Bad news for Uber and Lyft as New York cracks down on licences

9 Aug 2018

New York City traffic. Image: oneinchpunch/Shutterstock

New York is the first city in the US to cap ride-sharing vehicles, directly impacting Uber and Lyft.

Uber and Lyft took a blow on Wednesday (8 August) as New York City Council voted to freeze new ride-sharing vehicle licences for a year. Taxi drivers and others in favour of the legislation have been campaigning for months, while the companies themselves have been imploring customers to oppose the changes.

New York mayor Bill de Blasio said he would sign the legislation, having originally tried to impose limitations on the services in 2015. He said: “Our city is directly confronting a crisis that is driving working New Yorkers into poverty and our streets into gridlock.”

An overwhelming majority

The council approved the licensing cap by 39 votes to 6. The ride-sharing companies previously warned that the cap would lead to reduced services in the outer boroughs of New York City and higher fares.

Council member Richie Torres said: “No longer will the city of New York stand by idly while unfettered growth in the for-hire sector causes ever-worsening traffic congestion, ever-rising environmental degrading and ever-deepening human suffering.”

Those in favour of the proposals said that both traditional yellow cab drivers and drivers for the likes of Uber and Lyft are suffering due to the volume of ride-sharing vehicles on the city’s roads.

Even the companies’ car-pooling services still pull passengers from public transport, adding new vehicles to the already overwhelming traffic in the city.

Bhairavi Desai, the executive director of the New York Taxi Workers Alliance, told NBC New York that Uber and Lyft use technological innovation “to return us to a time of sweated labour, destroying lives and livelihoods across the planet”. Campaign groups had linked the issue to a recent spate of suicides carried out by cab drivers due to financial pressure.

According to the BBC, approximately 80,000 Uber and Lyft cars are operating throughout New York City, versus only 13,500 yellow cabs. The city is the largest market in the US for Uber.

The New York City Taxi and Limousine Commission (TLC) will now have the power to regulate minimum fare rates, minimum pay for drivers and set new rules for firms such as Lyft and Uber.

Uber and Lyft respond

A spokesperson for Uber told The Wall Street Journal that the pause on new vehicle licences will damage “one of the few reliable transportation options while doing nothing to fix the subways or ease congestion”.

Lyft said the decision would “bring New Yorkers back to an era of struggling to get a ride, particularly for communities of colour and in the outer boroughs”.

The companies pointed out that many cars for private use contribute to the traffic problems in the city.

Wired noted that while New York failed to pass a congestion charge earlier in 2018, attitudes could soon change, particularly in light of this recent vote.

New permits for wheelchair-accessible vehicles will still be available and the moratorium can be lifted in certain cases. Chicago and San Francisco have also made moves to regulate the companies.

Ellen Tannam was a journalist with Silicon Republic, covering all manner of business and tech subjects