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THE IMPACT OF ADVANCED RESERVATION APPS ON
AIRPORT, TAXI, AND SHARED RIDE VAN OPERATIONS
PROFESSOR MATTHEW W. DAUS, ESQ.MATTHEW W. DAUS, ESQ.
AGTA, NEVADA 2012October 7 - 10
Green Valley Ranch, Resort and Spa
Matthew W. Daus
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Presented ByPresented ByProfessor Matthew W. Daus, Esq.Professor Matthew W. Daus, Esq.
Distinguished Lecturer, UTRC Distinguished Lecturer, UTRC
President, IATRPresident, IATR
Partner & Chairman, Transportation Practice GroupPartner & Chairman, Transportation Practice Group Windels Marx Lane & Mittendorf, LLPWindels Marx Lane & Mittendorf, LLP
Contact: Contact: [email protected]
156 West 56th Street | New York, NY 10019156 West 56th Street | New York, NY 10019
T. 212.237.1106 | F. 212.262.1215T. 212.237.1106 | F. 212.262.1215
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In July 2012, the Windels Marx In July 2012, the Windels Marx Transportation Practice Group Transportation Practice Group Published A Report Entitled:Published A Report Entitled:
“ “Rogue” Smartphone Applications Rogue” Smartphone Applications for Taxicabs and Limousines: for Taxicabs and Limousines:
Innovation or Unfair Competition?Innovation or Unfair Competition? A National Regulatory Review of A National Regulatory Review of
Safety, Accountability and Safety, Accountability and Consumer Protection Legal Issues. Consumer Protection Legal Issues.
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Taxi, Shared Ride, Limousine…….Taxi, Shared Ride, Limousine…….
Yes, there is an app for that, but…Yes, there is an app for that, but…
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Is it the “Wild West”?Is it the “Wild West”?
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Smartphone AppsSmartphone Apps New apps are constantly entering the marketNew apps are constantly entering the market Apps are used for electronic hailing Apps are used for electronic hailing Arrange rides or share ridesArrange rides or share rides Expedite paymentsExpedite payments
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How Does It Work?How Does It Work?
Run the app and locate a service
Get an app
Book a Taxi/Car
Payment
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Smartphone Booking ApplicationsSmartphone Booking Applications Arranging for transportation no longer requires Arranging for transportation no longer requires
making a telephone call to a taxicab or limousine making a telephone call to a taxicab or limousine company.company.
Dispatching for-hire vehicles is now being done in Dispatching for-hire vehicles is now being done in growing numbers through smartphone growing numbers through smartphone applications (via driver and passenger apps).applications (via driver and passenger apps).
Users request a vehicle through a smartphone Users request a vehicle through a smartphone app.app.
The dispatcher/driver can accept the fare, paying The dispatcher/driver can accept the fare, paying a small commission, or skip it.a small commission, or skip it.
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ALL APPS ARE NOT CREATED EQUAL!
Prearrangement or Electronic Street Hail?
• Smartphone apps introduce the “electronic hail.”
An “electronic hail” is similar to a street hail, but through an individual’s smartphone.
• Jurisdictions around the country have not comprehensively addressed this new concept in their regulations……yet.
• New York City (TLC) has put an industry notice restricting the use of apps to hail yellow taxicabs…for now.
Legal Issues Identified with Rogue Apps
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Taxi/Limousine/Shared Ride DistinctionTaxi/Limousine/Shared Ride Distinction How is it that limousine and tax apps legally How is it that limousine and tax apps legally
operate with essentially the same function in operate with essentially the same function in different markets?different markets?
Is the inputting of your location and summoning Is the inputting of your location and summoning a vehicle considered an on-demand electronic a vehicle considered an on-demand electronic street hail or a prearranged service? street hail or a prearranged service?
Most jurisdictions have yet to answer these Most jurisdictions have yet to answer these questions directly….& varying definitions don’t questions directly….& varying definitions don’t help!help!
Legal Issues Identified with Rogue Apps
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““Rogue” Apps cut out the dispatch Rogue” Apps cut out the dispatch companies and deal directly with companies and deal directly with
drivers.drivers.
• Electronic hails will make it difficult to ensure properly Electronic hails will make it difficult to ensure properly licensed vehicles are picking-up passengers.licensed vehicles are picking-up passengers.
• Some cities prohibit third parties from contracting with Some cities prohibit third parties from contracting with for-hire ground transportation services (e.g., NYC has for-hire ground transportation services (e.g., NYC has issued an Industry Notice that app companies cannot issued an Industry Notice that app companies cannot directly dispatch FHV drivers).directly dispatch FHV drivers).
• Rogue apps distract drivers from a transportation Rogue apps distract drivers from a transportation company’s customers and can poach their drivers company’s customers and can poach their drivers away.away.
Legal Issues Identified with Rogue Apps
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Safety ConcernsSafety Concerns
• Apps may not be exclusively associated with a Apps may not be exclusively associated with a specific base or ground transportation business specific base or ground transportation business license.license.
• If these new apps continue to avoid regulation, the If these new apps continue to avoid regulation, the public may be riding in unauthorized vehicles. public may be riding in unauthorized vehicles.
• There is no guarantee that these vehicles are There is no guarantee that these vehicles are properly insured and are being driven by properly properly insured and are being driven by properly licensed drivers.licensed drivers.
Legal Issues Identified with Rogue Apps
Application Name Confusion
• Apps using terms “taxi” or “cab” are dispatching non-taxi vehicles.
• This creates consumer confusion (e.g., in Boston, dispatching limos from a taxi app).
E.g., San Francisco responded with a cease and desist letter in one case.
