Transportation Network Companies

“Disruption” has become the buzzword of the decade for technology startups.  Entrepreneurs take aim at existing markets every day with ideas designed to uproot and redefine their industries.  But some of the most innovative disrupters are having trouble bringing their ideas to a place where disruption is generally unwelcome: the airport.

Car sharing services such as Zipcar, Car2Go, and Getaround and ride sharing services such as UberX, Lyft, and Zimride are changing the game in ground transportation.  By using smartphone apps to connect drivers who have open seats in their vehicles with passengers who need rides, the ride sharing movement is reducing traffic and fuel usage.  Similarly, by planting a network of available cars throughout a city and allowing consumers to access the vehicles for a fee, car sharing makes it more practical for consumers to forego vehicle ownership altogether.  In 2014 alone, these companies have amassed hundreds of millions of dollars in venture capital financing.  Many consumers prefer these services to taxi cabs or other traditional methods of ground transportation because they are more convenient, affordable, and in some cases more environmentally friendly.  As with taxi cabs, airports are natural hubs of activity for car sharing and ride sharing services.

Notwithstanding the rising tidal wave of demand, most airports have yet to develop a workable approach to the unique legal and logistical challenges presented by car sharing and ride sharing services.  Instead, airports are prohibiting these companies from picking up or dropping off passengers at their terminals.  At a recent conference of in-house airport lawyers, several representatives from some of North America’s largest aviation hubs expressed serious concerns about these services.  One attendee suggested setting up “stings” by using the popular ride sharing apps to order rides from the airport and arresting the drivers for lack of taxi cab certification when they arrive.

However, non-airport regulators are beginning to appreciate that ride sharing services are not cab companies and should not be subject to the same regulations.  In September of 2013, California became the first state to provide a regulatory framework for Transportation Network Companies (“TNCs”), defined by the California Public Utilities Commission (“CPUC”) as any organization that “provides prearranged transportation services for compensation using an online-enabled application (app) or platform to connect passengers with drivers using their personal vehicles.”  (See CPUC Decision 13-09-045.)  The Illinois House of Representatives followed suit last week when it passed HB 4075, which seeks to implement a set of regulations specific to ride sharing services.

With mounting political and consumer support for car sharing and ride sharing, airports are under increased pressure to adopt policies regulating these services instead of prohibiting them.  Developing practical, sustainable policies that address issues such as airport congestion, service monitoring, and revenue sharing may prove to be a more profitable and efficient solution than denying airport access to car sharing and ride sharing companies.
 


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