Alfred Dawes | Will Uber make it?

Every Jamaican taximan who overtakes and then immediately stops to pick up passengers must now be praying we forget their obnoxious driving and support them in their impending battle with Uber. The entry of the ride-share platform in the local market is yet another round in the ongoing battle between traditional operators of businesses and the disruptive technological giants who have changed the world with improved convenience while generating immense profits.

In this situation, however, there is more than just a moral argument. There are legal issues to be addressed, and the Transport Authority has it clear that no unlicensed vehicle should be used for hireage. The repackaging of a car-for-hire service as merely a platform to connect cars and passengers under a lease agreement may not stand up to scrutiny if this were to reach the courts.

Uber is another of the big-tech companies that have changed the way we live. Without owning any cars, they have supplanted thousands of taxis with a model where the average Joe can earn a few extra dollars using their own cars for hire, and passengers get cheaper fares. This democratisation of transportation was hailed as a major leap in the affordability and efficiency of transportation. Thousands of drivers without licensing fees and higher-than-usual insurance costs could now offer ride-share services in their downtime at lower costs than taxi companies. It seemed like a win-win situation for passengers and driver, and the only sore losers were the disrupted taxi companies who saw a significant drop in revenue wherever Uber, and its main competitor Lyft, were rolled out. It fit in perfectly with the rise of the gig economy, where platforms allowed regular Joes and artisans another stream of income by matching them with clients.

The rise of Uber has demonstrated how rapidly the world has changed in connecting suppliers and consumers outside of the traditional means. The world’s largest provider of accommodations, Airbnb, has disrupted the hotel industry by connecting owners of private accommodations with those on business or leisure trips. No travel agencies, no hotels. Just part-time innkeepers taking advantage of an innovative platform. Of course, Airbnb has had its fair share of criticism. The private accommodations are not licensed or subject to any regulation. There are no local taxes and fees that hotels are forced to pay in order to be state sanctioned. This, the small hoteliers argue, puts them at a distinct disadvantage to independent providers. From a macroeconomic point of view, the platform is criticised as taking money out of countries in which they operate.

AIRBNB TOOK OFF

In spite of the resistance to Airbnb and the calls for regulation of the informal accommodations industry, Airbnb took off in pre COVID-19 in Jamaica. In fact, much of the construction boom was thought to be driven by the demand for apartments earmarked for Airbnb rentals. The exorbitant price tags of real estate in Kingston could very easily be financed by this income from rentals. The market is still very much active during the pandemic and is expected to soar with the pent-up demand for getaways when normalcy returns.

Social media giants Facebook and Instagram generate massive profits from advertising revenues. As with traditional media, advertisements are interspersed with news and entertainment content. Unlike traditional media, the social media giants enjoy royalty-free use of content that draws users to their platforms. Imagine a TV station never having to pay reporters or a radio station that played music without ever having to pay a cent to the entertainers who worked to create the songs. We would still watch and listen and be reeled into their ads. Only the content generators would feel abused by the arrangement. However, when we generate content to get as many likes and shares as possible, we accept that in place of monetary compensation from the platforms, we are rewarded with the connectivity and exposure to our talents and services. There are few complaints from Jamaicans about social media, video-streaming sites, and from Airbnb.

With Uber, it is different. Uber operates its business model as if the drivers are employees, and the company sets their remuneration. They are, however, classified as independent contractors and are not afforded protection under labour laws that set minimum wages and vacation time.

Recent legislation in the United Kingdom declared that Uber drivers are workers, not independent contractors, and are entitled to benefits from the company that their prior designation as contractors excluded. The overall compensation for drivers has been a contentious issue, especially with the adjustment of rates set by the companies’ algorithms. With Airbnb, you choose your own rates. Not the company. If you want to price yourself to attract more bookings with a corresponding lower profit margin, so be it. With Uber, during peak hours when you are more likely to pick up more passengers, the company decides that your fare is lower. Already we see Jamaican hustlers overcharging passengers and blaming it on incorrect app calculations or faulty GPS tracking. Will Jamaican Uber drivers passively accept the exploitative remunerations challenged in other jurisdictions?

INSURANCE COVERAGE

The issue of insurance coverage once you get in an accident is also a major issue. Will local insurance companies buy into the pitch that Uber drivers are not using their cars to run unlicensed taxis? How did the legal team at Uber work around clauses in policies that prohibit the use of vehicles for hire? Interesting times are ahead.

Probably the greatest hurdle facing Uber is the Government of Jamaica. We often forget that the biggest single competition to Uber is the state-run JUTC that is already haemorrhaging cash. Should a viable alternative be present, the entity will need massive state subsidies to stay afloat. Add that increased expenditure to the fall in revenues from fewer taxi operators licensing their vehicles and we have a transportation Armageddon. Will the Government shoot itself in the foot by allowing unregulated, cheaper, and more traffic congestive transportation services to bankrupt the JUTC and slash revenues as more red plate drivers defect?

Will Uber make it on The Rock?

- Alfred Dawes is a general, laparoscopic, and weight-loss surgeon; Fellow of the American College of Surgeons; former senior medical officer of the Savanna-la-Mar Public General Hospital; former president of Jamaica Medical Doctors Association. @dr_aldawes. Email feedback to columns@gleanerjm.com and adawes@ilapmedical.com.