Licence Application Decision Luxury App-based Transportation Service

Transcription

1 Licence Application Decision Luxury App-based Transportation Service New Special Authorization Application # Applicant BC Ltd. Trade Name (s) Cowichan Auto Repair Cowichan Space Shuttle Principals RUGE, Elspeth Ann Address Allenby Road, Duncan, BC V9L 6V8 Current None Authorization (s) Application Summary Date Published in Weekly Bulletin Submitters (and representatives) New Special Authorization (Reference: Section 26 of the Passenger Transportation Act) New passenger directed vehicle service in Cowichan Valley Regional District with 4 luxury app-based vehicles. (2 sedans and 2 SUVs) Booking is exclusively app-based. Rates (Section 24 of the Passenger Transportation Act) App-calculated rates. July 26, 2017 Country Cabs Duncan Ltd. BC Taxi Association Duncan Taxi Ltd. Board Decision The special authorization is refused. Decision Date August 31, 2017 Panel Chair William Bell Cowichan Valley Limousine Encore Limousine Service I. Introduction The applicant, BC Ltd. operating under the trade name Cowichan Auto Repair/Cowichan Space Shuttle (CSS) seeks a new passenger transportation licence with a Special Authorization: Passenger Directed Vehicles. CSS wants to operate a premium shuttle service with 4 luxury vehicles. The service will be based in Duncan, B.C. and Page 1 Passenger Transportation Board PDV Decision

2 operate from any point in the Cowichan Valley Regional District ( CVRD). The destination area would include any point in B.C. CSS would exclusively use an app- based booking and dispatch system and app-calculated rates based on time and distance. CSS also seeks authority to pick passengers up in their destination area and bring them back to the CVRD. II. Background The applicant, Elspeth Ann Ruge will be the company s owner, operator and manager. The service will operate with 4 vehicles: 2 sedans (3-5 passenger) and 2 SUVs (6-11 passenger). The fleet would include hybrid and fully electric vehicles, most with 4 wheel drive and above average luxury features. In support of this application, BC Ltd. provided the following documents. PDV vehicle proposal Service Area Proposed Rates & Rules Public Explanation Disclosure of Unlawful Activity and Bankruptcy Declaration Condensed Operating Plan Business plan Financial information Public need indicators Board staff prior to publishing the application summary advised the applicant of the Board s Application Guide 5.1 : I want to start a new luxury, app based transportation service. The applicant, at this time, was also asked to clarify concerns regarding vehicle type and rates to ensure the application summary to be published reflected the authority wanted. III. Relevant Legislation Division 3 of the Passenger Transportation Act (the Act ) applies to this application. The Act requires the Registrar of Passenger Transportation to forward applications for Special Authorization licences to the Passenger Transportation Board (Board). Section 28(1) of the Act says that the Board may approve the application, if the Board considers that: Page 2 PDV Decision Passenger Transportation Board

3 (a) there is a public need for the service the applicant proposed to provide under any special authorization. (b) the applicant is a fit and proper person to provide that service and is capable of providing that service, and (c) the application, if granted, would promote sound economic conditions in the passenger transportation business in British Columbia. I will consider each of these points in making my decision. IV. Rationale and Submissions (a) Applicant s Rationale The middle market is not serviced. Taxis are basic and limos are flashy with more bling than people want. High end restaurants, wineries and bars want to get clients home safely and in style. Realtors want to show their clients some properties and give them their full attention. Most of our vehicles are 4X4, black with leather and Wi-Fi. CSS will fill the gap between taxis and limos. The Cowichan Valley and Vancouver Island are booming. The vehicles are black, always clean with drivers in uniform. Cowichan is going upscale with tourism and the new motorsport park etc. More part time residents need nicer transportation options. (b) Submissions & Applicant s Response Submissions were received from the following: Country Cabs Duncan Ltd. BC Taxi Association. Cowichan Valley Limousine Duncan Taxi Encore Limousine Five (5) submissions opposed the application. Common themes include: There is no unmet need for further passenger directed vehicles (PDVs) in the area Taxis and limousines currently serving the area are under utilized Page 3 PDV Decision Passenger Transportation Board

