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Ride-hailing companies to get airport access in exchange for 15 percent cab fare hike

Taxi drivers in Chicago have held many protests aimed at ride-hailing companies such as Uber. | Gerry Images

Chicago cabdrivers would be in line for a 15 percent fare increase, but ride-hailing companies would get the keys to the kingdom — the right to make pick-ups at McCormick Place, O’Hare and Midway Airports — under a mayoral plan that, cabbies warn, would “decimate” their already wounded industry.

“If he takes the airports away from us, him and his brother will live happily ever after, and the cab industry will be totally shot,” said 31-year veteran cabdriver Steve Wiedersberg.

“He’s doing whatever he can to decimate the cab industry and help Uber,” whose investors include Hollywood super-agent Ari Emanuel, the mayor’s brother.

Veteran cabdriver Melissa Callahan agreed that there “won’t be an industry left” if Emanuel succeeds in taking away what has become the “last bastion” for cabbies.

“I don’t think a fare increase of any size would be enough to compensate for the loss of business at O’Hare and Midway. The only business cabdrivers have left at this point is the airport and McCormick Place,” she said.

Currently, ride-hailing companies are allowed to drop passengers off at O’Hare, Midway and McCormick Place, but they leave empty. Pick-ups are forbidden.

In exchange for the lucrative access, Uber and other ride-hailing services would pay a $5 surcharge every time they pick up or drop off passengers at O’Hare, Midway, McCormick Place or Navy Pier. The new tax would generate $30 million in new revenue. Cabs pay a $4 ground transportation tax, but only after airport pick-ups.

To raise an additional $48 million, Mayor Rahm Emanuel’s plan would also slap a 50-cents-a-ride surcharge on cab rides and raise the little-known 30-cents-a-ride surcharge on Uber and other ride-hailing services to 50 cents.

Emanuel is also following the lead of two powerful aldermen by applying a multiplier to the ride-hailing surcharge; it would apply whenever Uber and other ride-hailing services use “surge pricing” — that’s when they take advantage of periods of peak demand to charge riders even more. If Uber charges triple the normal fare during a snowstorm, the 50 cent surcharge also would triple — to $1.50.

The 15 percent fare hike would be Chicago’s first in a decade. City Hall claims it would put anywhere from $4,000 to $10,000 more into cabdrivers’ pockets every year.

To address a chronic complaint, the mayor’s plan would also give ride-hailing services and taxis a 50 percent credit — up to 15 percent of their total trips — for pick-ups and drop-offs in underserved Chicago neighborhoods.

Callahan has a class-action lawsuit pending against the city that seeks a declaratory judgment that taxi drivers are employees — not independent contractors — and must be paid the minimum wage.

It also seeks millions of dollars in damages and back pay for all persons who have worked as taxi drivers in Chicago over the last three years while paying the companies to lease their vehicles for $90 a day and $500 a week.

On Friday, Callahan urged Chicago aldermen to “save” the taxicab industry by rejecting the mayor’s so-called grand compromise. She called the 15 percent fare hike a “manipulation tactic” aimed at appeasing struggling cabbies.

“For all of these years, we’ve worked with no fare increase under terrible conditions. And this is the thank-you we get. Show some appreciation and loyalty to the people who’ve been moving this city all of these years.”

Ald. Anthony Beale (9th), chairman of the City Council’s TransportatIon Committee, said the feedback he’s getting tells him the mayor’s plan would “kill the cab industry as we know it.”Beale vowed to work with Finance Committee Chairman Edward Burke (14th) on a compromise that truly “levels the playing field” and keeps ride-hailing services out of Chicago airports.“We would have cars all over the place that we can’t identify. It would be chaos at the airport,” Beale said.Mara Georges, former Mayor Richard M. Daley’s longtime corporation counsel, now serves as an attorney for the Illinois Transportation Trade Association, representing 6,000 taxi medallion owners and operators.

Georges said the mayor’s grand plan will make a bad situation worse. She noted that taxi medallions used to change hands up to 400 times a year, with the city getting a $17,000 transfer tax for each transaction. This year, it’s down to 30 transfers.

“In June, 59 medallions were being foreclosed upon. People who have taken out loans on taxi medallions can no longer make their payments because ride sharing has come into the market without regulation,” Georges said.

“Taxis have as their last bastion the airports, McCormick Place and Navy Pier. Now, the city will let them in and taxis will not be able to compete. More and more medallions will be foreclosed upon and, very soon, you’ll just have renegade taxicabs holding on for as long as they possibly can. The fleets will disappear. You’ll no longer have a Yellow or Checker. Primarily immigrants have put their life savings into medallions and they are losing their shirts.”

Well aware that the reforms would be controversial, the mayor’s office released the details late Friday, when bad news is traditionally buried and Chicagoans are more focused on weekend plans.

The mayor’s office responded to the barrage of criticism by defending what it called Emanuel’s “strong record of reforms that further strengthen” the public passenger vehicle industry, level the playing field between cabs and ride-hailing and create “more transit options” for Chicagoans.

“By allowing ride-share vehicles to pick up at airports and other high-volume locations, we are providing travelers with more options and generating revenue for the city by charging ride-share companies a fee that is more than two times what is charged to taxis,” the statement said.

Three months ago, South Side Ald. Pat Dowell (3rd) demanded City Council hearings to determine how to level the “uneven playing field” between taxicabs and ride-sharing companies that has caused medallions prices and driver incomes to plummet.

Her resolution, co-signed by half the City Council, called for strengthening the watered-down ride-hailing ordinance approved last year.

That Emanuel-championed ordinance does not regulate ride-hailing fares or “surge-pricing” and does not restrict the number of companies, vehicles or drivers that could operate on Chicago streets.

It also created a two-tier system that allows part-time drivers to escape rigid screening. And it opened the door to the lucrative airport market that Uber once tried to enter illegally, only to be stopped by the city.

During the mayoral campaign, then-Ald. Bob Fioretti (2nd) accused Emanuel of political favoritism, pointing to the conflict posed by Ari Emanuel’s investment in Uber.

Emanuel flatly denied the political favoritism charge after pushing through the ride-sharing ordinance that, the taxicab industry maintains, did not go nearly far enough.

Earlier this year, Emanuel stepped in for the second time in a year to block Uber from moving in on cabdrivers’ turf at O’Hare and Midway Airports.

It happened after Uber started an online petition to persuade City Hall to let Uber drivers make airport pick-ups.