On the Road Again

Uber and Lyft are ready to return to Austin — and it could mean lower rates

Uber and Lyft ready to return to Austin — and it may mean lower rates

Uber
Will Uber and Lyft lower prices to lure Austin customers? Uber/Facebook

They’re back ... almost. If Gov. Greg Abbott signs ride-hailing legislation as expected Monday, May 29, Uber and Lyft are set to resume services in Austin following a one-year absence. And with their re-entry into the Austin market might come a drop in rates for ride-hailing passengers.

Christian Perea, head of operations for The Rideshare Guy, a blog and podcast for ride-hailing drivers, tells CultureMap that Uber and Lyft might immediately reduce the rates that Austin passengers pay to lure them back to the ride-hailing apps, with the two services initially subsidizing the pay difference for drivers.

“Those lower rates will probably become permanent,” he adds, “and the drivers will eat the difference after six months.”

Perea forecasts that once Uber and Lyft regain dominance of the Austin market, they’ll settle on passenger pricing of about 65 cents a mile, compared with a current base rate of 99 cents a mile for one of their competitors, RideAustin, and $1.10 a mile for another rival, Fasten.

The bill awaiting Abbott’s signature, known as HB 100, would impose an array of regulations on ride-hailing services across Texas, but it would not require drivers to undergo fingerprint-based background checks — a sticking point that prompted Uber and Lyft to exit the Austin market in May 2016. The legislation would override a City of Austin ordinance that mandates fingerprint background checks for ride-hailing drivers.

The bill will take effect immediately after Abbott signs it.

Controversy over the fingerprinting of ride-hailing drivers in Austin reached a boiling point in the spring of 2016.

Uber and Lyft pumped around $10 million into an Austin ballot measure that would have dropped the fingerprinting requirement, which the Austin City Council adopted in December 2015 as a way to boost public safety. Uber and Lyft argued that the fingerprinting mandate curbed innovation and failed to improve public safety.

Many critics, however, balked at the ballot initiative, griping about what they viewed as Uber and Lyft’s costly and heavy-handed effort to reverse the City of Austin’s ride-hailing ordinance. In May 2016, Austin voters rejected the change pushed by Uber and Lyft.

Both Uber and Lyft issued statements trumpeting their return to Austin.

“Austin is an incubator for technology and entrepreneurship, and we are excited to be back in the mix,” the Uber statement says. “Our local team is focused on making sure that Uber works for Austinites and helping our driver-partners earn. We know that we have a lot of work to do in the city, but we couldn’t be more excited for the road ahead.”

Lyft’s statement expresses a similar sentiment: “We’re excited to return to Austin on Monday. As we’ve said for months, we will relaunch in the city as soon as Governor Abbott signs HB 100 into law.”

Not everyone in Austin is giddy about the comeback of Uber and Lyft, though.

For instance, state Sens. Kirk Watson, an Austin Democrat, and Judith Zaffirini, a Laredo Democrat, voted against the bill. Their districts cover parts of Travis County. The two other state senators who represent portions of Travis County — Dawn Buckingham, a Lakeway Republican, and Donna Campbell, a New Braunfels Republican — voted for HB 100.

In a statement after the Texas Legislature approved HB 100, Austin Mayor Steve Adler said: “I’m disappointed that the legislature chose to nullify the bedrock principles of self-governance and limited government by imposing regulations on our city over the objection of Austin voters. Our city should be proud of how we filled the gap created when Uber and Lyft left, and now we must hope that they return ready to compete in a way that reflects Austin’s values.”

Ride-hailing services like Fare, Fasten, and RideAustin swooped in to pick up where Uber and Lyft left off. Beset by major glitches, both Fasten and RideAustin stumbled badly in trying to meet heightened demand during this year’s SXSW; Fare, however, operated smoothly.

It’s uncertain how the revival of Uber and Lyft in Austin will affect the likes of Fare, Fasten, and RideAustin. But they’re certainly not pleased about Abbott’s anticipated signing of HB 100.

Kirill Evdakov, co-founder and CEO of Fasten, wonders whether Uber and Lyft will be able to woo drivers back. For his part, Perea predicts Uber and Lyft will dangle several financial incentives to attract drivers once again.

In a statement, Evdakov says: “Austinites may not be able to overturn HB 100 legislatively, but they can make it irrelevant economically.”