4 The application is a replica of application The Board approved 20 vehicles to operate in Metro Vancouver. The submitters claim it is not a viable business model. Any support letters do not reflect the true nature of public need and are too easy to obtain. Social media support should be given no weight. The applicant has no experience or ability to provide the service. Approval of the application will have a negative financial impact on the livelihood of existing taxi and limousine operators in the area. The submission by Encore Limousine also reported the following concerns and observations: It operates an eco-friendly luxury sedan Tesla limousine that serves the middle market between taxis and limos which is a narrow niche market in the Cowichan Valley and the area does not need 4 more luxury vehicles. Realtors showing properties use their own high end vehicles. The CVRD is not a big urban city but largely rural with small urban pockets. Based on the applicant s taxi-like rates it expects shorter rides that are not likely in such an area. App-based ride-sharing companies exist successfully in cities targeting millennial s and business people who often do not own a vehicle and use the services to go many city blocks in heavy traffic. Further, ICBC insurance rates for late model luxury sedans and SUVs are costly as are those associated with licencing and maintenance. There is no record of the applicant s proposal working in a rural area. It is not sustainable or financially viable. The new motorsport park is operated by a high end resort that has its own high end shuttle. Applicant s Response The service is a luxury PDV that is not a taxi and not a limo. It offers customers a more luxurious experience than that of taxi and not as upscale as a limo. It is a premium and alternative transportation service to the growing valley. Anyone spoken to about the shuttle is in total agreement that it is a bonus and will be used extensively. The application is for a luxury, app-based transportation service not a limousine. Page 4 PDV Decision Passenger Transportation Board

5 The service is different than the company in Vancouver and their financial situation is unknown. The service fills a niche market that is not served by either taxis or standard limousines. Growth in the valley is high with a record 40% increase in building permits this year and tourism is booming. The Tesla operated by Encore is set up as a limo licence and cannot do shorter runs and must charge the flat rate. Encore s inability to market effectively and local business s lack of awareness of Encore cannot be a determining factor in granting it a licence. The ride sharing companies that do service in a city is a taxi service and is not the applicant s target market. The applicant is fit and capable to operate the business and has had tourist businesses and tourist transportation businesses throughout the years. The Board gives more weight to submissions that back up general claims with facts or details. I have considered the submissions and the responses in my review of this application. V. Reasons for the Board s Decision (a) Is there a public need for the service that the applicant proposes to provide under special authorization? Applicants should supply information that is factual and objective to demonstrate public need. They should demonstrate that there are people who would use the service. Applicants should explain why they are applying for a specific number of vehicles. The Board wants to be satisfied that there is a reasonable connection between the number and types of vehicles requested and public need. The applicant reports that there are no providers in the area for the middle market, the market between taxis and full stretch limos. People s choices to go to meetings, night on the town, wineries, the airports and ferry terminals etc, are in older taxis or a stretch limo. Taxis often have high usage and cleanliness can be an issue. Stretch limousines are too fancy for some people that want and appreciate luxury yet do not want to be seen in or pay the cost of a full stretch limousine. People want transportation that s nicer than a taxi and less flashy and much more subtle than a limousine. CSS will provide convenient, eco friendly, reasonably priced, safe, clean and comfortable transportation. Further, it contends that as Page 5 PDV Decision Passenger Transportation Board

6 the only transportation provider with 4x4 and AWD it will be the provider of choice for many when considering back roads in the area and in severe winter and wet road conditions. CSS indicates its key customers will be the upper middle class, realtors, tourists, private schools, special events and local business. It also cites several advantages for its services: the use of GPS with advanced features to track vehicles; website and apps handle the majority of billing; vehicles with safety features such as lane departure, front collision avoidance with automatic braking, radar cruise control, etc. It reports that its smart phone app oye.one is built and will allow customers convenient usage and will encourage them to share their experience and knowledge of the app with their various social media and other friends. The applicant provided the following information and evidence in support of public need for the service: 1. Condensed Operating and Business Plans CSS reports that 120,000 people live in the Cowichan Valley catchment area. Tourism is increasing. Further, the wealthy upper middle resident numbers are the biggest segment of the population increases. The real estate market is very strong. Two international airports and five ferry terminals are within an hour s drive of the Cowichan Valley. The Condensed Operating Plan states Uber and rideshare is coming in late We have decided to join Uber when it is legal here. Uber will fill in slower times and increase awareness of Cowichan Space Shuttle. In its Business Plan the applicant adds we registered with Uber so that once rideshare becomes legal we will be able to accept rides from the Uber app. This is another form of marketing. When people know that we are available from our own app and we provide a better consistent service at similar cost, a percentage of Uber passengers will book directly with us on future rides. 2. Local Economy Indicators A report ( undated) produced by Economic Development Cowichan titled Live Work Invest- 7 Reasons to Make Your Home In The Cowichan Region On Vancouver Island outlined and provided details concerning: A Vibrant and Diverse Economy Page 6 PDV Decision Passenger Transportation Board

