in Southern Nevada, driving the 3,530 taxis running on Southern Nevada roads, Williams said.
  • All taxis must have a medallion, which is a small license plate affixed to cabs authorizing them to operate within a jurisdiction. The number of medallions approved is the maximum number of cabs that can be in operation at a given time, according to the Taxicab Authority.
  • There is no cap on the number of ride-share vehicles that can be in operation in Nevada, Williams said.

The Review-Journal further noted that cab drivers must be fingerprinted, go through a background check, provide a valid health certificate and go through orientation and safety courses. Transportation network company drivers must provide their name, address, driver history and proof of registration and go through a background check at the time of their hire and every three years thereafter. Uber and Lyft drivers are required to obtain a $200 business license from the secretary of state within six months of joining a TNC company.

Transportation network companies have a large financial impact on the Transportation Authority, according to the Review-Journal. Of the authority’s $5.6M 2020-21 fiscal year budget, revenue derived from ride-hailing companies accounted for $2.5M of that.

It is important to consider the second bit of news, the integration of Uber’s app with local mass transit, in the context of this growing local financial influence. Local authorities say that the highly popular Deuce bus on the strip has been a key source of revenue supporting all of Las Vegas’ public transportation. But, like the taxi industry, the Deuce has taken a hit from the increasingly popular ride hailing operators. Now though the Deuce will be accessible via Uber's app, does that actually work to Uber's advantage rather than the Deuce?

In essence, Las Vegas, like a growing number of cities across the U.S. and the world is increasingly strung out on ride hailing operators and their cut-rate transportation offerings. With cities leveraging fees and taxes to extract their cut from the resulting financial bonanza, the motivation to “fix” the imbalance – negatively impacting legacy taxi and limousine operators and public transportation – is vanishing.

All of this is particularly bad news for the organization behind the third January announcement from Kaptyn, a taxi operator that is seeking to disrupt transportation in its own way. Last year, Kaptyn acquired Desert Cab Company, ODS Chauffeured Transportation, and Whittlesea-Bell Transportation, accounting for 872 of the 3,250 cabs operating in Las Vegas, along with private vehicles and limousines.

Kaptyn appears to have aggregated the taxi brands under a single dispatching operation branded as “Kabit.” Since arriving in Las Vegas I have had one Kabit ride, which was virtually undifferentiated from the various rides I had from one of the other large local operators, Newcab. The one disappointing surprise was a premium charged for credit card payments vs. cash.

Other than that last negative, Kaptyn’s stated intentions, as reflected in the Tesla launch announcement, is to deliver a more refined and reliable transportation service than is available from competing taxi and limousine operators while also introducing app-related convenience – presumably in the form of Kabit. 

The bottom line is that Las Vegas is a microcosm of the kind of negative and unregulated impact ride hailing operators can have on cities – flooding already grid-locked streets with opportunistic gig operators – pushing aside more regulated transportation options. There is a financial and sometimes a qualitative difference between the taxi and the ride hail experience – but ignoring the impact on taxi operators and public transportation is dereliction of duty for local politicians. I love a cheap ride as much as the next guy, but I am uncomfortable with the hidden and not so hidden costs of this convenience.

On a final note, it appears that casino and resort operators have significant influence of their own – more or less veto-ing the availability of e-scooters. You can find a lot of free parking in Vegas. You can smoke ‘em if you got ‘em inside almost any casino or hotel - including cannabis. You can drink for free as long as you are gambling. But don’t look for an e-scooter in Sin City. There are actually limits to what you can do in Vegas, whether it stays here or not.

 
 
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