Ridesharing companies get big win at O'Hare, but at a high price
By Fiona Ortiz
CHICAGO (Reuters) - Chicago's budget woes have handed rideshare companies like Uber Technologies [UBER.UL] and Lyft a major victory - long-sought-after access to pick up passengers at the city's busy airports, O'Hare International and Midway.
But it comes at a high price: a $5 city fee to pick up and drop off passengers, compared with a $2 fee that taxi drivers must charge customers for the same service.
Under Mayor Rahm Emanuel's 2016 budget proposal ride-sharing companies for the first time will be allowed to pick up passengers at airports - previously only taxis and livery services had that access.
Emanuel says the airport fees as well as new 50 cent surcharges on every ridesharing and taxi ride - up from a current 30 cent surcharge on rideshares only - would add $48 million to city coffers next year as he tries to dodge a budget crisis. Chicago faces a $745 million budget shortfall and has $20 billion in unfunded pension liabilities.
If the proposal gains City Council approval, it would be a major step forward for the ride-sharing industry. Ridesharing pickups are permitted in airports including San Francisco and Nashville, and ridesharing companies are working out new permits at the airports in Washington, D.C., and at Los Angeles International Airport. The fee in Los Angeles, for example, will be $4 per each pickup and dropoff.
At least one ridesharing company complains the $5 fee in Chicago puts it at a competitive disadvantage to taxi companies.
"This proposal would double the fees consumers would pay for ridesharing compared to what they would pay to take a taxi. This would also make fees to participate in ridesharing at Chicago airports the highest in the country," said Lyft spokeswoman Chelsea Wilson.
Uber did not respond to requests for comment.
Emanuel's budget proposal also includes other revenue boosters such as property tax hikes and an unprecedented garbage pickup fee.
Although taxi drivers would get a 15 percent fare hike under the budget proposal, their first in a decade, they are threatening to strike on Thursday, saying the increase is not enough to ward off growing competition from ridesharing. The drivers also complain that the new competition at airports will hurt their business.
Taxis would also lose their exclusive right to pickup fairs at the McCormick Place convention center and the Navy Pier tourist attraction.
"The taxi industry in the City of Chicago is like a wounded animal in intensive care, and this proposal will kill it," said Fayez Khozindar, chairman of the United Taxidrivers Community Council.
Khozindar said airports for now are the only refuge for taxi drivers, who are struggling to compete with Uber drivers on the city's streets. Taxis queue up for up to three hours to get guaranteed fares at O'Hare and Midway, he said. "Now it will be invaded by thousands of part-timers," he said.
Uber, Lyft and other ridesharing companies have faced stiff opposition in many cities from taxi operators who accuse them of underpaying drivers, causing congestion and taking away business. But ridesharing has continued to grow. In July, New York Mayor Bill de Blasio gave up on trying to cap Uber's growth in the city.
Outside the U.S., taxi drivers from Rio to Paris have gone on strike or blocked streets to protest against ridesharing companies. On Tuesday France's Constitutional Court upheld a law that banned one of Uber's car services that relies on non-professional drivers using their own vehicles.
It is not yet clear where ridesharing cars would pick up passengers at O'Hare and Midway under the mayor's proposal. The City of Chicago said it is still working that out. In other U.S. airports, there are designated lots or curb areas for pickup. Ridesharing cars do not generally queue up like taxis, but go to the airport to pick up people who have lined up the ride through an app on their phone.
(Additional reporting by Karen Pierog; Editing by David Greising and Christian Plumb)
