Uber is operating without due diligence on hire car licences and lacks proper insurance, according to a scathing attack by transport sector lawmaker Frankie Yick Chi-ming, who says the firm’s recent “ridesharing” claims are bogus.
Yick demands the company open up more details on its insurance policy “so everyone can take a look and see if it’s really safe enough for the passengers.”
Uber has published a certificate of its $100 million AIG insurance policy online, which says the policy covers “Ride-Share Vehicles used by Passengers for Ride Share Journeys arranged using the Policyholder’s Mobile Application”.
But Yick says none of the firm’s trips could be counted as “ridesharing” and calls for more disclosure into the policy’s inner workings.
“When you call it ridesharing, if you are not going to charge anything, I would be happy with that. Or if you are sharing the cost only, not at a profit, that’s ridesharing. There’s a major difference.”
“In Singapore, for example, they try to minimise the traffic into the CBD, so they allow drivers to pick up people going into that area, but for sharing the cost only, not at a profit. In Hong Kong, some people have private apps for arranging trips from the New Territories to the city, but sharing the cost, not at a profit. These are ride sharing. So, there’s a major difference,” he says.
Yick highlights a test case, a fatal Uber crash in April 2018, which left the Uber driver dead and a taxi driver and his passenger seriously injured.
“The taxi driver had seven ribs broken, all his teeth gone, the lady passenger was seriously injured, but they haven’t got any compensation up to now. We’re still working on the case today,” he says.
After the crash, Uber said it would offer assistance to the injured parties in the form of counselling, and would discuss financial compensation, but as yet there’s been no financial pay-out to anyone involved in the deadly incident. The driver, who was thought to have passed out at the wheel and therefore, according to Uber, “at fault”, would not be eligible for any compensation even if the policy satisfied the “rideshare” test.
Uber wouldn’t comment on its insurance policy or pay-outs; a source close to Uber claims the insurance policy has been tested and has paid out in Hong Kong – but a legal expert says the policy, as seen from the certificate, would face difficulty in paying out if it could be proven the trip was for profit, not simply sharing costs.
Speaking from his LegCo offices, which remain open amid an expected extension of the current legislative term, Yick also calls into question Uber’s commitment to due diligence in checking that its drivers have proper hire car permits (HCPs).
“When Uber recruits drivers, they demand the driver to have a hire car permit for their vehicle before they join, but unfortunately they never do the due diligence to check whether the vehicle itself has the hire car licence. It’s a sort of negligence.”
According to Transport Department, there have been just 400 new HCPs issued since 2015 – and an undisclosed number of those are typically for hotel or tour car services, which are not allowed to collect Uber passengers.
Even a generous estimate of the number of the HCPs available to Uber drivers is a long way from the estimated 30,000 drivers working for Uber, suggesting only around 1-3% of Uber vehicles have the proper permit today.
Getting a HCP is not easy: applicants must deploy “a brand new vehicle with a taxable value of more than HK$400,000”, according to the government. Applicants must also prove the hire car is “reasonably required” and justify “why alternative transport facilities cannot be used”.
What’s more, there’s no real path to improve the situation under existing law: with a regulatory quota of 1,500 HCPs for private hire allowed in the city, Uber could never rise above 5% compliance with its current number of drivers.
Hong Kong has faced these problems before: indeed, the HCP itself was introduced to abolish the illegal pak-pais that rivalled the taxi trade in the 1960s. Pak-pais enjoyed protection by corrupt police officers, a practice largely stamped out with the founding of the ICAC in 1974 but still leaving a regulatory gap: the HCP, with its 1,500 private hire quota, effectively legalised the remaining pak-pais and brought them under regulatory supervision.
“The major issue for my side is fair competition,” says Yick. “Taxis have a lot of regulations, the taxi drivers have to go through a test, get a licence, your vehicle has to go through the annual inspection. Insurance is very expensive, around HK$30,000 just for third-party – if you use your own private car [as an Uber], it’s basically free. Is that fair? The taxi trade bid for the licence, the money went to the government’s pocket, and they are not getting any protection from the government.”
FIXING THE TAXI BUSINESS
Yick admits there are many problems with Hong Kong’s taxi business, and says he wants to see an overall improvement.
The main problem is money, he says: the job simply doesn’t pay well enough. Average salaries for taxi drivers have sunk to around HK$18,000 a month, says Yick, which has impacted the quality of service.
Taxis fares are now only around 2.9 times public transport fares in Hong Kong, against 4.2 in Seoul, 8.2 in Shanghai and 4.2 in New York City.
“30 years ago, taxi driver earnings would be good enough to buy an apartment, support their kids to go to university, buy the licence. But today, the salary is barely enough to support a family, don’t even think about buying a property… it’s not really attractive at all, so there’s a problem.”
Yick says drivers aren’t looking for handouts, but that policy support from the government is seriously lacking. Yick himself, from LegCo, and others in the taxi trade, have put forward many policies and incentives that could boost taxi earnings and ultimately improve service. Yick gives a shortlist of rebutted proposals:
- a peak-hour surcharge for congested areas;
- tunnel fee parity or at the very least allowing taxis to use, for example, the Western Tunnel on a return cross-harbour trip, rather than queuing to take the Hung Hom tunnel as a return;
- more bus lanes, and allowing taxis to use those bus lanes;
- a quality-badge or accreditation scheme to improve driver service; and
- discounted land for centralised maintenance and cleaning garages, allowing a professionally managed fleet approach as seen in cities such as Taipei and Singapore.
“But the government’s done nothing. What we’ve proposed is the overall improvement of the taxi service in town, but instead they just say ‘oh it’s too difficult for us to manage,’ and they came up with this 600-franchised-taxi service idea, to satisfy some of the people and hope it will calm things down. It’s not the right thing to do.”
The franchised taxi service was proposed by the government last year to introduce 600 higher-quality franchised taxis, with franchisees required to meet demanding service level requirements. The scheme was widely criticised, with the Consumer Council concluding that only existing operators would benefit, squeezing new entrants out from the start. “Tactical collusion is a possibility in a highly concentrated market… difficult to detect even when under close scrutiny,” it said in 2017.
Yick says the proposed franchise service would likely just improve matters for a few customers around the Peak or Mid-Levels but would do nothing for the trade as a whole. He wants a broader approach. “There’s the issue of fair competition. The Uber service is not fair to those in the taxi trade, that’s one issue. But what is Hong Kong looking for? It’s the overall improvement of the taxi service. Our duty is to try to help the industry improve overall.”
“I really don’t know what our government is thinking of,” he says. “The most important thing is to help the industry to help themselves, raise service levels, then everybody is happy. If everybody is happy, then who cares about Uber?”