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Has Ridesharing In Austin Been Ruined?

The attention from SXSW—and a new bill in the legislature—seek to address a problem that may not be broken.

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Sixth Street during the 2012 SXSW Music, Film + Interactive Festival on March 16, 2012 in Austin, Texas.
Photo by Michael Buckner/Getty Images

During SXSW, there was a brief outage of service from both Fasten and RideAustin. If those names don’t sound familiar to you, it’s because you don’t live in Austin—you are presumably more familiar with the ride-hailing services provided from major international players like Uber and Lyft. In May 2016, when a local ordinance that would have repealed the city’s regulations on those kinds of services—backed by the two titans of the app-based ride-hailing industry—failed at the ballot box, and Uber and Lyft quickly left town.

Since then, Austin has more or less recovered. Off-brand companies like Fasten, Fare, Wingz, GetMe, and InstaRyde, as well as the non-profit RideAustin, popped up and quickly developed a pecking order. Fasten and RideAustin are at the top, offering tens of thousands of rides a week, while the others provide services in a more limited capacity.

But because of that outage at SXSW—when demand was at the sort of extreme high that neither service had seen before—the state of ride-hailing apps in Austin got put on blast. Some of it was from tech industry types livid that they couldn’t just use the app they were used to in order to get a ride out of the airport. Others pointed to the outage as proof that Austin couldn’t actually function without Lyft and Uber (as though Uber had never had an outage of its own). Finally, others used the affair as an opportunity to hammer the liberally-minded city as “hostile to disruptive innovation,” declaring that “Austin’s Progressive Leaders Ruined Ridesharing.”

The outage was unfortunate, and it denied the city the chance to boast about how smoothly things function without Uber and Lyft—even if things do tend to work pretty well when there aren’t 150,000 visitors clogging networks. But the thesis that Austin is experiencing a crisis around ride-hailing apps is an old one, and it’s incomplete. RideAustin, which as a non-profit makes all of its numbers public, gave its millionth ride in February. Drivers are happy with the rates they make on RideAustin (which gives them the full amount of the ride) and Fasten (which takes a flat fee out of each ride, rather than a percentage like Lyft does). Most of the year, the companies’ servers can handle the load, and it’s likely that they’ll each be improving their servers based on what happened at SXSW.

Still, despite the fact that the city seems much happier with the current state of its ride app regulations than the tech fellas who come in for SXSW, things might end up getting a lot friendlier for Lyft and Uber anyway. That’s because the disruptive innovators in the tech world have an ally in the Texas Legislature, which seems increasingly likely to pass statewide regulations that would prevent cities like Austin (and Houston, which has a similar ordinance—and which keeps Lyft, but not Uber, from choosing to operate in the city) from determining what the rules that drivers and the companies through which they find passengers will have to follow will be in each city.

There are three different bills in the Lege, all of which would create a statewide rule that would supersede local regulations, and the Senate began debating them last month. (Similar legislation was proposed in 2015, though it ended up dying without a vote.) This time, though, momentum is on the side of the companies that hope to see the legislation passed—the Texas Tribune reports that “at least one of the bills is widely expected to eventually move on to the full Senate for a vote,” which, in an environment that’s increasingly hostile to the idea of local control, has a strong chance of passing.

All of which is to say that the question of whether or not Austin’s leadership “ruined” ridesharing is ultimately the wrong thing to focus on. It’s true both that Austin tends to get around pretty well without Uber and Lyft, and that the two companies are pushing hard for legislation that would change the dynamic there dramatically. Perhaps the real question, then, is what happens to Fasten, RideAustin, and the rest if Uber and Lyft come back?

That’s a tougher question to answer, but it’s the one on which the future of ride-hailing in Austin hinges. For now, RideAustin and Fasten are doing a job that satisfies customers and drivers. But if Uber and Lyft decide to cut costs to consumers for six months, eating the expense of the service, they could easily make RideAustin and Fasten seem like overpriced relics of a bizarre moment in the city’s history. It may not prove sustainable (currently, Uber’s passengers pay for only 41 percent of each ride, and the company was projected to lose $3 billion in 2016), but it doesn’t have to be sustainable: it only has to chase away the competition.

Ultimately, Austin’s current ride-hailing situation is a reminder that Uber and Lyft actually provide very little value to the people who use them. As the companies are keen on arguing in court when drivers challenge that they are employers, they simply facilitate a transaction between two separate entities. They don’t provide the car, the gas, or even the phones that people use to connect. Austin’s collection of Brand X companies prove that those things can be replicated pretty effectively, which means that they might actually be able to stick around—and only time will tell if that’s what happens.

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  • Él Guapo

    the Austin city clowncil is run by idiot libtards. Austin hasn’t recovered, people just aren’t using ride sharing now–the new companies are much more expensive. Uber and lyft kept drunks off the streets, heck I even used them, now I just drive or don’t go out. You failed to mention another reason uber was run out of town–the taxi companies. They greased the city clowncil to get them to institute the unnecessary fingerprint requirements. ann kitchens was uber’s biggest opponent since she was in bed with the taxi companies. Sounds like the writer of this has connections with the taxi companies or clowcil as well, people are definitely not happy with the current situation, they just can’t do anything about it until our state legislature comes thru…and don’t even get me started on the silly bag ban.

    • joethepleb

      “the new companies are much more expensive”…Did you miss the part that says Uber subsidizes around half of every ride?

      • José

        He figures they’re going to make it up on volume.

    • Unwound

      City clowncil! Libtards! Haha that’s fantastic! Very funny!

    • The Gorn

      Nonsense. You seem to forget that the ordinance was passed by the people. Uber and Lyft poured millions into fighting it to no avail. There are just as many people using ride share in Austin as there was before, how is that helping taxi companies?