7 Strong Local Labour Force Strategic Location Secure and Sustainable Infrastructure A Proactive Government Clean, Safe and Livable Communities Strong Business and Community Organizations Information included in the report indicates that the Cowichan Region according to the 2011 Census had a population of 80, 332 with an annual growth rate of about 1.6 %. The document also reports that most residents in the region are aged followed by those with almost 50% being trade, college of university graduates. It further reports that Agriculture, Tourism and Forestry are the cornerstones of the diverse local economy and the area is strategically located between 2 city markets Victoria and Nanaimo and is served by a well maintained network of air, road and rail infrastructure. A Cowichan Business Roundtables Summary Report of April 2017 reflecting 6 industry sectors (retail, tourism, manufacturing and processing, construction and real estate, agriculture, technology and innovation) identified in its general analysis 4 significant issues: strengthening the relationship with local government, creating a shared vision, infrastructure development and labour and skills development. A BC Chamber of Commerce Collective Perspective Survey Report. This was an online survey which invited members to participate during the period October 18 and November 6, Respondents represented 16 economic sectors that employed a range of employees. The key findings note that business reports decent strength, a broad optimism for about 3-5 years, few feel at a competitive disadvantage and 85% plan to grow and 78% expect they will. 3. Tourism Indicator A Destination BC presentation dated January 26, 2017 to the Duncan Chamber of Commerce was included that highlighted the following: 2016 was a record breaking year for tourism in BC with 20 million domestic and international visits forecasted is poised to be a record year as well. International overnight arrivals to the end of November 2016 were up 12.2%. Page 7 PDV Decision Passenger Transportation Board

8 A survey by BC Chamber of Commerce of its members indicates 52% believe tourism will become a lot more important for the BC economy in the next 5-10 years Tourism in BC is diverse and is good for the cities and rural communities. It is a valuable and sustainable industry providing more than 120,000 jobs in the province with $14 billion in overall revenue. 4. Support Letters Two (2) letters were received from the Community Planning and Response Coordinator, BC/Yukon Disaster Management Programs that provided references about the applicant and her husband regarding their volunteer work. One support letter from the President, Duncan Cowichan Chamber of Commerce reports that businesses as well as visitors would use the proposed service. It observes the service would be a value added one that would enhance tourism in the area. Another letter came from the same individual who also works as the Director of Finance and Operations of an independent school located in the area with 350 students. This letter indicates that it would recommend the service to families of students attending the school and specifically to parents from outside the country visiting their children and also for transfers for the children and them from events, ferries and airports when school buses cannot always accommodate them. Two letters received from realtors in the area indicated they would use the service to transport clients when viewing properties so they could focus on property information. One also notes that picking up and dropping off clients at airports and ferry is often outsourced and having a vehicle nicer than a taxi and not as fancy as a limo will appeal to its clients. Another realtor reports usage of the service If I have a group to show properties to and I cannot fit them in my vehicle and that it is safer and efficient to be driven around. One letter from a recent resident of North Cowichan provided a testimonial regarding the applicant s experience in small business operations and as a participant in community events. The letter reports a good shuttle service from the ferries and airports is needed as well as service for small tours or other events in the Cowichan Valley. Page 8 PDV Decision Passenger Transportation Board

9 Five letters came from businesses in the Duncan area, including a vineyard with a restaurant and wine bar, a local farm that offers dinners, cooking classes and catering/supporting local events, a café, a wine and cocktail bar and home décor business. Several indicated tourism and general growth in the valley. Several indicated use of the service for the pickup and delivery of clients or guests when hosting local events and one indicated use for visiting local vineyards, bistros, artisan studios and farm gates that would provide a safe driving option for participants concerned about drinking and driving. One reports heavy use of the local 2 taxi services, but that there is a minimum of passengers they can take and weekend waits can be lengthy at times. One added the SUV service would be useful for larger groups wishing to travel together while another indicated access to the SUV service for its grocery shopping would be beneficial. One stated this feature was the answer for most seniors who find it difficult to get in and out of a taxi. Several also noted that high end clients or the mature and upscale market find the luxury and SUV option appealing for getting around town. 5. Social Media Support The applicant solicited social media posts and provided a description of the new service on May 2, 2017 that stated this new ride service will cost more than a taxi and less than a limo. It also included a description of the vehicles as eco-friendly 4 x4 SUVs that can carry up to 6 passengers in style and the intended service can be booked from your smartphone or from the website or call Twenty seven (27) media posts were received between May 2 and May 4, Six (6) were from support letter authors above. Of the remainder the posts expressed views or congratulations that the service was great idea and would be of benefit. Several indicated general use of the service primarily for airport/ferry transfers or that the service would be good for festivals, wine tours and other events. Board Analysis and Findings Claims of growth in the CVRD, including tourism, were general in nature and the applicant did not explain adequately how it equates to a public need for the proposed service. The reference to population growth, local economic indicators and related reports, broad BC tourism statistics are not, in and of themselves, evidence of a public need. Page 9 PDV Decision Passenger Transportation Board