Legal Issues Identified with Rogue Apps
Illegal Service Refusals
• Many jurisdictions make it illegal to refuse any potential fares.
• Rogue Apps allow the driver to accept or decline potential dispatches.
• Disabled passengers may be refused service.• Drivers are enabled to discriminate against
consumers; offering service to some, and rejecting others.
Legal Issues Identified with Rogue Apps
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““Fair” FaresFair” Fares Fare regulations promote: Fare regulations promote:
(1) consumer protection; and (1) consumer protection; and (2) distinguish different transportation (2) distinguish different transportation services/modes. services/modes.
Some apps operate by charging passengers at the Some apps operate by charging passengers at the end of their trip, therefore the consumer has no end of their trip, therefore the consumer has no assurance as to the final fare, or whether or not it IS assurance as to the final fare, or whether or not it IS fair. fair.
• E.g., D.C. Taxicab Commission conducted “sting” - E.g., D.C. Taxicab Commission conducted “sting” - driver would not provide set fare for the passenger.driver would not provide set fare for the passenger.
• Some apps have “demand” or “surge” pricing and Some apps have “demand” or “surge” pricing and mandatory gratuities.mandatory gratuities.
Legal Issues Identified with Rogue Apps
Is an App a Taximeter?
Taxis are usually required to have a taximeter (and many jurisdictions do not ban taximeters in limousines).
Only taxicabs charge fares based on distance and time.
These taximeters are regulated by States via Federal guidance (NCWM & NIST), and are calibrated, inspected and certified.
Apps might use GPS to calculate the fare based on time, mileage and demand – not meeting taximeter standards.
Legal Issues Identified with Rogue Apps
Process = NIST Regional CWM National CWM State/Local Adoption of Handbook 44 & Publication 14
NIST on IATR App Committee (& conference speaker).
GPS Issues: Loss of signal & Illegal Blockers.
Software Issues: Should Weights & Measures Officials Set Standards & Approve?
National Institute for Safety & Technology (NIST) – Working
Group
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Dangers Faced By Ground Transportation Businesses
• Collaboration with an unruly or rogue app could Collaboration with an unruly or rogue app could lead to loss of: lead to loss of:
• Drivers Drivers • Reputation with customersReputation with customers• Brand & Goodwill (App may only matter Brand & Goodwill (App may only matter
with passengers in the long run)with passengers in the long run)• Independence (total dependency to App)Independence (total dependency to App)• Service coverage to longstanding clients Service coverage to longstanding clients
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Options for Ground Transportation CompaniesOptions for Ground Transportation Companies
1.1. Develop own App (or white label App).Develop own App (or white label App).
2.2. Contract with a legal App company.Contract with a legal App company.
3.3. Carefully review all 3Carefully review all 3rdrd party App party App contracts.contracts.
4.4. Vigilance to protect brand, customers and Vigilance to protect brand, customers and drivers.drivers.
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Impact on Airports & Shared Ride ServicesImpact on Airports & Shared Ride Services
No reported rogue app infiltration yet…..No reported rogue app infiltration yet….. Infiltration attempts are inevitable, but Infiltration attempts are inevitable, but
will be more challenging.will be more challenging. TaxisTaxis = Apps may interfere with dispatch = Apps may interfere with dispatch
operations and cause congestion issues.operations and cause congestion issues. ShuttlesShuttles = Extra passengers on way to = Extra passengers on way to
airport?; Pick-ups may be difficult.airport?; Pick-ups may be difficult. FranchisesFranchises = Interference with contracts = Interference with contracts
Things are moving fast!
1. Litigation Cambridge, MA Chicago, IL
2. IATR App CommitteeTaxi, limousine and for-hire transportation regulators considering model regulations & addressing legislative & enforcement issues.
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IATR App CommitteeThe purpose of the App Committee is to develop a model code of regulations to ensure smartphone app technology can exist fairly, safely and with accountability to protect the consumer, while also protecting existing businesses against unfair competition.
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IATR App CommitteeIATR App CommitteeProfessor Matthew W. Daus, ChairProfessor Matthew W. Daus, Chair
BostonBoston New York City Australia New York City Australia
ChicagoChicago Philadelphia Philadelphia Montreal Montreal
Los Angeles Los Angeles San FranciscoSan Francisco Toronto Toronto
AustinAustin Seattle Seattle San Diego San Diego
Denver Denver Washington, D.C. Washington, D.C. Houston Houston
NIST (National Institute for Standards & NIST (National Institute for Standards & Technology) Technology)
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IATR App CommitteeIATR App Committee Will produce model regulations & app standards.Will produce model regulations & app standards.
Working with Taxi, Limousine & Paratransit Association Working with Taxi, Limousine & Paratransit Association (TLPA) App Committee.(TLPA) App Committee.
The model regulations will be presented for comment The model regulations will be presented for comment and input at the IATR Conference.and input at the IATR Conference.
Regulations & Smartphones – “There’s an App for That” Regulations & Smartphones – “There’s an App for That” (Washington, DC Conference)(Washington, DC Conference)
[email protected]@iatr.org To be Presented on November 17, 2012To be Presented on November 17, 2012
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AGTA RegulatorsAGTA Regulators Welcome to participate in IATR’s model Welcome to participate in IATR’s model
regulation process.regulation process.
Model regulations can be referenced for Model regulations can be referenced for language to include in airport regulations language to include in airport regulations and/or franchise agreements. and/or franchise agreements.
2013 Joint AGTA – IATR Conference in St. 2013 Joint AGTA – IATR Conference in St. Louis = Great Opportunity to Brainstorm!!!Louis = Great Opportunity to Brainstorm!!!
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Thank You
AGTA!
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Q&A
