Despite efforts, uberX still not allowed in St. Louis market

| Contributing Reporter

Ride-sharing company Uber has proven to be one of the fastest-growing businesses in the country with a valuation over $50 billion just five years after its inception—but you won’t see its usual fleet in St. Louis.

Despite becoming one of the most dominant transportation services in most of the nation, and in international hubs, it has been largely barred from operating in St. Louis, a landmark American city.

Most notably, uberX, the company’s cheapest riding option, is entirely shut out of the St. Louis market, and Washington University students have taken notice.

“I love the idea of bringing uberX here. Uber BLACK is already here but it’s too expensive. [uber]X is much more accessible, allowing many more people to use it,” junior Neil Stein said.

UberX seeks to connect people looking for a ride with drivers who are available in real time via an app on their smartphone.

St. Louis County and Yellow Cab, a local taxi giant, has tried to replicate the app’s success by creating its own application for ordering cabs. The reviews have been mixed.

Freshman Eva Fine used the app to call a taxi just last week.

“I used the app, and it worked fine. I got a taxi within a reasonable amount of time and made it to my destination, but it was not nearly as streamlined, and it lacked the helpful features I can usually find when I use uberX,” Fine said.

A majority of uberX drivers are either working part-time or using the money they earn as a means to pursue another career, whereas in more traditional taxi companies, drivers tend to be full-time, career cab drivers.

In accordance with their 21st century approach to transportation, uberX is much less heavily regulated than typical cab companies and is much more interactive on the part of the consumer, allowing riders to instantly rate their drivers.

Olin Business School professor of economics and strategy Glenn MacDonald noted the effectiveness of the company’s business model.

“Uber is literally saying, ‘Let’s let the customers rate this driver in real time, on their actual performance, which is what we actually care about,’” MacDonald said.

The pause on Uber’s growth in St. Louis is largely due to the existing taxi companies’ insistence that uberX must comply with all the same regulations ordinary cab companies follow.

In a recent blog post preceding a vote by the Metropolitan Taxi Commission (MTC) on whether or not to allow uberX to enter the market, St. Louis County and Yellow Cab Company pleaded with the commission to make sure no company enters the taxi market without being subject to certain regulations.

In the blog, the president of St. Louis County and Yellow Cab writes, “In my opinion, transportation network companies (TNC’s) should be subjected to the same rules that we have followed to the letter since the inception of the MTC.”

The company then goes on to lay out which rules they believe need to be in place in order to regulate any cab company in St. Louis, including FBI background checks and random drug testing.

In response, Uber has created an online Web page outlining the numerous ways it combats the claims of the traditional cab companies. It insists that the uberX business model is, in fact, a safer and more efficient alternative to a regular taxi ride.

In its rebuttal, Uber states one of its many safety features to be “24/7 feedback loop and customer support ensuring that riders and drivers are constantly rated based on quality and service.”

Many, however, are not convinced that local cab companies are reacting purely in the name of the public good.

“The cab companies here in St. Louis are a regulated monopoly, so they act like one. Cabs are expensive; there isn’t much competition to discipline things like poor driving, or grumpy cab drivers or even dangerous behaviors. They’re protected by their monopoly status,” MacDonald said.

Freshman Hannah Cohen recognized the inability of such companies to regulate drivers in real time when she took a cab ride via St. Louis County and Yellow Cab earlier in the year.

“It was pretty clear that the driver overcharged us with no explanation, and I had work to do, so I didn’t feel like arguing it out or filling out the necessary paperwork, so I had no means by which to alert anyone else of the problems with my experience,” Cohen said.

MacDonald added, “The reaction you’re getting [from the cab companies] is precisely what you would expect. Of course when somebody comes in and says, ‘We can do a better job, and take all your customers’…they’re not happy about it.”

Whatever the motives are behind their effort to stop the growth of uberX in St. Louis, local taxicab companies are using public policy to try to maintain the status quo.

MacDonald, however, sees this use of regulatory power by a monopoly as a typical approach by an incumbent to hold on to its power.