      • Él Guapo

        due to tricky advertising saying the companies were writing their own laws and that uber drivers would rape everyone without fingerprint checks. I suspect the majority that voted for it had never used it nor would ever use it.
        Austin voters are so gullible they even voted to pay for a training hospital for the University of Texas, one of the richest schools in the country. Again scare tactics with ads saying we would all die if it wasn’t built (although there’s one in Round Rock) They would have built it anyway and they will rake in profits from it. I wonder how much they paid Kirk Watson to get him on their side to push that one. /smh

  • DJPooleATX

    ‘ and it denied the city the chance to boast about how smoothly things function without Uber and Lyft—’….wow. If that statement doesn’t open some eyes, nothing will.

  • Wastrel Way

    This article has some good sense in it.

    “…Uber and Lyft actually provide very little value to the people who use
    them. As the companies are keen on arguing in court when drivers
    challenge that they are employers, they simply facilitate a transaction
    between two separate entities. They don’t provide the car, the gas, or
    even the phones that people use to connect. Austin’s collection of Brand
    X companies prove that those things can be replicated pretty
    effectively…”

    Under Uber’s business model, their product is not the ride. Their product is the driver. They have a practically unlimited supply of them, selling themselves over and over and giving Uber its profit.

    I see no reason why Capital Metro can’t get into this business. They already have drivers who are employees, vans for passengers (and they can get more), and a maintenance facility. All they need is an app. They’d make a better margin doing point-to-point rides-on-demand (it’s not really “ride-sharing”) than they do running buses.

    • pwt7925

      Presumably the cab companies could also get into this business. They’re already in the business.

      • Wastrel Way

        They are. They have apps, and the sides of cabs advertise them. But they have to stick to their regulated rates, and can’t make more money during peak demand.

  • Mark Machado

    This is like arguing generic cola is just as good as Coke-Cola. Maybe or maybe not. Either way Austin is lame for not having Uber and Lyft.

    • Josephinealopez

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      On tuesday I got a great new Land Rover Range Rover from having earned $8752 this last four weeks.. Its the most-financialy rewarding I’ve had.. It sounds unbelievable but you wont forgive yourself if you don’t check it
      !sq13c:
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  • ShawnShillington

    RideAustin and Fasten are not doing a job that satisfies customers. They are twice as expensive as Uber, and slower, less reliable, and harder to use. If Uber comes back to Austin, they will disappear because everyone will go back to using Uber.

    • Stephen Perry

      Most drivers are not going to go back to Uber and Lyft because it isn’t profitable for us so good luck actually getting someone to take your request. If you want cheap then take public transit. If you want a private car service then that deserves a premium price.

      • J Iley

        Well put Stephen Perry

      • Great, I guess they should be welcomed back then, if they will “fail anyway.”

  • Have you read the blog post from Ride Austin where they explain their business model is unsustainable? The whole point of Uber and Lyft is driverless transportation on demand. The current service is just a stop-gap. The only long term future for Fasten or Ride Austin is getting bought out for their data.

  • danadsutton

    How quickly you Austinites (that’s assuming that everyone who commented lives here) forget that Uber and Lyft left the city high and dry with 5 days notice! People were left without jobs and safe rides home. It was a crazy few weeks/months. They didn’t have to leave. They had til August to comply or then vacate the city. But instead they said, ‘Nope, screw you Austin! We didn’t get our way, so we are leaving.’ You also quickly forget the $8-9 million that Uber and Lyft spent trying to sway the vote! That money could have been better spent by using it to get the drivers’ fingerprinting and background checks, or better yet, put some of that money back into the community.
    I’m happy with the choices we have now and will gladly pay a little more for a ride with Ride Austin and also contribute to a charity of my choice! Oh and I get to tip my driver (uber refuses to put the tip option in the app). No better way to thank someone that provides a service than to tip them!

    • How quickly you’ve forgotten they said the entire time there were going to leave. It was foolish Austinites who claimed they were bluffing.

      • danadsutton

        I never thought they were bluffing. They did say they would leave if they lost, but the way they left (swiftly with 5 days notice), and the money they wasted, makes me never want to ride with them again.

      • Jed

        meanwhile, yellow cab keeps taking me wherever i want to go. i just dial my phone and walk outside.

        man, i feel foolish.

        • Él Guapo

          walk outside after an hour if they ever showed up? You’re a yellow cab driver, aren’t you Jed?

    • American

      Austin was no more “high and dry” than we were before they came.

    • pwt7925

      As a reminder, Austin still has taxicabs, I assume. Can’t people use those? not as cool as Uber and the others, but they’ll still get you where you need to go.

      • “they’ll still get you where you need to go.” – actually no. That’s always been the problem with cabs in Austin. The reason I stopped using taxi cabs were the two times that I scheduled a pickup to take me to the airport and they didn’t pick me up. I am hardly alone in having horrible experiences with cabs.

  • American

    Who cares? Report some real news. If Uber wants to come into Austin, then they need to play by the rules.

  • keystonelonestar

    Choice is good. Limiting choice at the ballot box isn’t. Why don’t people just offer strangers a couple of bucks for a ride? Nothing illegal about that. I think I’ll try it sometime at an airport.

  • dccabs

    Funny the author failed to mention the lack of handicap accessible vehicles for ride sharing since Uber and Lyft left. I guess providing rides to disabled people isn’t considered “value”.

    http://kxan.com/2016/11/27/smaller-tncs-struggle-to-fill-gap-in-accessibility-after-uber-lyft-leave/

  • Kozmo

    Screw Uber and its ilk. Austin existed quite nicely long before they arrived with their demands for sanctioned corporate libertarian-fascism riding roughshod over the rights of citizens.