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Ridesharing arrives in the region

Lyft launches its service at the Rochester airport

While Uber Technologies Inc. and its recently ousted CEO combat a backlash from stakeholders and in the media, Lyft Inc. has motored into neighborhoods around the country, including Rochester.

This week, Rochester became one of the upstate regions to welcome ridesharing, as Lyft launched its service at the Greater Rochester International Airport.

Company officials signed an operating agreement with the airport that will allow drivers to pick up and drop off passengers curbside, said Michael Giardino, airport director. No such agreement has been made with Uber, although negotiations continue and Giardino is confident Uber will be available to airport customers.

Both firms are now available in and around the Rochester area, officials said.

“I think it’s another choice and it’s a great choice,” Giardino said of ride-hailing at the airport. “I’ve used the service and I think it’s terrific.”

The Federal Aviation Administration allows the airport to collect revenues for services operating on airport property, such as livery service and parking, because no tax dollars are used to run the airport.

New York’s recent ridesharing legislation essentially allows upstate airports to charge transportation network companies, as ridesharing services are called, to use their property to conduct business.

Giardino declined to discuss the Lyft agreement or how much the airport will receive as a result of ridesharing services contracts, but said “the numbers are pretty standard throughout the country,” noting airports in Buffalo, Albany and Syracuse also have been negotiating contracts with Uber and Lyft.

Jaime Raczka, Lyft regional director of new markets, said while the airport fees differ from region to region, in Rochester, passengers who use the ride-hailing service will pay $2 for each pickup or drop-off they hire, in addition to the cost of the service.

Elsewhere, Lyft had balked when the Niagara Frontier Transportation Authority, which operates Buffalo Niagara International Airport and Niagara Falls International Airport, said it would charge the ridesharing company a $3.50 fee for each drop-off and pickup.

Both firms eventually came to agreements with the transportation agency. Lyft will pay $3 per trip, while Uber will pay a flat fee of $180,000 for a one-year pilot program.

By comparison, in Baltimore, Uber and Lyft will pay the airport $2.50 per pickup and drop-off, a fee passed on to customers, while in Atlanta, riders pay a $3.85 airport fee. In Florida however, the Greater Orlando Aviation Authority is calling for ridesharing companies to pay a $5.80 pickup charge for each ride.

“The FAA would encourage us to have this type of service to collect revenue from whoever is benefiting from the airport being here,” Giardino said.

Bipartisan support

Support for ride-hailing services upstate has been mostly bipartisan. The service gained traction on the legislative floor last year as lawmakers on both sides touted the benefits of companies such as Lyft and Uber. In February this year, the state Senate passed legislation allowing ridesharing services to operate statewide, and in May the state Assembly voted to allow the service to begin June 29.

Assemblyman Mark Johns, R-Webster, has been an outspoken advocate of the service.

“It’s going to help the economy,” he said. “It’s going to protect fellow citizens against DWI infractions.”

Johns, who acknowledged he had not used a ride-hailing service before, said he and his fellow Republicans insisted on amending the ridesharing bill to ensure sex offenders could not be drivers for Uber or Lyft.

The Business Council of New York State Inc. backed ridesharing statewide in its Back to Business 2017 legislative and regulatory agenda, and Business Council President Heather Briccetti said ridesharing promotes economic freedom by spurring economic development, creating jobs and complementing the state’s existing public transit systems.

“Residents in New York City and across the world have for years enjoyed the services of companies like Uber and Lyft,” Briccetti said in a statement when the legislation passed. “It’s time the rest of our state gets to join in.”

Johns echoed that sentiment: “In the other 49 states they have ridesharing. They come into the airport in Rochester and it’s not available to them. What does that make New York State look like? That we’re behind the times.”

Ridesharing cheerleaders say the service benefits a community. An economic report published last year by Uber suggested some 1,000 jobs would be created in the Rochester region in its first year of operation here, while 13,000 jobs would be added statewide by Uber’s presence upstate.

A report from the National Association for the Advancement of Colored People and Uber published in March contends for millions of New Yorkers, the day begins and ends with long walks to buses that often are crowded and unreliable.

The report’s authors said transportation deficiencies are holding back communities in Albany, Buffalo, Rochester and Syracuse from realizing their full economic potential. In Rochester, for example, the report notes that for the last decade businesses have returned to the downtown area, employing some 50,000 workers, yet just 3,000 individuals live downtown. That means a large number of workers faces long commutes to and from work.

Citing data from the 2014 American Community Survey, the report noted nearly 12 percent of Rochester workers did not have a vehicle available to transport them to work, and nearly 40 percent of those workers took public transit. Nearly 15 percent of those without a vehicle walked to work and another 4 percent took a taxi or other means of travel.

And, the report states, 20,000 low-income families in Rochester do not own cars.

The NAACP and Uber report also contends that Rochester’s public transit system is strained and does not have the funding to address critical needs, such as increasing service, so the city’s working population that relies on public transportation can have easier and more affordable commutes.

