Uber’s bumpy start in New Orleans

Jeanie Riess on the ride-sharing service’s first week in town



During the nearly seven months it took to legalize the ride-sharing service Uber in New Orleans, the main argument in favor of the smartphone app that connects riders to luxury vehicles was also a slam against the current New Orleans taxi industry: There aren't enough reliable rides in town.

  Uber, which the New Orleans City Council finally approved this month after the group twice delayed a vote on legislation that would allow for Uber's expansion into the city, began offering rides Sept. 19. The San Francisco-based technology company's local general manager, Tom Hayes, says people are using the app — the company can track both how many people are opening it and how many people are actually using it to request rides — and are reporting that they're pleased with the service it provides. Still, the biggest challenge facing Uber is the same one New Orleans faced before the app launched: At many times, especially on weekends, supply can't keep up with demand. Some who have tried to hail an Uber ride have been met with a message that no cars are available.

  Sheree Kerner, president of Nawlins Cab, says the public mistakenly believes "that cabs are a guarantee of service.

  "The Uber sensation of 'Gee, when I order a cab it shows up,' — yeah, 90 percent of the time it's going to. But during the times that people are sitting in the backseat, you can't just throw that person out to go pick up the other person. There's no magic wand that's going to change the labor pool or the principles of the transportation experience."

  Hayes declined to say how many town cars and SUVs currently operate with Uber in New Orleans, but an Uber driver who did not want to be identified told Gambit that on the second day of operation there were "about 10" cars rolling around the city. By comparison, the city has issued more than 1,500 Certificates of Public Necessity and Convenience (aka CPNCs, or taxi permits) for traditional taxi services. Uber's popular UberX service, which competes directly with traditional taxis, still is not allowed in New Orleans.

  Uber Black, the service the New Orleans City Council approved by amending its taxi and limousine code, connects riders with limousines and high-end sedans via smartphone app. (In a concession to traditional cabs, the council set minimum rates of $15 per ride for town cars and $25 for SUVs.)

  Robert Daspit, owner of the traditional limousine company Lagniappe Chauffeured Services, is working with Uber and already has driven some Uber customers himself.

  "We're getting a lot of rides," he said, particularly on weekends. "Our business, we usually take care of CEOs, celebrities, corporate executives. But with this, there's more interaction for the drivers. ... It's fun for them. If I have a driver and I tell them to go get a ride, they'll say they'd rather do the Uber ride."

  Hayes says the reason for the lack of available cars is that the city hasn't given out enough CPNCs to vehicles looking to pick up extra cash when they're not driving for the livery companies they represent.

  "Right now, in order to have a car that we can work with, they need to have a CPNC that's registered with the city," Hayes says. "The city has only scheduled CPNC releases quarterly. The next one is coming up Oct. 24. We're currently constrained to the existing supply of sedans and SUVs that are out there, and quite frankly there just aren't that many."

  According to Hayes, Uber's platform is designed to encourage entrepreneurship by allowing drivers to turn on the app and set their own hours. A driver takes 80 percent of the fare and Uber takes 20 percent. Hayes says Uber wants to see drivers striking out on their own, essentially self-employed via Uber, but the city code makes that impossible, since in order to start a new small business in the livery industry, New Orleans requires drivers to own at least two limousines.

  "So even when (Oct. 24) comes around, it's difficult for that person who maybe used to drive for someone else and wants to go out on their own," Hayes says. "The financing it takes to buy two stretch limos and then a sedan, which is the car they actually need — it's pretty onerous and a lot more than just one sedan or one SUV to get going."

  "I think it's too early to tell if we're going to make money from it," Daspit says. "An individual employee is going to make more money regardless, because some chauffeurs don't get paid for down time. And this way they can make money when they'd usually be at the gym, calling their girlfriend, getting something to eat."

When Uber began to drop hints at a New Orleans expansion earlier this year, many local taxi companies said they also were developing apps to compete with Uber's hail-by-phone model. United Cabs President Syed Kazmi told Gambit an app is in the works, but did not elaborate. According to United administrative assistant Jami Cuthbert, that app is in development and will be optional for United's drivers when it launches in a few months.

  "We considered what we call the 'old school drivers' and the 'new school drivers,'" Cuthbert says, "because we didn't want to leave out the old school drivers who didn't want to use the app." United Cabs will continue to use traditional radio dispatch, but drivers with smartphones will be able to connect with riders using a United-only app. (Earlier this year, Monroe Coleman, president of Coleman Cabs, told Gambit that his company, was working on an app, though multiple calls to the company concerning the app were not returned.)

  Kerner points out, though, that more apps won't solve the problem. "It's just changing the way you contact the cab," she says. Nawlins Cabs has had a smartphone app for the past two years, and although it's in the process of revising the existing app to make it more like Uber's, Kerner says the company is focusing more on the experience of riding in a cab than the way drivers and riders are connected. That means installing tablets in taxis to provide customers with local dining, entertainment and sightseeing options, paid for by local advertisers.

  The fear of UberX, the taxi industry's direct competitor, was one of the central barriers to Uber's expansion into the city's market. Many cab drivers say they're still feeling the pinch from city-mandated taxicab upgrades put in place in 2012 that restricted the age of cars and forced the installation of GPS and credit card machines.

  Though it's still not legal, UberX already has put some wheels in motion to launch UberX in New Orleans at some point. The company posted job listings on the local employment website, and at a City Council meeting earlier this month, when Uber was finally approved, two men said they'd begun the application process to become drivers for the ride-sharing service.

  "We've definitely heard there's demand for UberX and for affordable options for folks," Hayes says. "We're offering that service in over 100 U.S. cities and we think there's a place for that here in New Orleans as well."

  Asked whether Uber would defy New Orleans' ban on UberX-style services — a ban the city emphasized this month by passing more stringent penalties for drivers who violate it — Hayes didn't quite answer the question.

  "It's standard operating procedure for us to essentially collect the demand and even push people through the process, so in the event that we do launch, we're ready to go," he says. "We do that in pretty much every city in the U.S. where we're not currently operating. It's not really unique to [New Orleans]. In terms of the city, we're absolutely at the table and wanting to continue conversations around alternatives and more affordable options for the people of New Orleans."

  "New Orleans is such a small, big city," says Daspit, the limo company owner who's working with Uber. "And we still have taxicabs. We can't just go over and stomp on all the taxi drivers, after all we've put them through (with mandated updates). We have to be ethical. That's why, if they try to do UberX, I would say, 'Don't do that. It's just not fair. You have to do business, but do it fairly. Have a sense of heart or a kind of feeling.'"

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