“[The rise of uberX] is a perfect example of a market regulating itself far better than a regulator can,” MacDonald said, arguing that better technology lowers the need for government regulation.

As uberX continues to outpace the growth of traditional cab companies by huge margins, the future of transportation in the St. Louis area is uncertain.

The most recent vote on the entrance of uberX into the St. Louis market was postponed from July 29, 2015, to a later date to be determined—a setback for the young business.

Editor’s note: Both Uber and St. Louis County and Yellow Cab did not respond to requests for comment before the time of publication.

  • John Kmetz

    I think the main thing people should take away from this article, is it shows the Saint Louis public perception of the current taxi structure vs Uber. It is clear that people are unhappy with the current service and are looking for better sources of transportation. The people interviewed, as well as many others have enjoyed Uber’s services in other cities and see the true benefit. At the end of the day the citizens of Saint Louis are requesting an improved transportation structure and they deserve it.

  • Mr Wingens – This is Debbie Rudawsky, CFO and co-owner of St. Louis County & Yellow Cab. You took the liberty of featuring our company in your story and I regret that we were not given the opportunity to be interviewed and provide comments for your benefit. I would welcome the opportunity to speak to you and any of the individuals featured in your story to provide a more clear perspective on this topic. Regardless of any future opportunity to provide comments on the vehicle for hire industry, I would like to provide additional commentary on some misstatements in your story.

    1. You mentioned that we created our app to try to replicate the success of the apps available by TNC’s. We began using app dispatch technology in 2009 and our current custom app was launched in December 2012. Our app has most of the features available in other apps and even some that they don’t have like the ability to request a future ride. Our developer continues to add new features like the stored card pay-in-app ability that we have too. With almost 55,000 downloads of our app and over 210,000 rides requested, we feel that our app is top-of-class.

    2. Our app also allows you to rate your driver which we monitor very closely.

    3. You mentioned that the existence of UberX is paused because existing cab companies are insisting that they follow the rules. Being a heavily regulated industry, our local regulating body – the Metropolitan Taxicab Commission – is the sole body that can offer UberX the authority to operate legally in our region. As a 3rd generation owner of our family cab company, I do feel that certain regulations are necessary to protect the riding public, none of the cab companies have any influence on the ability of UberX to operate in St. Louis or not. That is up to the MTC and possibly the state Legislature.

    4. In response to Mr. MacDonalds statement that existing cab companies operate like monopolies and thus have no incentives to address “poor driving, or grumpy drivers or even dangerous behaviors”, I would welcome any opportunity to educate him on our business, our commitment to excellence and our proven track record. For over 80 years, we have operated with one goal – to provide the citizens and visitors to our region with access to safe convenient transportation. We are proud of our 2014 BBB Torch award, and the glowing reviews that we receive on all the review sights. We provide more than 20,000 rides each week and we strive to exceed expectations with each ride. When we do fall short, we act swiftly and fairly to address any concerns.

    5. In response to Ms. Cohen who is claiming that our driver overcharged her, I would welcome the opportunity to investigate her claim so that we can reach a resolution. Often, when we get an inquiry about an overcharge, it is just a matter of educating the passenger about the rate structure and how it works. I wonder how Hannah will feel about UberX when they are surging their prices to 3 – 12 times their normal rates during the most popular times when she will likely be needing a ride. Our rates are the same 24/7/365.

    6. Finally, Mr. MacDonald continued with his accusations that we are a monopoly afraid of competition and trying to keep the incumbent in power. Again, I would welcome the opportunity to speak to him but nothing could be further from the truth. We welcome the ability to compete with any service on a fair and level playing field. Competition makes us all better and the ultimate winner is the consumer. We have been a technology leader in the industry for over 25 years and will continue to seek ways to use technology to improve our customer experience. But we will never hide behind our technology as an excuse to skirt around rules that are there to keep the riding public safe. At the minimum, drug testing and fingerprint based background checks should be the standard for all those providing vehicle for hire services.

