Libéralisation des marchés

No, ride-sharing apps will not be disastrous for Montreal

Longtime taxi driver Peter Foster’s anecdotal history of Montreal’s taxi industry paints a scary picture (“UberX would be a disaster for Montrealers,” Opinion, Nov. 15).

Before 1987, when the Montreal taxi bureau was created and began “bringing order into chaos,” customers were abused and complaints went unanswered. And according to Foster, ride-sharing apps like Uber, Lyft and Sidecar threaten to plunge the city back into the anarchy he lived through as a young driver.

Yet he also more or less admits that the taxi bureau has become complacent in recent years, that industry leaders are often behind the times, and that customer dissatisfaction is currently high. The golden age of taxis in Montreal does not seem to have lasted very long.

Regardless of the ups and downs of the taxi industry, however, ride-sharing apps are not the harbingers of doom Foster makes them out to be. Rather, by allowing taxi drivers to find clients more rapidly, and other individuals to offer transportation services more easily, these technologies are currently revolutionizing the urban transportation industry and could lead to considerable improvements for customers.

The largest benefits from these new applications result from a more efficient use of resources through carpooling. A study carried out in New York City showed that sharing among passengers could reduce the total number of kilometres travelled by roughly 40 per cent, contributing to smaller and fewer traffic jams, lower air-pollution emissions and a reduction in prices and waiting times for consumers.

And studies have already confirmed that these applications have reduced waiting times considerably. In the San Francisco market, for example, 93 per cent of customers who used ride-sharing apps on weekday mornings and afternoons waited 10 minutes or less for their rides to arrive, compared to just 35 per cent of customers who used taxi dispatch services.

Cost is another advantage. A survey of 21 large U.S. cities shows that for a five-mile trip at 30 mph with no idling, using Uber is cheaper than using a taxi everywhere except in New York and Philadelphia.

The only real barrier to the adoption of these new technologies is taxi licences (permits of operation). It is impossible to enter the taxi industry without acquiring such a licence, or renting one from someone who owns one. In Montreal, the price of a permit of operation is currently about $200,000.

However, the increased competition created by ride-sharing applications is reducing the value of these licences. Taxi drivers who rely on these licences as retirement assets will understandably see any deterioration in their value as hindering their retirement prospects, which explains the resistance of the taxi industry.

Yet given the substantial potential benefits of ride-sharing apps, it would be a huge mistake to give in to the temptation of trying to ban or overregulate these new services. It would be more economically efficient for everyone involved to instead partly compensate taxi drivers for their losses, based on such considerations as the original amount paid by the owner of the licence and the length of time he or she has owned it — the same logic successfully applied by the Australian government when compensating dairy farmers for the abolition of production quotas a decade ago.

Ride-sharing applications have the potential to revolutionize the personal transportation sector in urban areas, to the benefit of drivers and riders alike. We shouldn’t let unfounded fears hinder their adoption.

Vincent Geloso et Jasmin Guénette, sont respectivement chercheur associé et vice-président de l'Institut économique de Montréal.

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