Hard Truths And Turns On TNCs

Posted on January 5, 2015 by - Also by this author

In the last few months, Uber has proved it is not inevitable, invincible or ingenious. In fact, it’s all too prideful, so predictable, all too human. The Transportation Networking Company has made some grievous mistakes, and like a beloved celebrity caught up in a self-inflicted scandal, betrays some fatal flaws.

December headlines would qualify as an avalanche of bad news for the obnoxious and cavalier TNC: Crimes, regulatory snafus, lawsuits, public relations spectacles, inquisitions, injunctions, media hostility, a boorish CEO, and most destructive of all, bad buzz.

Amid all the media reports that seem to take up bigger chunks of my day via my iPad, I found this quote in a Bloomberg News article the most insightful: “The-low cost premise is starting to look doubtful,” said Erik Gordon, who teaches entrepreneurship at the Ross School of Business at the University of Michigan. “If the lower costs arise from insufficient screening and supervision of drivers and no insurance, the advantage is not sustainable and the valuation could collapse.”

At this point, it would be tempting to roll-out the usual clichés about swinging pendulums and paradigm shifts. If you look at more facts, however, you’ll want to avoid another typical tendency: Dancing in the end zone.

While TNCs may be hitting hard times, the sobering facts mount for traditional ground transportation. In December alone, I learned about a big-city limousine service that has lost high-end hotel business due to lurking TNC vehicles. I heard devastating accounts of taxicab industry losses. I know of a few operators giving up on sedan business and going all-in for buses. And then these anecdotes popped up:

  • An operator looking for transportation from a hotel lobby to a downtown area was told by a staff member to just download the Uber app and get a car.
  • Illegal TNC vehicles are now so relentless at one major airport that overwhelmed authorities are helpless to enforce the rules.
  • A front page newspaper article about Uber contends it is more of a “software company” than a transportation company. Other articles refer to Uber as a “technology company” that is part of a “sharing” economy.
  • Some major corporations now allow employees to use Uber as part of reimbursable travel expenses and/or as an option among official corporate business travel vendors.
  • A state transportation regulator charged with overseeing for-hire vehicle industries openly says he loves the TNC technology.
  • The 2016 Republican and Democratic National Conventions plan to use Uber as an official transportation provider. [Note the irony of politicians who impose onerous rules on chauffeured and charter bus transportation now indulging businesses that flout those rules].

You can see the problems here. The last thing the limousine industry can do is take comfort in the storm of bad news. Regardless of the setbacks for TNCs, they still rely on a wave of ignorance, propelled in part by planted deceptions, gullible media fans and a distracted public enamored with apps for everything.

This year, the industry goals should be to participate in constructive advances in competing with TNCs and pushing for regulatory parity. Preserving the integrity of the American ground transportation system involves multiple fronts, from public relations, to lobbying, to legislative remedies, to administrative and regulatory reforms.

As the above bullet list proves, education about TNCs is needed within the industry and among the traveling public. Corporate and business travel sectors must be reminded about duty-of-care issues, and why chauffeured operations keep it a top priority.

It’s also time for business owners to consider playing a survival game known as hardball. Uber is a mega-rich company full of independent contractors who are complaining about pay and treatment. Has anyone alerted those predatory class-action trial lawyers and federal labor bureaucrats? That’s called giving as good as you get, and it should be part of any strategy. As one board director wisely put it: “The National Limousine Association is in the biggest fight ever in its 30-year history.”

While those options all will play out in official realms, operators can do things on their own to turn the tables on TNCs. Operators will need to adopt the same street-smart ferocity of brash entrepreneurs; it’s all up to you, so look out for yourself and your business. For example, be sure to exploit the bad news about TNCs, and remind clients and potential ones anyway you can of limo service values: We’ll protect you from criminals. We’ll drive safely. We won’t surge your prices. We’ll show up on time. We’ll respect your privacy. We know where you’re going and how to get you there. We care about you.

Which underscores the main point about the above “ah-ha” quote, one emphasized by this magazine and at our trade shows: Luxury limousine operations compete on quality high-touch service and safety, not price. If you compete on price cuts, you diminish your brand and fail to sustain quality service.

Just look at Uber. We told you so.

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