Honolulu could be leader in taxi deregulation

Honolulu could be leader in taxi deregulation
© Photo Illustration/Garrett Evans

Honolulu has a chance to lead the way in the nationwide battle between municipalities, taxis and ride-hailing services. But will the city move toward a free market or greater government control?

Honolulu almost made history in June when its city council voted 6-3 to outlaw “surge pricing” for ride-hailing companies such as Uber and Lyft. The move would have placed a cap on how much private transportation companies could charge for rides during periods of high rider demand. However, the ban never made it past the mayor’s desk.


Citing the need to adapt to changing technology and meet the public’s needs, Honolulu Mayor Kirk Caldwell vetoed the surge-pricing cap. Instead he suggested the city explore options to reduce the regulation of taxi fares. He told KHON News that his proposed bill focuses on disclosing the price to the customer, letting both taxis and ride-hailing companies offer flat rates or by-the-mile pricing.


“It is about leveling the playing field for all private transportation companies,” he said, “whatever your model is. We want to let you operate in the fairest way possible, but we want to protect consumers.”

It’s the obvious solution to a problem that has created tension across the country. Taxi services have lobbied in city councils and state legislatures to increase the regulations over Uber, Lyft, and similar companies. They have said it’s unfair that taxi companies have to comply with laws that don’t apply to the drivers for ride-hailing companies. They have claimed that the regulations guarantee public safety. Some have even said there is a moral dimension involved in regulating fares.

Given the unhappiness over the different levels of regulation for taxis and ride-hailing companies, Caldwell’s remarks about leveling the playing field should have been met with cheers from taxi companies, right?

Not so fast.

If you think businesses always oppose regulation, think again. When it comes to regulations that suppress competition, businesses can be ardent admirers of red tape.

One Honolulu cab company said the market is already saturated and taxi drivers are losing their jobs. Another equated surge pricing with price gouging, and suggested that the mayor’s proposal would lead to anarchy.

The owner of Eco Cab even sang the praises of regulation for Hawaii News Now: “We've always been regulated. I think it’s in the best interest of the community for for-hire transportation to be regulated. That's one of your primary responsibilities as a city.”

On the other hand, ride-hailing drivers are in favor of the level-playing-field approach. Uber — which lobbied against the bill, saying it threatened the future of ride-hailing in Hawaii — praised Caldwell’s decision. As one Uber driver told KHON: "It doesn’t just help us. It helps everybody on both sides. It's going to level the playing field, as they say, but at the same time it leaves what we’re doing the way it is.”

The conflict between Honolulu cabs and ride-hailing companies became even more fraught when the state Department of Transportation made permanent a pilot program that allowed Uber and Lyft drivers to pick up passengers at the airport. Representatives of the taxi industry complained that the change was unfair, hurts taxi drivers, and was turning the industry into the “Wild West,” but the DOT said that the “vast majority” of public testimony favored the change.

It appears that the winds in Honolulu are changing when it comes to ride-hailing restrictions, and that shift is in favor of deregulation.

Caldwill’s bill is one of two currently in the Honolulu City Council’s Budget Committee. One benefit of Caldwell’s is that it would allow individuals with out of state driver’s licenses to be riding hailing or taxi drivers. Currently, both taxi and ride-hailing drivers need a State of Hawaii driver’s license to operate. But Caldwell’s bill could go further. It would allow surge pricing (with advance notification) and gives taxis more flexibility in their fare structure, but it also would introduce other regulations for ride-hailing drivers.

The other bill, introduced by Councilmember Trevor Ozawa, proposes a prior-disclosure-plus-receipt rule for private transportation companies, but would not limit surge pricing. It also would repeal certain requirements related to taxi certification numbers.

This is a step in the right direction, but why not match the mayor’s rhetoric with a system that puts taxis and ride-hailing drivers on the same footing — by reducing regulation of taxis but not increasing regulation on Uber ride-hailing companies?

Instead of chasing out ride-hailing companies and their benefits, Honolulu could be one of the first major American cities to pursue deregulation and increased freedom of choice in in transportation services. That way, the consumers — not the lobbyists or bureaucrats — could decide which services are best for them.

Malia Hill is the policy director of the Grassroot Institute of Hawaii (@GrassrootHawaii), a public policy think tank dedicated to the principles of individual liberty, free markets and accountable government.