Lyft, Uber, killing local cab companies

SINKING FEELING: Pedro Virgen’s Union Cab company has sunk from 13 cabs to three as a result of competition from largely unregulated ride share companies that charge half as much as him.

The owner of Union Taxi Company of Gilroy says ride-sharing companies like Lyft and Uber have been killing his business. Pedro Virgen, 50, who has owned the company since 2006, has seen his business shrink from eight taxis and a dozen employees to three cabs and two drivers.
He’s lost his home, and his family of four now shares a two-bedroom apartment with his sister and her husband.
“I’m sad,” said Virgen. “I don’t know why the city lets them operate here, They don’t have to have permits, like we do. They don’t have their cars inspected or give their employees drug tests. They don’t have the insurance we have.”
Virgen works 12 hours a day to keep afloat and pay $4,100 a month for insurance, fuel, licensing fees, his office and advertising. Virgen has laid off his dispatchers and his secretary as business has dwindled.
Customers “all go to Uber because it’s a lot cheaper,” Virgen said. “I don’t know if I’m going to be in business much longer. It’s just too much. They can charge half as much as I can. To go to San Jose, I charge $90, and they only charge $45.”
Virgen, an immigrant from the Oaxaca region of Mexico, worked as a cab driver for Union Taxi and saved enough money to buy the company for $70,000 in 2006. He made a good living until about three years ago, when Uber and Lyft made inroads here.
Now, to help make ends meet and support his wife and 7- and 9-year-old children, he’s selling prepared food and Oaxacan crafts from his office at 7263 Monterey St. As part of the city’s regulation of cab companies, he’s required to pay rent on an office in town. The ride sharing companies aren’t. He is not alone. Taxi cab companies around the country have closed, including Gilroy’s Golden Taxi Cab.
One of the things Virgen is most sad about is that he and his drivers made a decent living. In his opinion, rideshare drivers don’t make a fair wage, and says his drivers could make as much as $400 a day.
Gilroy Lyft driver Nikole Harlan, 36, makes considerably less, but is happy. She started driving with Lyft over a month ago after being unemployed for six months, and she’s enjoying the work.
“I posted on Facebook and I asked if people knew that Uber and Lyft were in the area and most people didn’t,” said Harlan, who also works at a Gilroy flower shop.
“I like it. You get to meet new people; you learn the roads better and it’s a learning experience every time,” Harlan said.
Harlan never interacts with other Lyft drivers and dealings with the company are over the web. In fact, nearly all business is conducted through the Lyft app, including getting paid.
“You pick up somebody, tap on the app and let them know that you picked somebody up,” she said. “It automatically tells you where to go and it gives you step by step directions. After the drop off, the app automatically tells you how much is charged and the money goes into your piggy bank. Every week you get paid in the middle of Tuesday.”
Harlan has made up to $600 in a week and was especially busy during the Garlic Festival, picking up and dropping off festival goers throughout the weekend.
“I think I picked up about 10 people in only a couple of hours,” Harlan said.
So far Harlan has not had any trouble passengers. Nobody has been rude, and she hasn’t encountered obnoxious drunks, late night couples getting intimate in her backseat or anybody who has made her feel unsafe.
“Some people are just too quiet for me, I like someone who can interact with me a little bit. I prefer if they sit in the back, it makes me feel that I’m providing a service for somebody.”
Fares begin to be calculated one minute after a driver has confirmed on the Lyft app that they arrived at the pickup spot. The fare includes a pick up fee, cost per mile and cost per minute. Rates are also calculated based on area. In Gilroy, the minimum fee is $5, $1.22 per mile and $.22 per minute.
There have been rideshare horror stories. Jason Brian Dalton, a former Uber driver in Kalamazoo Michigan, engaged in a killing spree in 2016 when he murdered six people between stops. Police said that Dalton would pick up and drop off passengers for Uber between shootings. Uber itself has been rocked by a recent sex scandal that led to the dismissal of 20 employees and CEO Travis Kalanick in late June. Lyft has taken advantage of its rival’s vulnerability and has seen its market share increase from 21 to 25 percent since February, according to Forbes Tech.
With a higher market share and massive global expansion, CNBC reported that despite spending $600 million in 2016 on expansion, the company made $700 million in revenue. Uber meanwhile ended a long trade war in China when it merged with the Chinese ride-share company Didi Chuxing. According to Forbes, Uber will reportedly receive 20 percent of the new company, while Didi will invest $1 billion in Uber. Techcrunch reports a $50 billion valuation of Uber while Lyft lags behind at $7.5 billion.
According to hits website, a Lyft driver must be at least 21, pass a driving record check and a background check, possess a current driver’s license and registration and have a smartphone. Vehicles must be at least 2004 models in California, be four doors and pass a vehicle inspection. Drivers cannot have a speeding ticket in the past three years, may not have any driving related convictions, moving violations or a DUI or drug convictions within seven years. Lyft does not require a drug test to drive for the company.
“I had to take the car to a service center and they tested the brakes, the lights and made sure everything was in working order,” Harlan said. “The car can not have any mechanical problems at all. You have to send all of that into Lyft before they give you the final ok.”
As taxis are replaced by ride sharing, so is the custom of tipping.
“I have been given a cash tip one time,” Harlan said. “I don’t expect tips. It’s their right, but if they don’t want to, that’s ok. If they don’t tip me, I don’t wonder what I did wrong.”
So far, Harlan’s longest trip was when she embarked on a 170-mile round trip when she drove someone to Tracy.
“That was over a $100 ride, but it was worth it,” Harlan said. “To me, it was worth it. The guy was willing to pay for it and he really wanted to get there. The ride seemed much shorter because the person talked with me the whole time. I like driving. If I can get paid to do something I like, why not?”