Thursday, 1 October 2020

“Piratas” and Uber Target Costa Rica Taxi Business

An illustration picture shows the logo of car-sharing service app Uber on a smartphone next to the picture of an official German taxi sign in Frankfurt, September 15, 2014.  REUTERS/Kai Pfaffenbach
An illustration picture shows the logo of car-sharing service app Uber on a smartphone next to the picture of an official German taxi sign in Frankfurt, September 15, 2014. REUTERS/Kai Pfaffenbach

(QCOSTARICA) Traditional taxis are taking fire from two sides, one a traditional and continuing problem, while the taxi service app Uber is advertising for a general manager for San Jose (Costa Rica) on its web site.  In both cases, regulated and unregulated rides with sometimes cheaper fares are undermining the traditional metered taxi business.

Pirate taxis (piratas in Spanish) have been common in Costa Rica for decades.  Traditional red taxis have a limited number of licenses available, and collusion from taxi owners and government officials have kept the bidding process for taxis licenses limited, in both numbers and in opportunities for outsiders to gain a license.

Related: Uber Wouldn’t Have It Easy in Costa Rica

- paying the bills -

At the same time fares are always and issue, since the regulatory agency, the Autoridad Reguladora de Servicios Publicos (Aresep) –  at times will deny hikes that cause taxis to lose their net income, or cause users to overpay when fuel costs have gone down.

The limited number of formal taxis causes shortages on peak demand times, when rains hit, on heavy shopping days, and holiday seasons.  And there are areas of conflictive communities like La Carpio or Leon XIII where some formal taxi drivers refuse to provide service.

This opened the market for informal taxis, who were often retirees looking to supplement their pensions.  As the informal taxi fleet grew, younger drivers began operating with older vehicles, quite often rented from investors who can afford to purchase a cheap car and rent it to drivers in shifts.

Because formal taxi drivers complained that the “piratas” were undercutting their prices, and stealing clients, in addition they aren’t required to have cars that are as new or in good condition, like formal taxis, steps were taken by the Legislature to shut down informal taxis in the early 2000s.

This caused an uproar from informal drivers, who pointed out that the commercial code permits a “transporter” (porteador in Spanish) who can pick up and deliver a select group of clients without needing a public taxi license.

- paying the bills -

The blockage of traffic and the lack of will by the Chinchilla administration to enforce the letter of the law, resulted in a 2012 package that organized “porteadores” into companies and allowed them to become regulated, in theory at least.

Now both groups are threatened by the expansion of Über, which according to LA REPUBLICA has even New York taxi drivers under fire, with a license that cost over US$1,000,000 just a few years ago now selling for a mere US$700,000.  Taxi finance companies are also fleeing the market of loaning to New York taxi owners.

Über in other countries offers a peer-to-peer network that allows approved drivers to transport clients asking for rides to different destinations. The company makes background checks on drivers and requires them to maintain their vehicles to company standards, while at the same time eliminating fare overcharges and the need for either party to carry cash to pay for the transaction.

Über has not begun operations in Costa Rica, but there are number of concerns for the service, based on local conditions:

  • Will Über become licensed as a “porteador” company?  It seems the local law is very clear on the service the company is offering, it would seem to be even more exactly the type of service the commercial code contemplates, and that which allowed the “piratas” to become somewhat legitimate.
  • Will Über drivers really maintain their cars according to company regulations? Ticos are famous for cutting corners.
  • Shouldn’t both types of “porteadores” be required to pass the annual RTV inspection twice yearly, the same as the formal taxis?
  • Will Über relax the car year requirements for Costa Rica?
  • Will insurance companies here in Costa Rica cover Über cars?  (in Costa Rica the car is insured, not the driver)
  • Will people sign up to be an Über driver just to get a free smart phone?  (the company gives drivers a phone according to the site)

Article by, with editing by the Q

Q24N is an aggregator of news for Latin America. Reports from Mexico to the tip of Chile and Caribbean are sourced for our readers to find all their Latin America news in one place.

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