SUNDAY EDITION | Need a ride? Competition heats up Louisville's taxi industry
LOUISVILLE, Ky. (WDRB) – Forget the horses. There was another race in Louisville last week involving crowded fields, jockeying and big money.
Kentucky Derby week marked roughly a year since Uber and Lyft debuted in the metro area, challenging the traditional taxi industry with smartphone-based, on-demand ride services from people using their own cars.
Since then, Kentucky regulators agreed to emergency rules allowing the new companies to operate legally. Louisville's airport set in motion plans to allow Uber and Lyft pick up arriving passengers – a move viewed as unfair by some traditional cab drivers who do not have that privilege.
And, earlier this year, Kentucky approved the application of a new taxi company, Taxi 7, which plans to add 100 hybrid and wheelchair-accessible cars and vans to Louisville streets this summer.
The influx of new for-hire vehicles has revealed a divide between established taxi operators -- who have fought to keep competitors away -- and civic, tourism and restaurant leaders who claim existing cab service is inadequate.
When Taxi 7 applied to operate in Kentucky last year, Yellow Cab of Louisville protested. A Yellow Cab attorney argued before the Kentucky Department of Vehicle Regulation that its would-be competitor didn't meet the state's “fitness requirements.”
A review of documents in that case, obtained under the state's public records law, sheds light on the high-level support for new cab service in Louisville and the fight put up by Yellow Cab to try to block Taxi 7.
State law requires applicants to show that their proposed service is needed, and that existing options aren't adequate.
Backers of Taxi 7's application wrote letters of support. Among them:
-Metro Louisville economic development director Jeff Mosley, who said the city expects a “significant need for additional transportation providers” as the area continues to grow
-Greater Louisville Inc. President and CEO Kent Oyler, who said the city “badly needs” another taxi service because “[w]ait times are lengthy during periods of high demand”
-Businessman and developer Gill Holland, who said “current taxi service does not adequately provide transportation to and from Louisville's many growing neighborhoods”
Other letters of similar tone came from Karen Williams, president and CEO of the Louisville Convention and Visitors Bureau; Galt House Hotel general manager Terry Jenks; and Metro Council President David Tandy.
But in proceedings before state regulators, Yellow Cab argued that the letters didn't address Taxi 7's ability to do business. The Yellow Cab attorney said Williams' letter, which cited Raleigh, N.C. officials' praise of Taxi 7, was “hearsay on top of hearsay.” The state ruled in Taxi 7's favor in January. Yellow Cab has appealed that decision to Franklin Circuit Court, where the case remains.
Taxi 7 president Michael Solomon said in an interview his company plans to “put the heat” on Yellow Cab when it debuts its first cars sometime in August.
“It's been easy for them and now they have to work,” he said, referring to Yellow Cab. “We think the residents of Louisville and Jefferson County deserve a better system.”
Yellow Cab declined to comment for this story.
Williams said the demand for taxis always has existed during large events, such as the Derby and the Breeders' Cup. But more choices are needed as hundreds of new hotel rooms are planned or under construction downtown, she said.
“Several years ago we had lack of service, lack of permits, so the … hotels and restaurants were complaining because they couldn't get taxis to pick people up,” Williams said.
The arrival of Uber and Lyft in the Louisville area last spring began to change that, hotel and restaurant leaders say.
Stacy Roof, president and CEO of the Kentucky Restaurant Association, said she asked members in Louisville about their experience with cab companies.
“Most of the feedback that I got was it's not reliable, there's not enough, and Uber and Lyft have really been who we go to now because that's who is making things work and that's who is a good option,” Roof said in an interview.
Starwood Hotels & Resorts, the parent company of the Sheraton Louisville Riverside Hotel in Jeffersonville, Ind., now allows guests to gain rewards points for future hotel stays when they use Uber.
“Our brand has bought in that Uber will be a key player long term, and I'd say our hotel has bought in as well,” said Patrick Gregory, the hotel's general manager.
Like Uber, Lyft lets smartphone users order rides through an app linked to a credit card. Instead of marked cabs, drivers use their own cars.
Cody Judd, a 20-year-old rising junior at the University of Louisville, said he has never taken a traditional cab. He uses Lyft.
“I'm in a fraternity and they all use that. It's a very good way for them to get down to Fourth Street (Live) and then come back to the house and hang out,” he said.
After months of operating without any government oversight, Kentucky enacted emergency regulations last December that require vehicle inspections, background checks and other approvals.
As of last Tuesday, Lyft had qualified 388 vehicles to operate in Kentucky, but Uber had yet to qualify any cars, said Chuck Wolfe, a Transportation Cabinet spokesman.
Kentucky allows out-of-state limousine operators and similar companies to operate only during a special period of time, such as Derby week. Uber hasn't received, or applied for, a temporary permit, according to the Cabinet.
“The expectation would be that they like any other company in that business would be following the law,” Wolfe said.
Any enforcement action would be left to local law enforcement, he said.
An Uber spokeswoman said the company has submitted its application and other information to the Transportation Cabinet. “We continue to work closely with the Cabinet as they process the submitted information,” Lauren Altmin said.
Louisville also plans to weigh whether the city's taxi rules need updating.
Taxi driver William Lambert, a member of the Louisville Metro ground transportation advisory committee, said he's concerned that cab companies must pay certain fees to the city and undergo inspections that Uber and Lyft vehicles are bypassing. For example, an annual permit to operate in Louisville costs $30, but ride-sharing drivers aren't required to get the same permit, he said.
Lambert, a co-owner of Crosstown Taxi, also took issue with the Louisville Regional Airport Authority's decision in March to create rules for ride-sharing companies to pick up passengers, while only two traditional cab companies are allowed to do the same. Neither Uber nor Lyft has gotten approval for pick-ups yet, according to an airport spokeswoman.
Under an exclusive franchise agreement, Ready Cab and Yellow Cab are the only cab companies that can pick up passengers at the airport, and they pay $1.25 a ride to the airport for that privilege. If approved, Uber and Lyft would be able to pick up passengers for a $2-per-ride fee to the airport.
Skip Miller, the airport authority's executive director, defended the airport's franchise agreement with Ready Cab and Yellow Cab in a March interview with WDRB News.
“That's a bid process that we go through and we've limited that bid franchise to two companies,” Miller said.
Lambert, whose company has five vehicles, said one of his drivers was fined $100 by airport officials last week when, after dropping off a passenger, someone asked about getting a ride from the terminal.
Christian Cab and Courier owner Mark Goeing said the airport should “absolutely” allow all cabs to compete for pickups after giving that access to ride-sharing companies.
Goeing, who drives his company's only cab, said he's already been hurt by Uber and Lyft.
Goeing said his best Kentucky Derby-related business was in 2012, when Churchill Downs set an attendance record for the race. The second-highest attended Derby was last year, but Goeing said it was the worst Derby of his five years in Louisville.
“I even considered getting out of the business because of the inequalities and also because of the business that I feel certain that they're taking away from the taxis,” he said.
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