Uber, other ride apps shake up Twin Cities transportation

When Andrew Murphy needs a ride for a night out or special trip, he doesn't call a cab. Instead, he opens Uber, an app on his smartphone that connects drivers with folks who want rides.

A couple of taps lets Murphy set the location for a pickup and choose the kind of car he wants. He gets a text back detailing who's picking him up, when the ride will arrive and the cost, which automatically goes on his credit card. There's no need to tip. And Murphy can track his driver's approach.

"There's no uncertainty," he said. "If you need to go catch a flight or something, with Uber you know where they are, when they're going to come."

Uber is the best known of a new generation of car services sweeping the country and shaking up Twin Cities transportation. The new services offer rides in everything from limousines and high-end SUVs to the personal cars of folks looking to make money on the side by giving other people lifts.

Fares, however, are unregulated. With Uber, fares can more than double or triple when there's a surge in demand for rides and vehicles are in short supply.

While many customers give the services positive reviews, they're raising the ire of cab companies and the concerns of regulators who aren't quite sure how to treat this new kind of transportation service.

Uber does not have its own cars, nor does it employ drivers. It's essentially a booking service, extracting a fee of 20 percent or so for matching up drivers and riders. The company, in the Twin Cities since October 2012, says it has hundreds of drivers in the region but won't be more specific.

Fares are based on time and distance. Customers register for the Uber service when they download the company's app to their smartphones. Besides setting all the details of a trip, the app lets drivers rate riders and riders rate customers, and the ratings become part of their profiles.

"We're the match maker," said James Ondrey, Uber's Twin Cities general manager. "We're connecting riders with drivers. We live in a capitalist society, where better ideas are always coming. Uber has been able to innovate and provide a product that people have been asking for a long, long time."

The company says its limo service typically costs 30 to 50 percent more than a taxi and its service that matches riders with drivers offering rides in their personal cars usually costs less than a cab ride, though Uber's fares may rise 100 percent or more when demand is high and the supply of cars tightens.

In New York and Boston, Uber customers have complained of "surge" fares that averaged $25 or more per mile. In the Twin Cities, a cab ride generally cost $2.50 a mile, excluding minimum charge and airport fees.

If surge pricing is in effect, riders are shown the subsequently higher new minimum and per-mile rates and have to agree to them if they want to request a car. And before they lock up a ride, riders are again asked to confirm they realize higher than normal rates are in effect.

"Uber is focused on being a reliable transportation choice, at all times," says Ondrey. "Surge pricing helps ensure that consumers have that choice to still get a ride during extremely busy times if they want it. The perfect storm of holidays, parties and bad weather can, at times, drive surge pricing in some markets quite high. The elevated fares are determined by an algorithm, which elevates price in order to bring more supply online to meet the spike in demand."

Uber's generated new business for some local firms, especially limousine companies.

The service delivers customers who would otherwise end up in cabs, said Patrick Grose, owner of Preferred Limousine of Burnsville. Uber, he added, has doubled his business and made limos affordable for more people, with a minimum charge of just $12 for a ride.

"The limousine company used to charge like a minimum of $50," he said. "Now, you've got a service that charges you by the mile, like a taxi, which it more affordable if you're just going short distances."

CHEAPER OPTIONS AVAILABLE

For folks who want a less pricey ride, there's UberX, which matches riders with drivers who use their private cars to transport people.

Uber says it checks out the drivers and their cars to make sure they'll provide a safe ride in a clean, reliable, good-looking vehicle. The company also says it provides a $1 million insurance policy to supplement a driver's auto insurance.

Jon Sasseville of Bloomington started providing rides through UberX this past September, hauling folks around in his 2004 Accura, after he finishes his full-time day job working in information technology at Blue Cross Blue Shield of Minnesota.

"This position lets me go online or off-line any time I want to," he said. "I've got two girls in college so this helps pay those bills."

There are no restrictions on where Uber's limos can pick up customers, as long as the pickups are pre-arranged. Limos are regulated by the state and their business with Uber doesn't create any issues, it seems, with the state.

But taxi services are regulated by local authorities. And the city of Minneapolis and Minneapolis-St. Paul International Airport consider UberX to be a taxi service. Those authorities insist UberX cars and drivers would have to meet the same insurance, vehicle, and other requirements cab companies and their drivers do.

Uber hasn't sought to meet those requirements so its UberX drivers can't pick up fares at the airport or in the city of Minneapolis. The drivers can, however, drop off people in Minneapolis or at the airport.

"From our standpoint, they would need to be regulated just like the taxis are to operate at the airport, and we haven't seen them trying to do that here," said airport spokesman Patrick Hogan.

Hogan said an annual permit to pick up fares at the airport costs about $3,500 per vehicle.

In St. Paul and some suburbs, UberX and other ride-matching services have been free to operate without regulatory flack. But that could change, as cities and the airport coordinate how they treat Uber.

"It's a new model," said Ricardo Cervantes, director of St. Paul's department of safety and inspections. The department is studying Uber and other services such as Lyft and Sidecar to determine what, if any, regulations are necessary.

It's been hard to get a handle on exactly how many cars Uber and Lyft have on Twin cities roads now, Cervantes added.

"I can't say with any accuracy how many they have," he said. "But we know the potential for them to grow is good. they've been successful in other markets. So, I would expect they'll be just as successful here in the Twin Cities."

"NOT A LEVEL PLAYING FIELD"

Now in 32 U.S. markets, Uber has fought attempts to regulate the business. Last August, Uber raised about $260 million from investors, including Google. Uber said the money would be used to enter new markets, add customers and drivers and "fight off protectionist, anti-competitive efforts."

It's only fair, however, that Uber and its peers play by the same rules that govern his business, said Steve Pint, CEO of Taxi Services Inc., which operates 500 cabs in the Twin Cites. "It's not a level playing field," he said of Uber.

"They're advertising, 'We're less than a taxicab.' Of course, you are," he said. "You don't have an age requirement on the vehicle. Ten percent of our fleet has to be wheelchair-accessible vehicles. Pricing is regulated. We have a maximum rate per mile that we charge, no matter what -- whether it's snowing [or] New Year's Eve."

The alternative to regulating services like Uber could be deregulating the taxi business. It'll be up to regulators to make or try to make that call, as they assess to what extent regulation of these services is in the public interest.

Pint and fellow cab owners are considering legal actions they could take to combat what they say is an unfair lack of regulation of Uber and like rivals.

Meanwhile, Pint is fighting back on the technology front. His taxis have their own smartphone app for booking rides.