My intern Jessica Greene has another piece at Huffington Post on protectionist regulation aimed at driver services, this time in Portland, Oregon.
Instead of a taxicab across town, you could take a clean, upscale Town car for the same price. But despite car services in many cities ready to take you, new regulations designed to protect big taxi companies are preventing them from doing so.
This is especially true in Portland, Ore., where regulators have waged an aggressive crackdown on car services, also known as livery drivers . . .
In Portland, livery services must charge a minimum fare of $50, and receive reservations at least an hour in advance of pick-up. The law, which went into effect in 2009, also prohibits them from parking in front of hotels. Livery vehicles must charge a minimum rate 35 percent higher than competing taxi companies for any ride outside the city. The fine for violating the ordinance is $500 for the first offense, $1,000 for the second and suspension of permits for a third.
The sheer absurdity of these laws comes into focus when you consider that livery services can’t even market themselves with coupons or discounts.
In September, two Portland livery companies were initially fined nearly a million dollars and faced losing their businesses for offering a promotion on Groupon, the popular online coupon site. Fiesta Limousine and Pacific Cascade Towncar offered a Groupon for one-time limo or sedan rides at $32, well under the mandated minimum fare. After the offer went live, Portland taxi companies complained to the city. City officials responded with threatening letters to Fiesta and Pacific, and insisted that Groupon remove the promotion. The city then fined Pacific $659,000 and Fiesta Limousine $250,000, based on the number of Groupons sold. The companies were told that if they honored the Groupons, they’d lose their operating permits. Both companies escaped the harsh fines by refunding the Groupons, but each still paid a $500 fine for advertising services under the minimum fare.
And in Portland, city officials don’t even pretend that the law is anything but sheer protectionism for taxi companies.
Frank Dufray, administrator for Portland’s Private-for-Hire Transportation Program, which regulates both taxi and livery services, said the laws aren’t intended to help consumers or the city, but to protect market share for the taxi industry. “The main thing is that you don’t want the Town cars to take all of the best fares, which are to the airport, and not leave any for the taxi industry,” he said. “That’s why there’s a minimum fare and a one-hour wait requirement.”
Exactly how do consumers benefit by protecting taxis, who in many cases appear to offer worse service for a higher price?