(photo credit: REUTERS)
Technology – particularly the kind based on smartphones – is empowering ordinary people to share their products, services and assets with others.
In the field of tourism, for instance, startup AirBnB allows people to rent their homes directly to users. Store X offers a platform for renting storage spaces.
But perhaps the most revolutionary “shared economy” development is taking place in the field of transportation.
Any person who owns a car can act as a taxi driver and drive people in their free time.
Unfortunately, this technology is unavailable in Israel due a strong taxi lobby and the opposition of Transportation Minister Israel Katz. As a result, Israel has forsaken the benefits of ride-sharing: a drop in cab fares, a decrease in road congestion, a reduction in air pollution, fewer traffic accidents, better integration of public transportation and a better ability to respond to temporary bottlenecks like the one created by the Tel Aviv metropolitan light rail.
Uber is the most well-known company to innovate ride-sharing. But companies like Lyft, Sidecar and the Chinese Didi Chuxing have also developed apps that enable anyone to leverage what for most people is their most expensive asset after their house. Car-owners defray maintenance costs such as insurance, gas and mechanical expenses and even turn a profit. Passengers who use Uber’s app save the trouble of driving, waiting in traffic and finding and paying for a parking spot. For some Uber has even made owning a car unnecessary altogether.
Though Uber has had a presence in Israel since 2014 with an app that is restricted to taxis, UberX, the app that has transformed the company from a small San Francisco- based startup into a firm worth an estimated $50 billion in seven years, is not available in Israel.
Current Israeli regulations ban payments for rides offered by private individuals. Only taxis and other commercial transportation entities are permitted to charge for rides. So far the transportation minister has strongly opposed introducing UberX or other ride-sharing technologies.
Taxi drivers are rightly concerned that ride-sharing technologies will hurt their business.
In Israel, as in many countries, a regulated number of medallions are tendered which enable the owners of the medallions to operate a cab or to rent them out to cab drivers.
The introduction of ride-sharing would likely reduce the value of the medallions.
Also, because taxi prices are regulated, UberX will likely be better positioned to compete. Indeed, Uber’s spectacular success around the world has been fueled by outdated taxi regulations. Uber and other ride-sharing services can advertise big discounts, while regulation-laden taxis are unable to respond. Conversely, during peak times, Uber can dynamically raise its prices while taxis are tied to the same static one-size-fits-all rates.
But steps can be taken to deregulate taxi tariffs, thus enabling taxis to be more competitive. And cabs will continue to have advantages, such as having the right to pick up passengers off the street and not via an app.
Prime Minister Benjamin Netanyahu seems to be more open than Katz to the idea of introducing UberX and other ride-sharing apps in Israel. And where there is a will there is a way.
In January, after Netanyahu met Uber CEO Travis Kalanick at the World Economic Forum in Davos, he demanded to know why the ride-sharing service was not available in Israel. He and Katz got into a shouting match. Katz later said that before UberX can be introduced in Israel, taxi drivers must be compensated to the tune of NIS 8 billion to NIS 9b.
We believe that a less prohibitively expensive solution can be found.
Last week Uber Israel launched a campaign to garner popular support for ride-sharing. If the government ignores public sentiment it risks exposing itself to the sort of grassroots activism witnessed in the summer of 2011 when hundreds of thousands of Israelis took to the streets to protest the high cost of living.
The benefits of ride-sharing are too great to allow taxi drivers to get in the way. We all stand to benefit from a decrease in traffic jams, reduced air pollution and fewer traffic accidents. While efforts should be made to make the transition to ride-sharing less traumatic for taxi drivers, Israel cannot afford to miss out on one of the most revolutionary developments in the way people get from one place to another.
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