February 4, 2013

Ride-hailing apps offer new way to get around town

More city dwellers are turning to services that let them pay a voluntary donation to drivers who use their own cars.

By TERENCE CHEA/The Associated Press

SAN FRANCISCO — When Hesky Kutscher needed to get across town, he didn't call a taxi. He tapped a smartphone app called Lyft, which allows users to request car rides.

click image to enlarge

Nancy Tcheou, a driver with the ride-sharing service Lyft, waits in her car Jan. 4 after dropping off a passenger as a taxi cab passes her in San Francisco. Fed up with traditional taxis, city dwellers are tapping their smartphones to hitch rides from strangers. But taxi operators say the new ride services are little more than illegal cabs that don't have permits, pay city fees or follow regulations.

The Associated Press

Minutes later, a black hatchback with a big fluffy, pink mustache on its grille pulled up. Kutscher hopped in the front seat and gave the driver a fist bump. Then they cruised over the hilly streets of San Francisco, chatting like neighbors until he was dropped off near Union Square.

Kutscher, who runs a medical data firm, said ride-hailing apps like Lyft – with its whimsical mustaches – are more convenient than cabs: "I need to get from A to B. They do it well, they do it for a good price, and the drivers are friendly."

Fed up with traditional taxis, more city dwellers are using their smartphones to request rides using GPS-enabled mobile apps that let riders and drivers find each other in real time. Ride-summoning services such as Uber, SideCar and Lyft are expanding rapidly in San Francisco, New York and other U.S. cities.

Uber allows passengers to use their smartphones to summon luxury town cars and other vehicles driven by professional drivers. Customer credit cards are charged fares based on time and distance.

Lyft and SideCar describe themselves as community "ride-sharing platforms" that connect riders and drivers, who use their own vehicles. After each ride, passengers are asked for a voluntary donation based on what others paid for similar trips. The companies take a 20 percent cut.

"We started Lyft to create a system for matching up people who need a ride with people who can offer a ride," said Logan Green, co-founder of San Francisco-based Zimride, which operates Lyft.

But taxi operators say the new ride services are little more than illegal cabs that don't have permits, pay city fees or follow regulations. The upstarts are also steering business away from cab drivers, making it harder for them to earn a living.

"It makes for an uneven playing field," said Barry Korengold, who heads the San Francisco Cab Drivers Association. "We're not trying to stifle technology. We're saying, 'Do it in the legal way.' "

Uber, which launched in 2010 and offers ride services in 18 cities, has been sued by San Francisco cab drivers and Chicago car-service companies alleging unfair business. The San Francisco-based company has also run into trouble with regulators in New York, Vancouver, Boston and Washington, D.C.

The California Public Utilities Commission last year issued cease-and-desist orders and $20,000 fines to Lyft, Sidecar and Uber for operating illegally. The agency says they are "charter-party carriers of passengers" that need permits certifying their drivers are properly screened, licensed and insured.

In December, the commission agreed to evaluate the safety of the Internet-based ride services and plans to draft new rules to regulate them over the next several months. Last week, the agency reached agreements with Lyft and Uber that allows them to operate legally until the new rules are written. It's in discussions with SideCar over its operations.

"We're not trying to put them out of business, but they cannot avoid the basics of public safety," said Frank Lindh, the commission's general counsel.

Lyft and SideCar say they're not charter-party carriers, but ride-sharing platforms. They say they shouldn't be regulated like taxis or limos because rides are prearranged, payments are voluntary and the firms don't own the vehicles or employ the drivers.

"Existing regulations have not caught up with the technology," said Sunil Paul, CEO of SideCar, which launched a year ago in San Francisco and is preparing to expand to 15 other cities. "This is a new medium, and a new medium needs a new set of rules."

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