The report suggests Uber has the potential to fill the void in Rochester’s “transit deserts,” neighborhoods such as the city’s 19th Ward, where a single Regional Transit Service bus route is available.

Johns said that, for the unemployed, ridesharing jobs will allow them to make at least a small living.

“Or some people may do it as a supplement to their regular income,” he said. “And there may be some people that have obligations with kids and this would allow them to drive during the times that they don’t have to be with the family or have to be with the kids. There’s a lot of pluses picking your own hours.”

Both Uber and Lyft officials have visited Rochester on several occasions this year, drumming up interest in the service and holding job fairs for drivers, and both companies worked with state government to develop the appropriate legislation.

“Our government relations team has been on the ground in New York, working with government officials to ensure that we were putting together legislation that made sense for us to be able to operate there and ensure the safety and reliability of this kind of ridesharing alternative to its citizens,” Raczka said.

Uber participated in roundtables, discussions and hearings with elected officials, stakeholders and local residents to ensure that a bill would be passed that would appeal to all involved, an Uber spokeswoman noted.

“Rochester has a lot to offer tourists, business owners and residents, both young and old,” Uber officials stated in an email. “We are excited for the opportunity to connect visitors in Rochester to places like the Port of Rochester, Lake Ontario beach front, wineries, breweries and other popular destinations.”

Drivers signing up

Uber officials said the company has had thousands of driver signups in the region and expects that number to grow in the coming months.

Lyft’s Raczka said the company does not disclose how many jobs will be created through its app in a region, but she said the service has recruited thousands of drivers in the Rochester area.

“We’ve launched a lot of cities across the U.S. this year and we were overwhelmed with how many people were interested in driving for Lyft in New York and Rochester specifically,” Raczka said. “We’re also excited that we’re able to launch before the Fourth of July weekend.”

The earnings potential for drivers in Rochester depends on the individual, Raczka said. Since drivers are considered independent contractors, they have control over their own hours.

Uber officials echoed that sentiment: “Uber will provide flexible economic opportunities for local Rochester residents, who can turn on the app and work where and when they want. Ridesharing services will help continue Rochester’s economic revitalization and make upstate cities a place to invest in a new business or launch a startup.”

Keeping young people in upstate cities also is imperative, the Uber spokeswoman said.

“In terms of how it benefits the local economy, one leading indicator is driver response,” she said. “It shows that people are really excited about having a chance to make extra income on the side.”

Lyft also is focused on reducing the number of cars on the road, and Raczka said safety is its No. 1 priority.

“We feel very passionately that making sure people can get home safely is a huge benefit to local communities,” she said. “And there’s been reports done that show the reduction of drunk driving incidents in towns where there is ridesharing.”

A bumpy road

But for all the high-fiving surrounding ride-hailing services, the industry’s two biggest players, Uber and Lyft, have not been without their share of bumps in the road.

The Federal Trade Commission in January ordered Uber to pay $20 million to settle charges on earnings claims by drivers. And founder Travis Kalanick came under fire when a video of him berating a driver went viral earlier this year.

The company also has been accused of gender pay inequality, sexual harassment and sexist comments, among other things. Uber fired more than 20 executives following a harassment investigation in early June.

Kalanick resigned a couple weeks later amid speculation that his board pressured him to leave so it could work on improving the company’s image.

“The drivers are the public face of Uber,” said Independent Drivers Guild spokeswoman Moira Muntz in a statement when Kalanick announced his resignation. “Creating a culture where drivers are treated with greater respect, rather than pawns in a high stakes chess game, will be vital to the company’s future.”

IDG is a Machinists Union affiliate that represents more than 45,000 for-hire vehicle drivers in New York City.

Lyft, meanwhile came under fire in May for its billing and payment practices on interstate trips originating in New York City. State Assemblyman Robert Rodriguez, D-East Harlem, and the IDG called for the state to launch an investigation into the way Lyft charges sales tax on its rides outside the state.

In a letter to state Attorney General Eric Schneiderman and Nonie Manion, executive deputy commissioner of the state’s Department of Taxation and Finance, Rodriguez contends  the state’s sales tax is intended to be charged to passengers for rides that begin and end in New York.

Lyft, he said, has been charging sales tax, under the guise of “administrative costs,” and deducting the charge from drivers’ fares. Lyft calls the amounts “surcharges” on its driver’s pay app.

Lyft briefly operated in Rochester in 2014. The company was investigated by the state attorney general’s office and the Department of Financial Services for violations of state and municipal laws centered on insurance issues. Lyft paid $300,000 in penalties and suspended its service in Rochester and Buffalo.

Regardless of who is on top in the ridesharing industry, the opportunity for Rochesterians is both welcome and long overdue, community leaders and elected officials say.

vspicer@bridgetowermedia.com / 585-653-4021

(c) 2017 Rochester Business Journal. To obtain permission to reprint this article, call 585-363-7269 or email madams@bridgetowermedia.com.

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