Proposal would allow D.C. cabs to embrace ‘surge pricing’


A taxi whizzes past in downtown D.C. in 2012. (Bill O'Leary/The Washington Post)

Washington could become one of the first U.S. cities to allow its cabdrivers to ignore their meters and adjust fares depending on demand.

D.C. Council members Mary M. Cheh (D-Ward 3) and David Grosso (I-At Large) have introduced legislation that would allow the city’s taxi drivers to embrace “surge pricing,” a practice used by popular mobile-dispatched car services such as Uber, in which prices are adjusted in real-time according to demand.

The council members say that the shift, which would apply only to passengers who use their smartphones or tablets to book a ride, will allow traditional cabs to better compete with new app-based ride services that have sprung up in the District and across the country.

The move could benefit riders by allowing them to comparison shop. But surge pricing has its critics, who say the practice can lead to gouging.

Under the proposal, passengers who book via a mobile app would be told ahead of time what they can expect to pay for their taxi ride. The price would not be set by individual cabdrivers but by the D.C. Taxicab Commission or the mobile dispatch service. Those who summon a taxi in the traditional manner — by hailing one on the street — would still pay metered rates.

The shift represents a radical departure for the taxi industry, which has long based payment on meter rates. D.C. cabs charge a standard rate of $3.25 to start and then $2.16 per mile. They are only allowed to increase prices in certain circumstances, such as snow emergencies, when passengers pay a $15 surcharge.

Grosso said the legislation strikes a balance between allowing new ride services — in which individuals transport passengers using their own cars — to grow while evening the playing field for D.C. cabdrivers.

“What happens when you have a more open free market is you generate more competition and engagement by the business side,” he said.

Cheh said the change would increase competition and promote consumer choice.

The bill also makes permanent emergency measures passed last year that require services such as uberX, Lyft and Sidecar to perform background checks on their drivers, obtain commercial insurance for drivers and adhere to zero-tolerance policies for drugs and alcohol.

The D.C. Taxicab Commission also is exploring how to regulate such services and is expected to take up a similar proposal at its meeting Wednesday. The proposal was first reported by WAMU (88.5 FM). In addition to surge pricing, the commission also will consider rules that would limit drivers for other services to 20 hours a week unless the driver has a taxi license.

The commission has come under criticism from consumers and council members for being slow to embrace the alternative services. But commission Chairman Ron Linton said the panel’s goal is to create a level playing field.

“Our goal is to make sure that citizens receive good, safe, fair service,” Linton said.

The arrival of other services, which in some instances cost less than a cab ride, has delighted consumers in the Washington region. But cabdrivers complain that the companies, who describe themselves as “ridesharing services,” because drivers use their own vehicles, have an unfair advantage because they don’t have to pay fees or follow the same rules.

For example, prospective D.C. cabdrivers can spend more than $600 on training, testing and licensing before they begin driving. They are required to renew their licenses each year and have their vehicles inspected on a regular basis. The city requires no special licensing or fees from those who work for ridesharing services.

Veteran D.C. cabdriver Larry Frankel said that the ridesharing services have “done irreparable harm” to city cabbies.

If the District moves to surge pricing for mobile-dispatched taxi service, it could provide an intriguing model for other cities grappling with how to regulate the new services.

California was the first to set statewide standards for the ridesharing business model, requiring criminal background checks and training programs for drivers, and zero tolerance policies for drug and alcohol use. In addition, drivers in that state also must carry insurance policies with a minimum of $1 million in liability coverage.

Since that agreement was reached, many of the services have updated their rules, increasing their insurance coverage and driver screening and training.

Many U.S. cities are still wrestling with how to approach the ridesharing model.

In Seattle, the city council recently voted to limit the number of rideshare drivers who can operate in the city at any given time to 150. Drivers for the services also must have the same insurance coverage required of taxi drivers. In Miami, a recent effort to rewrite rules to allow Uber to operate in the city was blocked.

Industry groups have been watching the battles closely. The Rockville-based Taxicab, Limousine & Paratransit Association recently launched a social-media campaign dubbed “Who’s Driving You?” It was designed to highlight what the group sees as shortcomings in the new transportation model.

“We’re anxious to see the actual proposal,” said Dave Sutton, a spokesman for the campaign. “Obviously, one of our main concerns is in having a regulated metered fare if you hail a cab on the street, and a completely unregulated, unmetered fare if you hail using an app.”

At least one company welcomed the legislation.

“The proposed legislation strikes the right balance between protecting public safety and allowing for consumer choice in the marketplace,” Sidecar spokeswoman Margaret Ryan said in an e-mailed statement. “Its adoption will ensure the District of Columbia will maintain its position as a transportation innovation leader.”

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Lori Aratani writes about how people live, work and play in the D.C. region for The Post’s Transportation and Development team.
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