1 THE IMPACT OF ADVANCED RESERVATION APPS ON AIRPORT, TAXI, AND SHARED RIDE VAN OPERATIONS MATTHEW W. DAUS, ESQ. PROFESSOR MATTHEW W. DAUS, ESQ. AGTA, NEVADA 2012 October Green Valley Ranch, Resort and Spa

2 Presented By Professor Matthew W. Daus, Esq. Distinguished Lecturer, UTRC President, IATR Partner & Chairman, Transportation Practice Group Windels Marx Lane & Mittendorf, LLP Windels Marx Lane & Mittendorf, LLP Contact: 156 West 56th Street | New York, NY T | F

3 In July 2012, the Windels Marx Transportation Practice Group Published A Report Entitled: In July 2012, the Windels Marx Transportation Practice Group Published A Report Entitled: “Rogue” Smartphone Applications for Taxicabs and Limousines: Innovation or Unfair Competition? “Rogue” Smartphone Applications for Taxicabs and Limousines: Innovation or Unfair Competition? A National Regulatory Review of Safety, Accountability and Consumer Protection Legal Issues. A National Regulatory Review of Safety, Accountability and Consumer Protection Legal Issues.

4 Taxi, Shared Ride, Limousine……. Yes, there is an app for that, but… Yes, there is an app for that, but…

5 Is it the “Wild West”? Is it the “Wild West”?

7 Smartphone Apps Smartphone Apps New apps are constantly entering the market New apps are constantly entering the market Apps are used for electronic hailing Apps are used for electronic hailing Arrange rides or share rides Arrange rides or share rides Expedite payments Expedite payments

8 How Does It Work? Run the app and locate a service Get an app Book a Taxi/Car Payment

9 Smartphone Booking Applications Arranging for transportation no longer requires making a telephone call to a taxicab or limousine company. Arranging for transportation no longer requires making a telephone call to a taxicab or limousine company. Dispatching for-hire vehicles is now being done in growing numbers through smartphone applications (via driver and passenger apps). Dispatching for-hire vehicles is now being done in growing numbers through smartphone applications (via driver and passenger apps). Users request a vehicle through a smartphone app. Users request a vehicle through a smartphone app. The dispatcher/driver can accept the fare, paying a small commission, or skip it. The dispatcher/driver can accept the fare, paying a small commission, or skip it.

10 ALL APPS ARE NOT CREATED EQUAL!

Prearrangement or Electronic Street Hail? Smartphone apps introduce the “electronic hail.” An “electronic hail” is similar to a street hail, but through an individual’s smartphone. Jurisdictions around the country have not comprehensively addressed this new concept in their regulations……yet. New York City (TLC) has put an industry notice restricting the use of apps to hail yellow taxicabs…for now. Legal Issues Identified with Rogue Apps

12 Taxi/Limousine/Shared Ride Distinction How is it that limousine and tax apps legally operate with essentially the same function in different markets? How is it that limousine and tax apps legally operate with essentially the same function in different markets? Is the inputting of your location and summoning a vehicle considered an on-demand electronic street hail or a prearranged service? Is the inputting of your location and summoning a vehicle considered an on-demand electronic street hail or a prearranged service? Most jurisdictions have yet to answer these questions directly….& varying definitions don’t help! Most jurisdictions have yet to answer these questions directly….& varying definitions don’t help! Legal Issues Identified with Rogue Apps

13 “Rogue” Apps cut out the dispatch companies and deal directly with drivers. Electronic hails will make it difficult to ensure properlyElectronic hails will make it difficult to ensure properly licensed vehicles are picking-up passengers. Some cities prohibit third parties from contracting with for-hire ground transportation services (e.g., NYC has issued an Industry Notice that app companies cannot directly dispatch FHV drivers).Some cities prohibit third parties from contracting with for-hire ground transportation services (e.g., NYC has issued an Industry Notice that app companies cannot directly dispatch FHV drivers). Rogue apps distract drivers from a transportation company’s customers and can poach their drivers away.Rogue apps distract drivers from a transportation company’s customers and can poach their drivers away. Legal Issues Identified with Rogue Apps

14 Safety Concerns Apps may not be exclusively associated with a specific base or ground transportation business license. Apps may not be exclusively associated with a specific base or ground transportation business license. If these new apps continue to avoid regulation, the public may be riding in unauthorized vehicles. If these new apps continue to avoid regulation, the public may be riding in unauthorized vehicles. There is no guarantee that these vehicles are properly insured and are being driven by properly licensed drivers. There is no guarantee that these vehicles are properly insured and are being driven by properly licensed drivers. Legal Issues Identified with Rogue Apps

Application Name Confusion Apps using terms “taxi” or “cab” are dispatching non-taxi vehicles. This creates consumer confusion (e.g., in Boston, dispatching limos from a taxi app). E.g., San Francisco responded with a cease and desist letter in one case. Legal Issues Identified with Rogue Apps

