Uber and Careem to become legal, yellow taxis face difficult road ahead

March 12, 2018

By Grady McGregor

An Amman taxi driver’s hand shot into the air at a recent forum discussing “equitable, innovative and inclusive” solutions to issues in Jordan’s public transportation system.

When he was chosen to speak, the driver grabbed the microphone and directed pointed questions about recently released regulations to license ride-hailing apps (i.e. Uber and Careem) to Amman Mayor Yousef Shawarbeh and Greater Amman Municipality Executive Director for Public Transport Abdelraheem Wrekat.

“If you license Uber and Careem, people will not be able to feed their families,” the driver pleaded to the officials.

In response Wrekat said that while Amman has to look out for the collective interests of its citizens, he still strongly supports the yellow-taxi sector.

“We (the LRTC) are responsible for developing yellow taxis,” Wrekat said. “This is my mandate.”

The driver appeared unsatisfied with the answer, and promptly got up from his seat and left the packed auditorium.

In his questions, the taxi driver was referring to a document released at the beginning of February by the Land Transport Regulatory Commission (LTRC) that will likely legalize and govern the operations of ride-hailing companies like Uber and Careem. These new regulations are widely seen as friendly to ride-hailing companies at the expense of Jordan’s yellow-taxi industry.

Taxi drivers have already protested the new regulations and are preparing lawsuits to challenge them. Mahmoud Kharabsheh, a lawyer representing yellow taxi owners, recently told the Jordan Times that the drivers will also be seeking JD 100 million in damages caused to the taxi industry by ride-hailing apps.

Hazem Zureiqat, transport consultant at Engicon (an engineering consulting firm based in Amman), has worked on issues pertaining to ride-hailing apps in Jordan for the last few years and believes that these new regulations could be as detrimental to yellow taxis as drivers warn.


“If not supplemented by the right set of instructions and improvements to taxis, this document could spell out a slow and painful death for yellow taxis,” Zureiqat said. “Taxi license owners are influential but it seems so far that ride-hailing apps got their way.”

Yellow-taxis, ride-hailing apps and the government

 

The relationship between yellow taxis, ride-hailing apps and the Jordanian government has ebbed and flowed over the last few years, but as the government seems to be trending towards favoring the ride-hailing apps, it is important to understand the root causes of the debate.

The key technical issue in regulating ride-hailing companies is the difference between private and commercial licenses. Currently, and in the new regulations, taxi drivers need to be in possession of commercial vehicle licenses in order to drive yellow taxis, whereas Uber and Careem drivers operate with only their own private licenses and vehicles.

“Taxi drivers are now really mad because it doesn’t explicitly say (ride-hailers need) private licenses but it (also) doesn’t say commercial licenses anywhere in the regulations,” Zureiqat said. “Theoretically, when the instructions come out they could limit them to commercial cars but I don’t think that’s the intention. The intention is to allow private cars to operate.”

Commercial vehicle licences for taxis were originally provided to Amman taxi drivers free of charge but the licenses were capped at approximately 12,000 taxis in 2000 as demand for them grew. But even as the population of Amman has more than doubled since then, this cap on commercial licenses has remained the same. The value of these licenses has skyrocketed on the black market and a commercial vehicle license can cost upwards of 50,000 JDs several years ago.

The price of these licenses has already fallen due to the rise of ride-hailing apps in the last few years, and there is concern that their value will continue to plummet as ride-hailers are legalized.

Since their arrival, some in Jordan have touted Uber and Careem for their convenience and high-quality services in relation to yellow-taxis, but others argue that customers should take into consideration potentially unfair advantages provided to ride-hailing apps.

In May of last year, 7iber’s Shaker Jarrar argued that people should not simply boil down the debate between ride-hailers and yellow-taxis to a ‘quality of service’ debate, but rather take the time to understand that taxi drivers are often under immense financial pressures to pay off expensive licenses (if they are owners) or high rental rates.

“I understand very much the displeasure and annoyance of some of the yellow taxi drivers’ practices,” Jarrar said. “But ignoring the situation that has produced the taxi drivers’ behavior leads to flattening of the issue, and the production of a discourse that demonizes taxi drivers and deals with companies as charities.”

Jarrar went on to argue that the ride-hailing apps have helped bring to light years of poor governmental regulation and mismanagement of the yellow-taxi sector. He believes that the LRTC should be blamed for not better regulating commercial taxi licenses and allowing them to skyrocket to such high-prices over the last few decades. To Jarrar, this lack of regulation created problems for yellow-taxis such as intense financial stresses for drivers, leading to poor services for customers, and left them ill equipped to compete with the likes of Uber and Careem.

“This growth (yellow-taxi costs) happened in front of the state, without the presence of any regulatory body,” Jarrar wrote. “The state alone is responsible for the great dilemma we face today (with yellow-taxis).”

In an interview with Venture Magazine last year, Uber’s Middle East manager Anthony El-Khoury also blamed poor regulation for problems in the taxi industry.

“I understand where the yellow taxi drivers are coming from (in complaining about ride-hailing apps), but we got to this point because this taxi industry was created in a very bad way,” El-Khoury said to Venture. “The fair solution is for us to create a licensing model that is easy to get and very accessible to everyone.”

While the new regulations appear to be in line with El-Khoury’s wishes, representatives from Uber and Careem have declined, or have yet to respond to, 7iber’s requests for comment on the new ride-hailing regulations. Last year however El-Khoury did say that regulations could lead to a rapid expansion of Uber’s services.

“There’s no real limit to the number of people we want (as drivers),” El Khoury told Venture. “We just want to get to a proper regulatory place with the government so that we can start pushing and getting more people in the platform.”

Though El-Khoury was quick to point out that Uber drivers are contractors and not employees with benefits, the further expansion of ride-hailing apps could be a significant development for Jordan’s workforce, especially as the unemployment rate in Jordan nears 20 percent.

Overall, though issues between ride-hailers, taxis and the government have reached a difficult juncture, Zureiqat believes that there are still ways for the government to craft policies that would be beneficial for both sides.

“I would have liked to see a situation where you could use the regulations to elevate the services of both taxis and apps,” Zureiqat said. “Things as simple as incorporating yellow taxis as ‘x’ percentage of your (ride-hailing) fleet would help taxis.”

Nevertheless, he thinks that there still may be a future for both yellow-taxis and ride-hailers.

“Taxis play a much bigger role in Jordan as a commuter mode, especially with the lack of adequate public transport, Zureiqat said. “There are still people that use taxis everyday, regularly, and won’t be able to afford ride-hailing apps.”