Uber’s Fight Against the Taxi Unions: The Changing Transportation Model in Paris

There is a new transportation model taking France by storm. The French call it the VTC (voitures de tourisme avec chauffeur), which refers to an American model of car service that lets people reserve and pay for a car using a smartphone app. Foremost within this industry is the San Francisco based start-up Uber, which has been particularly successful—as well as controversial—in Paris itself.

Paris Taxi Photo: Flickr via Wikimedia Commons, by jean pierre gallot

Paris Taxi
Photo: Flickr via Wikimedia Commons, by jean pierre gallot

The VTC industry, which has seen a huge boost of participation over the past six months, provides numerous advantages over the city-run taxi model, for both drivers and passengers. Unlike many cities in the United States, the Parisian taxi system is not built on a customer-friendly model. Not only are taxis few and far between in the city itself, but also they often may be attained only by reservation, starting the meter as soon as a customer calls as opposed to once you get in the car. Compared to other modes of transportation, taxis in Paris are expensive and rarely take credit cards, even with the exorbitant amounts charged per ride.

VTCs, on the other hand, can be ordered with convenience from one’s smart phone, arrive faster and start the meter on pick-up, and have enabled online payment, allowing customers to be billed through the app itself. Additionally, cars run by Uber and similar companies are not regulated to the same degree as taxis, and their drivers are able to bypass the $270,000 permit fee needed to acquire one of Paris’ limited taxi licenses, making the job both simpler and more lucrative for the driver.

However, Uber’s progression into the market has been fiercely combated. The strong taxi unions in Paris have understandably been working against the growth of transportation start-ups such as Uber, threatening further strikes if a deal is not struck between the two parties. An earlier strike in February caused traffic jams across the Paris metropolitan area, blocking the highway exits to both of Paris’ main airports.

Paris taxi drivers have further soured their relationship with the public and the media by attacking Uber cars in early January, slashing tires and breaking windows, even when the cars were carrying passengers. Thomas Thévenoud, the member of the Assemblée Nationale assigned in mid-February to broker a deal between the two competing parties, has been aiming for a plan that mitigates the violence and allows for the mutual development of both industries.

The report, presented at the end of April, provides over 30 measures for the modernization of taxis so they can better compete with the growing VTC market. All taxis will be required to have credit card machines, creating a formalized record of each cab driver’s income and making it much more difficult for them to evade paying taxes on their rides. However, the report also focuses on regulation of the VTC industry, limiting the services’ use of geolocation, a technology that allows drivers and passengers sync up and see if there are any available cars in their vicinity.

“From a technical standpoint, [the ban is] pretty incredible because we invented the use of geolocation for the drivers and client,” SnapCar co-founder Dave Ashton told Tech Crunch, an online news source focused on tech expansion and start-ups. “It’s completely ridiculous.”

In addition to the issues with the taxi unions and geolocation limitations, Uber has been threatened with legal action against its aggressive driver loyalty plan. In order to grow at such an exponential rate, Uber has been willing to take a loss on certain drivers in order to encourage driver expansion as a whole, offering bonuses of up to $1,100 a week. The smaller VTC start-ups in France are unable to compete financially, and have fallen back on building loyalty through relationships.

The anti-VTC litigation proposed by Thévenoud has only encouraged Uber to increase these incentives. However, its start-up competitors see this action as an aggressive move against competitors, arguing that Uber has more than enough drivers in Paris and that the push on growth is merely meant to minimize the supply of drivers left to other companies in the industry. Such accusations come after Uber was accused of using similar tactics in both New York and San Diego. Despite the complaints of competitors, none of Uber’s aggressive recruitment methods have been found to be illegal.

So while Uber may appeal to the general user and Paris population, the invasion of the American start-up has caused quite a stir in the French transportation field. Unless Uber and the VTC industry are further regulated, it is likely that the taxi unions will strike again. But beyond the violence the strikes have caused, there is the serious question of whether the Paris taxi as a business itself will be missed.

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