The curious case of Uber, LTFRB and regular taxi operators

So we’ve heard many sides and stories now about Uber, the Land Transportation Franchising and Regulatory Board’s (LTFRB) campaign against Uber operators and the regular taxi fleet operators. What’s the deal?

Ultimately, what matters is the riding public, right? So I asked some regular Uber users first. I spoke to some friends who use Uber regularly.

One of them is my good friend and fellow motoring journalist for Top Gear Magazine Philippines, JV Colayco, who is also one of the directors and chief business development officer of Xurpas.

JV drives his own cars but opts to ride Uber because “it’s a no brainer: the convenience of calling for one (I order an Uber from inside my home or office and only go out when the driver is outside), the quality of the ride—no karag-karag vehicles, the courtesy of the driver (no rude drivers so far), and the fare seems cheaper sometimes than a regular taxi.”

Speaking with other people who request anonymity, one of them says that he uses Uber regularly to have his daughter picked up from school. But he does it remotely: Since there is no cash involved, he orders an Uber pickup for his daughter from his office. The Uber driver picks up his daughter from school and brings her home. There is no cash involved in the transaction because everything is transacted via credit card.

The government, however, is against (for lack of a better word) Uber because Uber seems to be operating above the law, paying no taxes, heeding no regulations and restrictions set forth by the Department of Transportation and Communications  through the LTFRB, and it seems that the typical Uber driver/operator does not in fact pay any form of taxes to the government so it also becomes a Department of Finance issue through the Bureau of Internal Revenue.

Crucially, even for many Uber users, Uber (and other similar personal effects sharing sites and services) do not offer any form of accountability and responsibility for those drivers and operators registered under their organization.

A few weeks back, a post on social media went viral when a mother alleged that her daughter was almost kidnapped by an Uber driver. The driver surfaced later to claim otherwise, but the damage versus Uber was done.

While the government has technically allowed Uber (and Grab Taxi, a somewhat similar service that utilizes traditional taxis which form part of a network) to operate, it has done so under the condition that Uber registers its entire fleet with the LTFRB and secure a franchise.

Meanwhile, the government has laid out plans for a new Premium Taxi service. Initially, people thought it would be a project directly controlled by the Land Transportation Office (LTO), but after verification and review, it will in fact be a scheme similar to current taxi franchise operators but with some promising conditions.

These include but are not limited to the following:

1) A Premium Taxi is a four- or five-door sedan with an engine displacement of 2,000 cc or higher;

2) The applying fleet operator must have a minimum of 20 brand-new units;

3) All vehicles must be black, with yellow plates (to show these are public utility vehicles);

4) Applicants for the Premium Taxi service shall have a franchise of seven years maximum;

5) All applicants should have GPS tracking system and satellite navigation;

6) Credit card payment facility should be made available; and

7) The operator must have a facility to book clients via Internet/mobile-based apps.

I also asked the insurance industry on this matter. Speaking with Raul Pangilinan, Insurance head at Prudential Guarantee and Assurance Inc. (PGAI), the country’s largest insurance company, Raul says’ that vehicles insured under PGAI but found to be used for PUV-related purposes will not enjoy any insurance coverage.

“PGAI is very strict about this; we only offer insurance coverage to privately owned and used vehicles. So if you buy a vehicle, register it for private use (white plates), and use it for Uber, even when it is insured by PGAI, should it get into an accident, PGAI will not provide coverage on the vehicle and its occupants. Most other insurers operate similarly,” he said.

Now that is something for potential Uber owners and drivers to think about.

And finally from the taxi operator’s point of view, I shared a few minutes over the phone with Quezon City 4th District Councilor Bong Suntay. He’s also the president of the Philippine National Taxi Operators Association (PNTOA) and operates his own taxi fleet, Basic Taxi, which is one of the largest taxi fleets in the country.

Suntay says that the PNTOA is not against Uber and Grab Taxi; in fact, he believes that Uber and the like can co-exist with regular taxi fleets and operators so long as they comply with all the regulations set forth by LTO and LTFRB, which include:

1) Annual vehicle inspection;

2) Taxi meter calibration and fare standardization;

3) Operating guidelines to own and operate a taxi, which include limitations on space requirements for parking, strict vehicle maintenance and inspection/review, etc.;

4) Payment of all necessary LTO and LTFRB mandated fees; and

5) Payment of taxes (Uber doesn’t pay any tax whatsoever to the government).

According to Suntay, the LTFRB issued its current wage set as far back in 2010. Cost of living, fuel prices and vehicle maintenance costs have sky-rocketed since then. The PNTOA has lobbied to increase the fare but LTFRB hasn’t budged on this matter.

This is the main reason why many taxi drivers (be they  part of a large fleet operator or independent self-owned) go above and beyond the prescribed norm and fare rates.

Suntay is also quick to point out that most of the hate targeted toward taxi fleet operators are those promulgated by single-vehicle taxi operators: those who own their own taxis and operate with very little supervision by a higher authority.

These are the taxis that tend to have questionable road-worthiness, and due to lack of an immediate superior, are the ones where illegal/criminal activities originate: hold-up, rape, kidnapping and murder. Yet all taxis are bunched together along with reputable taxi fleet operators.

So after hearing all sides, from a casual observer’s point of view, here are some thoughts:

1) Why doesn’t the government raise its standards for all taxi fleets and operators?

2) Why doesn’t the government put a maximum life or mileage on each taxi’s franchise so taxi operators and owners are forced to upgrade to newer cars?

3) Why won’t taxi fleet operators install a GPS tracking system in all their vehicles?

4) Why won’t taxi fleet operators create an Internet-based booking system as well?

5) Why won’t Uber (and other similar vehicle sharing networks) register its entire network and apply for a franchise for every single vehicle part of the Uber network?

Lastly, Suntay pointed out one glaring fact: In other countries, Uber is meant to be a vehicle sharing program: You drive to work everyday, pick up people along the way going towards the same general direction, drop them off, and you get paid to share your vehicle.

In the Philippines, people have begun to buy vehicles specifically for Uber. They then employ drivers (many of them former taxi drivers themselves) and ply the streets looking for passengers.

Uber was meant to reduce vehicular traffic, but in the Philippines, Uber has added a good amount of vehicles on the road, creating more traffic. Somehow, something is amiss here.

We all want better, safer, more efficient public transport for everyone. LTO has a point, the PNTOA has a point, and Uber has its own very good points as well.

But in the end, much as I’d like to admit, the LTO, LTFRB and PNTOA have a very solid and unified point: Play fair, Uber, because you cannot be above the law. If you do, you’ll probably bankrupt the competition anyway because your cars are better, newer, and—thanks to the Internet—safer.

But you’re not the only one who can do that. Pretty soon, the government will shut you down (the Bureau of Internal Revenue would love to make an example of you for not paying taxes).

And if the government’s Premium Taxi service program flourishes, you’ll be dead in the water. For the sake of the commuting public, please play fair. You have until Thursday, Aug. 20 to comply.