How Uber will deal with NYC cap on ride-hailing cars

Justin Sullivan/Getty Images

• Uber plans
  to use creative measures to remain competitive in New York
  City following the passage of a bill that put a cap on
  the number of vehicles that may operate within the
  city. 
• In a statement to Business Insider, an Uber
  spokesperson said, “Uber will do whatever it takes to keep up
  with growing demand.”
• The company plans on setting up a system where drivers
  share cars so vehicles don’t remain idle while also recruiting
  existing livery drivers in the New York City area into their
  app network. 

  ---

Uber plans to use creative measures to remain competitive in New
York City following the passage of bills that put a cap on and
freeze the number of vehicles that may operate within the city
for the next year. 

On Wednesday, in a 39-6 vote, the New York City Council
passed multiple bills that will pause the granting of new
licenses for Uber, Lyft, and other ride-share companies for one
year while a study is conducted by the Taxi and Limousine
Commission (TLC) to determine the effects these companies are
having on the city’s transportation industry. The legislation
passed by the city also grants a new minimum pay-rate for
drivers. 

Prior to the vote, City Council Speaker Corey
Johnsons said, “We
are pausing the issuance of new licenses in an industry that has
been allowed to proliferate without any appropriate check or
regulation,” before adding that he does not expect the existing
service for ride-sharing customers to diminish. 

Mayor Bill de Blasio is expected to sign the legislation on
Tuesday, which will take
effect immediately.

With new regulations in place, ride-sharing companies like
Uber will now need to work within the limits of the law to
continue to remain competitive. 

In a statement to Business Insider, Uber spokesperson
Danielle Filson said,  “We take the Speaker at his word that
the pause is not intended to reduce service for New Yorkers and
we trust that he will hold the TLC accountable, ensuring that no
New Yorker is left stranded. In the meantime, Uber will do
whatever it takes to keep up with growing demand and we will not
stop working with city and state leaders, including Speaker
Johnson, to pass real solutions like comprehensive congestion
pricing.”

But Uber’s options under the license freeze are limited in
part because of the company will now be restricted to an existing
pool of vehicles. 

A company spokesperson told Business Insider that Uber is
ready to use creative measures to get around the language of the
bills. First, the spokesperson notes that this cap is not a limit
on the number of drivers, but rather a pause on the number of new
vehicles. This distinction is important, as the company is
thinking of reaching out to Uber vehicle owners who may be off
the app for two or three days a week and see if they will allow
new Uber drivers to use their vehicle when it is idle. This way,
the company can ensure it keeps a high number of cars on the road
despite a limit on new licenses. 

Another way Uber plans to work-around the new measures will
be to recruit from within the existing field of livery drivers,
which includes yellow taxis and black-cars. 

While voicing his support for the legislation, Mayor Bill de
Blasio
told the New York Times, “More than 100,000
workers and their families will see an immediate benefit from
this legislation.” 

Uber estimates the number of industry drivers in the area
to be closer to 120,000, and an Uber spokesperson told Business
Insider that the company believes there are at least 35,000
existing licensed vehicles not being utilized by their app
system. In short, Uber plans to recruit black-car drivers into
their network.  

And while the newly passed bills plan on creating a new
minimum pay-rate for drivers, Uber does not plan to oppose those
changes to their business model. 

An Uber spokesperson told Business Insider the company is
“supportive” of a minimum wage or wage floor for their
drivers. 

The mayor’s office told Business Insider that he plans to sign
the legislation on Tuesday, August 14, 2018.