Illegal Service Refusals Many jurisdictions make it illegal to refuse any potential fares. Rogue Apps allow the driver to accept or decline potential dispatches. Disabled passengers may be refused service. Drivers are enabled to discriminate against consumers; offering service to some, and rejecting others. Legal Issues Identified with Rogue Apps

17 “Fair” Fares Fare regulations promote: Fare regulations promote: (1) consumer protection; and (2) distinguish different transportation services/modes. Some apps operate by charging passengers at the end of their trip, therefore the consumer has no assurance as to the final fare, or whether or not it IS fair. Some apps operate by charging passengers at the end of their trip, therefore the consumer has no assurance as to the final fare, or whether or not it IS fair. E.g., D.C. Taxicab Commission conducted “sting” - driver would not provide set fare for the passenger. E.g., D.C. Taxicab Commission conducted “sting” - driver would not provide set fare for the passenger. Some apps have “demand” or “surge” pricing and mandatory gratuities. Some apps have “demand” or “surge” pricing and mandatory gratuities. Legal Issues Identified with Rogue Apps

Is an App a Taximeter? Taxis are usually required to have a taximeter (and many jurisdictions do not ban taximeters in limousines). Only taxicabs charge fares based on distance and time. These taximeters are regulated by States via Federal guidance (NCWM & NIST), and are calibrated, inspected and certified. Apps might use GPS to calculate the fare based on time, mileage and demand – not meeting taximeter standards. Legal Issues Identified with Rogue Apps

Process = NIST  Regional CWM  National CWM  State/Local Adoption of Handbook 44 & Publication 14 NIST on IATR App Committee (& conference speaker). GPS Issues: Loss of signal & Illegal Blockers. Software Issues: Should Weights & Measures Officials Set Standards & Approve? National Institute for Safety & Technology (NIST) – Working Group

20 Dangers Faced By Ground Transportation Businesses Collaboration with an unruly or rogue app could lead to loss of: Collaboration with an unruly or rogue app could lead to loss of: Drivers Drivers Reputation with customers Reputation with customers Brand & Goodwill (App may only matter with passengers in the long run) Brand & Goodwill (App may only matter with passengers in the long run) Independence (total dependency to App) Independence (total dependency to App) Service coverage to longstanding clients Service coverage to longstanding clients

21 Options for Ground Transportation Companies  Develop own App (or white label App).  Contract with a legal App company.  Carefully review all 3 rd party App contracts.  Vigilance to protect brand, customers and drivers.

22 Impact on Airports & Shared Ride Services No reported rogue app infiltration yet….. No reported rogue app infiltration yet….. Infiltration attempts are inevitable, but will be more challenging. Infiltration attempts are inevitable, but will be more challenging. Taxis = Apps may interfere with dispatch operations and cause congestion issues. Taxis = Apps may interfere with dispatch operations and cause congestion issues. Shuttles = Extra passengers on way to airport?; Pick-ups may be difficult. Shuttles = Extra passengers on way to airport?; Pick-ups may be difficult. Franchises = Interference with contracts Franchises = Interference with contracts

Things are moving fast!   Litigation Cambridge, MA Chicago, IL   IATR App Committee Taxi, limousine and for-hire transportation regulators considering model regulations & addressing legislative & enforcement issues.

24 IATR App Committee The purpose of the App Committee is to develop a model code of regulations to ensure smartphone app technology can exist fairly, safely and with accountability to protect the consumer, while also protecting existing businesses against unfair competition.

25 IATR App Committee Professor Matthew W. Daus, Chair Boston New York City Australia Boston New York City Australia Chicago Philadelphia Montreal Chicago Philadelphia Montreal Los Angeles San Francisco Toronto Los Angeles San Francisco Toronto Austin Seattle San Diego Austin Seattle San Diego Denver Washington, D.C. Houston Denver Washington, D.C. Houston NIST (National Institute for Standards & Technology)

26 IATR App Committee Will produce model regulations & app standards. Will produce model regulations & app standards. Working with Taxi, Limousine & Paratransit Association (TLPA) App Committee. Working with Taxi, Limousine & Paratransit Association (TLPA) App Committee. The model regulations will be presented for comment and input at the IATR Conference. The model regulations will be presented for comment and input at the IATR Conference. Regulations & Smartphones – “There’s an App for That” (Washington, DC Conference) Regulations & Smartphones – “There’s an App for That” (Washington, DC Conference) To be Presented on November 17, 2012 To be Presented on November 17, 2012

27 AGTA Regulators Welcome to participate in IATR’s model regulation process. Welcome to participate in IATR’s model regulation process. Model regulations can be referenced for language to include in airport regulations and/or franchise agreements. Model regulations can be referenced for language to include in airport regulations and/or franchise agreements Joint AGTA – IATR Conference in St. Louis = Great Opportunity to Brainstorm!!! 2013 Joint AGTA – IATR Conference in St. Louis = Great Opportunity to Brainstorm!!!

28 Thank You AGTA!

29 Q&A