10 The reference by the applicant to joining Uber suggests an uncertainty with this application that must stand on its own merits regarding a public need for the service. The creation of ridership and public need for its service through an alliance with Uber is highly speculative. I have some concerns for consumers as no explanation was provided on how its operation presumably working as both CSS and Uber would distinguish itself regarding bookings and the calculation of rates. Without this a general confusion would likely prevail for those making purchasing decisions and confidence in the market could be negatively impacted. The support letters, several of which were references only with no discussion of public need, did not present strong evidence of public need, but rather support for a transportation option that may be of benefit. The letters contained little details regarding frequency of use or when and how often clientele or guests need the service. They do not acknowledge in any detail the distinguishing features (e.g. app-based booking/calculated rates) of the proposed service. Other than 1 letter that refers to issues with a couple of taxi services on weekends, no information was provided regarding their use of transportation services provided in the CVRD where 2 limousine and 6 taxi companies currently operate and that they are inadequate, inefficient, unreliable or unsatisfactory or how the proposed service fills a gap. While there may be some preference for the proposed service this does not indicate a public need. I also assign little weight to the social media posts overall. They are largely anecdotal. I find this evidence of little probative value in establishing public need. There is insufficient evidence to show a verifiable or substantive public need for the service proposed by the applicant. The applicant has not in a compelling manner demonstrated that there is a public need for the new app based service in the proposed operating area of the CVRD. (b) Is the applicant a fit and proper person to provide that service and is the applicant capable of providing that service? The Board looks at fitness in two parts: (i) is the applicant a fit and proper person to provide the proposed service; and (ii) is the applicant capable of providing that service? The applicant, Elspeth Ruge, will be the sole owner, operator and manager of the business. Her husband will be a driver, screen all new drivers and be in charge of both driver and Page 10 PDV Decision Passenger Transportation Board

11 vehicle safety. The applicant indicates he is a professional driver who has a Class 2 (with air) licence with over 30 years experience as a bus driver. Ms. Ruge is the current owner of Cowichan Auto Repair and indicates she has 40 years of business experience, including owning hotels and running tours. The existing office for car repairs and detailing would be the base of operations The necessary disclosure and declaration forms were completed to my satisfaction. Also included criminal record checks on both the applicant and her husband. The application included a National Safety Certificate. The applicant provided a Condensed Operating Plan, a Business Plan, Financial Statements including Projected Profit and Loss, Balance Sheet and Cash Flows. The Business Plan indicates marketing will primarily be over the internet and a website is under construction. The application indicates that no financing is needed and that additional vehicles other than a main and temporary vehicle for start-up will be leased. The applicant is currently operating a company and indicates she has a substantial background in the tourist business relating to transportation and tours. There is no negative information regarding compliance or care and control matters and the applicant appears to have the wherewithal for start up and ongoing operation of the proposed service. I find that, absent evidence to the contrary that the applicant to be fit and proper and capable of providing the proposed service. (c) Would the application, if granted, promote sound economic conditions in the passenger transportation business in British Columbia? The Board looks at the economic conditions issue from a wide-ranging view. The economic conditions of the transportation business in British Columbia are considered ahead of the economic and financial interests of an individual applicant or operator. The Board supports healthy competition. The Board discourages competition that could unduly harm existing service providers. In this particular application, the applicant has not demonstrated public need to the satisfaction of the Board. As a result, I make no determination as to whether the Page 11 PDV Decision Passenger Transportation Board

12 application, if granted, would promote sound economic conditions in the passenger transportation business in British Columbia. VI. Conclusion For the reasons above, this application is refused. Page 12 PDV Decision Passenger Transportation Board