UberX launches in Calgary despite city bylaws

It may not be legal, but Uber nevertheless launched its low-cost ride-hailing service, UberX, in Calgary today.

The company says it has 500 "driving partners" signed up and ready to go and it flipped the switch on its app at 2 p.m., making those drivers accessible for the first time to customers looking for a ride in Calgary.

Uber already operates in numerous Canadian cities, to the delight of customers who have been clamouring for the worldwide service to come to Canada, the chagrin of taxi drivers who see it as a threat to their industry, and the irritation of municipal governments uncertain of how to regulate the new business model.

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The company claims UberX rides in Calgary will cost about 30 per cent less than traditional taxis, which are heavily and strictly regulated under city bylaws.

Ramit Kar, general manager of Uber in Alberta, believes those same bylaws don't apply to UberX.

"We are in an unregulated space," he said. "So we are not a traditional taxi system, as is regulated by the city."

City bylaw officers may see things differently, however.

Bylaw violations

Calgary's livery transport bylaw prohibits anyone from offering a car for hire or charging a fare for a ride unless the vehicle has a special, city-issued licence plate attached to it.

Marc Halat, the city's manager of compliance services, told reporters Thursday morning UberX drivers would technically be violating three sections of that bylaw, with each violation carrying a minimum fine of $1,500.

"They are in contravention," he said. "We'll enforce the bylaw."

Exactly how stringently and broadly the city will enforce the bylaw against hundreds of potential drivers, however, Halat wouldn't say.

He would only say the city has an "active" enforcement plan that "was activated today" but admitted there's no doubt UberX drivers will be operating in the city by this afternoon.

"They're going to drive, and we'll monitor the situation and we'll enforce the bylaw accordingly," Halat said.

'Bandit Cabs'

Earlier this year, bylaw officers charged three people with operating unlicensed taxis — sometimes called "bandit cabs" — out of the Calgary International Airport.

Kar noted UberX drivers have run into bylaw problems in other cities and said the company has stood behind them in those cases and will do the same if any are charged under Calgary bylaws.

"We will support our drivers in any way that's necessary to make sure that they will continue driving on the platform," he said.

"We'll either pay for their fines or we will support them with a lawyer."

Nenshi open to bylaw changes

Mayor Naheed Nenshi said Thursday he's not opposed to changing the city's rules to allow for UberX but, in the meantime, he advised against using the service either as a driver or passenger.

There are still questions surrounding the validity of UberX drivers' auto insurance, in addition to the regulatory issues, the mayor noted.

Council is set to discuss the topic at its Nov. 16 meeting.

How Uber works

Uber offers various levels of its service, which is coordinated via a smartphone app used by both passengers and drivers.

UberX is billed as the "low-cost Uber", as it involves relatively ordinary vehicles, as opposed to UberBlack, which involves luxury sedans.

Drivers are described as "partners" rather than employees because they use their own vehicles and work as little or as much as they want.

The Uber platform allows passengers to request a ride, then track a vehicle via GPS as the driver who takes the job makes his or her way to the pickup location.

When the driver drops the passenger off at the destination, no cash is exchanged; billing is done electronically via a customer's credit card, which is associated with their Uber account, based on the distance and duration of the trip.

Calgary entrepreneur Brett Wilson offered his support for the service Thursday morning.

Drivers keep 75 per cent of the fare, while Uber takes 25 per cent. Drivers are paid weekly.

Uber claims drivers make $23.40 per hour, gross, on average.

Drivers are responsible for their own vehicle operating costs.

What does it cost to use?

UberX begins with a basic fare of $2.75, plus $1 per kilometre travelled and $0.25 per minute of trip duration.

All of those fees can be subject to a "dynamic pricing" multiplier during periods of high demand.

There is also a $1.85 "safety ride fee" tacked on to each trip.

The minimum trip price is $5.

Uber is also offering the first two rides for new customers in Calgary for free.

Safety concerns

Both drivers and passengers can rate each other after a trip, and reputation plays a big role in whether a driver or passenger will accept a trip.

Kar said all UberX drivers are pre-screened, with criminal record checks and driving records that can't include more than two minor tickets in the past three years.

Drivers must also carry their own personal vehicle insurance that is supplemented by Uber's "contingent liability insurance" of up to $5 million.

Questions have been raised about whether personal vehicle insurance will be considered valid if a driver is using his or her vehicle for commercial purposes.

Kar said there have been few major problems, however, noting millions of Uber rides are booked each day around the world.

Uber operates in more than 340 cities in 60 countries.