Bill proposes limiting government regulations for ride-hailing services in Austin

Mikaela Cannizzo

Uber and Lyft might have the opportunity to return to Austin if a bill proposing restrictions on the city’s regulation of transportation network companies passes during this legislative session.

Sen. Don Huffines, R-Dallas, authored Senate Bill 113, which would limit government’s involvement with ride-hailing services. He said he wants to allow users, rather than the government, to determine the success of the companies.

“I believe in the free market and allowing consumers to choose winners and losers,” Huffines said. “(My bill) levels the playing field for all ride-sharing companies, opens up the free market and (lets) the consumer be the regulatory body.”

The current law permits local government to set requirements for all ride-hailing services including taxis and limousines. This law enables the city to regulate the number of drivers operating each service, set rates charged for rides and implement safety and insurance policies. Huffines said his proposed bill deregulates government and will eliminate these controls. 

When Uber and Lyft left the city last May, Austin felt the effects of these restrictions. A law passed by Austin City Council mandating stricter background checks and a fingerprint requirement for employees contributed to the companies’ decision to stop operating in Austin. 

Both companies released statements expressing their disappointment in leaving Austin, but emphasized the rules passed by City Council infringed on their business models of employing
part-time drivers. Huffines said the restriction of local control proposed in his bill would likely prompt Uber and Lyft to start operating in Austin again. 

Huffines said he believes his bill will create a competitive environment in which the most innovative company will attract the most customers. 

“Competition lowers the price and increases the quality and that’s what we need, a lot of competition in the ride-sharing business,” Huffines said. 

After Uber and Lyfts’ departures, new apps offering similar services emerged in hopes of becoming the new standard for the ride-hailing industry. Apps pairing users with vehicles such as Fasten, Fare and Ride Austin have gained traction over the past few months. 

UT transportation engineering professor Kara Kockelman said she believes the return of Uber and Lyft would decrease competition and opportunities for new participants in the
smartphone-based ride-hailing market.

“Uber and Lyft dominate almost all markets right now,” Kockelman said. “Without a special situation, like Austin is offering, other (transportation network companies) can hardly get started.” 

Dana Summers, advertising and radio-television-film senior, said she uses ride-hailing services multiple times a week to travel to and from her job in East Austin. Prior to its departure, Summers said Lyft was her top transportation option. While she said she has adjusted to new services and frequently uses Ride Austin, she would primarily use Lyft again if it were to return. 

“I’m very brand-loyal to Lyft,” Summers said. “If Uber and Lyft came back, I would be in a Lyft car the next day.” 

The bill was referred to the Senate Committee on Business and Commerce last month, but has received no further action yet. Huffines said he expects the bill to be considered during a hearing within the next four weeks.