Ride-sharing, cab companies brace for new Kentucky regulations

LOUISVILLE, Ky. (WDRB) – Kentucky is seeking to join a handful of states that regulate companies such as Uber and Lyft, whose smartphone-driven businesses are now competing with taxis in Louisville, Lexington and other cities across the country.

Anyone who has downloaded the companies' app can arrange a ride from a nearby driver – an independent contractor with a personal vehicle. Passengers use credit cards already on file to cover the fare, and they're not able to hail rides from the street.

The Kentucky Transportation Cabinet, working with taxi operators, Uber and Lyft, plans to file emergency regulations for insurance requirements, background checks and vehicle inspections in October. But, even then, those new rules are likely to leave other issues unsettled.

Louisville authorities are waiting for the state to act before deciding whether to update the city's ordinances on taxis and other ground transportation operators. The state's guidance also will determine how the so-called “taxicab transportation network,” or ride-sharing, companies can operate at Louisville International Airport.

Traditional cab companies, who have criticized their new competitors for flaunting current laws, say regulations don't necessarily level the playing field or solve safety concerns.

In Colorado, for example, a state law enacted earlier this year required ride-sharing companies to obtain a state permit before operating and carry liability insurance, conduct criminal checks and inspect vehicles.

But the measure failed to clarify whether drivers in Denver must apply for a city license required of cab drivers, said Brad Whittle, senior vice president of Transdev, which operates Yellow Cab in the Denver area.

Whittle said cab companies still face limits on how many vehicles they can operate, but ride-sharing companies have no such barriers. Cab drivers, he said, are complaining of fewer fares, particularly during lucrative weekend nights and some have even decided to try working for the upstart competitors.

“We've definitely had people leave and say, ‘We're going to give this a try,'” Whittle said.

In Louisville, taxi operators have raised questions about the legitimacy of Uber and Lyft's business model since their arrival in the area shortly before the Kentucky Derby.

Steve Coston, president of Yellow Cab parent company Procarent, accused the ride-sharing firms of operating “blatantly and illegally” in Louisville and Lexington in an April 30 letter to Kentucky Transportation Secretary Mike Hancock obtained through an open records request.

Coston, who testified before a legislative panel last week, said in an interview that the proposed regulation “feels closer to being right” and he is “absolutely” comfortable with his role in offering input on the new Kentucky rules. Coston said he is scheduled to meet with transportation officials Friday.

Speaking in Frankfort last week, Uber and Lyft representatives said they have insurance policies with higher coverage amounts in place and conduct thorough background checks that are, in some cases, more stringent than those in place for taxis.

Ride-sharing officials said their drivers are insured with a $1 million primary commercial insurance policy from when the driver accepts a passenger until the trip is complete, while separate policies cover the period between trips when the app is open.

“The benefits of ride-sharing are numerous,” James Ondrej, Uber's general manager for the Ohio region, told lawmakers. “But ultimately ride-sharing is succeeding because consumers demand it and love the service. It's a higher-quality and lower-cost way to get around your cities compared to the traditional taxi business.”

Uber declined to provide details of its business in Louisville. But Ondrej said in an interview that the company has seen “double-digit percentage growth” in the number of drivers and app downloads each month.

Lyft has been “enthusiastically embraced” by Louisville residents, a spokeswoman said, but she didn't have specific numbers to back up those claims.

Louisville Lyft driver Janet Houser said she's remained busy ferrying passengers for the past four months, in addition to her part-time job as a dental assistant.

“I just do this in my spare time, which is everyday right now,” she said.

Meanwhile, local and state governments have grappled with how to treat ride-sharing companies.

Kevin Kramer, a Louisville Metro Council member who has questioned the legality of Uber and Lyft, said he doesn't doubt those companies have put insurance, inspection and other safeguards in place. But enacting regulations would ensure that the same requirements exist of other ride-sharing companies that start operating in Louisville, he said.

Kramer said details in the state regulations will determine how city lawmakers respond. For his part, Kramer said he would like to ensure that Metro government is correctly receiving occupational taxes from ride-sharing drivers.

“I am of the opinion that we should look at our transportation-for-hire ordinances – all of them,” Kramer said.

Council member David Tandy, who represents the city's central business district, said he believes concerns over Uber and Lyft's operations will be allayed once the new regulations take effect.

“With the greater use of apps that allow for passengers to be able to hail a taxi remotely from wherever they are in our county – that's a good thing for us,” Tandy said.

The arrival of ride-sharing companies has posed a dilemma for airports, which typically set their own policies for ground transportation such as taxis, said Ray Mundy, executive director of the Airport Ground Transportation Association.

Mundy said airports in California – one of the states that has passed ride-sharing laws – have created a permit for Uber and Lyft drivers that would allow them to access their grounds. But no drivers have applied for them, since they include placing the airport on the vehicle's primary insurance policy, he said.

Skip Miller, executive director of the Louisville Regional Airport Authority, said airport officials are waiting to see the state regulations and any changes to the city's ordinances. The airport currently has a contract allowing two cab companies – Yellow Cab and Ready Cab – to pick up passengers from the airport, although ride-sharing drivers can drop off passengers, he said.

Miller said he's not aware of any Uber or Lyft drivers being cited for picking up passengers.

Coston, the Louisville Yellow Cab official, doesn't believe the new Kentucky regulations will impact the traditional taxi industry. But he said a host of questions remain, particularly involving insurance.

Cab drivers are insured anytime they're driving, Coston said, but what about ride-share drivers who might ultimately develop a relationship with a passenger and begin transporting them for cash? Under that scenario, he said, passengers may not be covered by the liability insurance.

“As they exist for a longer period of time it will become a bigger problem,” Coston said. “Because it takes time to build these (relationships). It doesn't happen overnight. So it's probably not as big of a risk today as it will be a week from today. Five years from today it could be a tremendous risk.”

But Houser, the Louisville Lyft driver, said that would “never appeal to me.”

“If you're taking a ride from somebody or I'm giving somebody a ride I want to make sure that every passenger in my car has a seatbelt and that they're protected by our insurance policy and they're not just giving rides to people,” she said. “That's not what we're here for.”