    Should you like further comments or welcome the opportunity to meet, please reach out to me at [email protected]. By the way, it would be great to see a feature in your paper on our FREE cab that is extremely popular with Wash U students – Lucky Lou Taxi. Look him up on Facebook, Twitter @luckyloutaxi and instagram @luckyloutaxi. Since January 2014, we have provided almost $30K in free rides to 2,400 passengers in our region. We care about St. Louis and Lucky Lou Taxi is just one small way that we try to give back.

    Thanks for your time and consideration – Debbie Rudawsky, CPA

    • Concerned Citizen

      I agree with you Debbie! I think Jon is a jerk too! Please let me know how I can help you further discredit him.

      • Concerned Citizen – I was in no way trying to question Mr. Wingens ability to do his job as a reporter. I would have just appreciated the opportunity to provide our side of the story since others were given the chance to give their opinions and experiences. We are a paid advertiser in various platforms at this university which I assumed would allow us the common courtesy to have our voice heard too. Hopefully we will be contacted in the future. Best Regards – Debbie

        • Mic Jos

          The top of the page says this is an Independent newspaper. It sounds like you are hinting at stopping paying for advertising if you aren’t able to control content? This is America.

        • Concerned Citizen

          Debbie, I agree with you that Mr. Wingens ought to be fired. If you would like me to help circulate or sign your petition to have him be removed from his position for this irresponsible article please let me know how I can help!

    • Mic Jos

      1. App dispatch technology is not a ride request app for customers. That’s basically saying, “hey we used technology before Uber.”

      2. I have made complaint before and not once received a response.

      3. Say – who is on the Metropolitan Taxicab Commission board? 4 of the 8 board members (deadlock on votes cough cough) are a part of the cab companies “pausing” Uber’s efforts.

      4. See Number 3.

      5. Nice jab at Uber I suppose, but even at surging rates it is typically cheaper than a Taxi. And unless St. Louis is hosting Lollapalooza or it is New Years, the rates will not surge that often. Unless you from personal experience using Uber have seen this, do you use Uber? Speaking of New Years, it is impossible to get a regular Taxi, so it sure would be nice to have another option.

      6. If the “real winner” is the customer, why don’t you allow THEM to choose? Like they have across the country. If customers weren’t aware of the background protocol for Uber drivers in St. Louis, they sure are now after this has been dragged across the board room for a year.

      Honestly, this is fear of competition hiding behind “the code”. It is an excuse. Who wrote the code initially? MTC made up of cab owners? Regulation to the extent MTC is requiring was likely useful when customers had NO OTHER option but to use a taxi, but now maybe it is time to let them decide what is safe and what isn’t. I never see criminal reports or background checks that you run on taxi drivers, but I will tell you I have NEVER felt unsafe in an Uber, but have felt pretty uncomfortable and disrespected in Taxis multiple times in St. Louis.

    • John Kmetz

      Hello Debbie Rudawsky & Concerned Citizen. – Now that Uber is in Saint Louis. You should try it. I used it last weekend and it was great! I had an awesome driver, with a brand new car. The fair was inexpensive and the app was flawless. I hope you give it a try. You will love it!

      Also, when you download the app type in RIDIN30 in the promo section and the first $30 of your first trip is free. Thanks for being a concerned citizen. As a Saint Louis citizen, I really appreciate it!

      Warm Regards,

      John

      • John – We hope that any concerned citizen would be concerned about a company that has chosen to operate illegally despite fair rules that were passed by the MTC. We hope that the residents and visitors to our region will appreciate that we value the rules that are in place to protect the public and make an informed decision about their transportation options.

        • John Kmetz

          Hi Debbie,

          Thanks for you input.

          I was not concerned for my safety as Uber conducts county, federal, and multi-state background checks. I was also impressed how I could rate the driver after my trip. 5 stars from me! Again, I would recommend you take a Uber ride.

          Thanks and have a Uber Day!

          Warm Regards,
          John

  • John Kmetz

    Great Article! I’ve been following this story for the past 5 months, this is by far the best. Great depiction of each side and clearly lays out the problem. Thanks for the input! This needs to be shared.