New York City Council decided to limit the number of licenses for shared travel services, such as Uber Technologies and Lyft Inc, to one year. This is a blow to companies that rely on cities as the main source of their revenue.
This is the first such move by an American city and is part of a package of measures that also includes setting a minimum wage for drivers.
The package, which was opposed by major travel-sharing companies, aims to reduce congestion on the roads and increase wages for drivers. The measures come at a time when there is a huge increase in the number of cars for shared travel. The drop in profits discouraged many taxi drivers, and the New York taxi drivers said there had been six driver suicides in the past six months.
New York Mayor Bill de Blasio said he intends to sign the bills, which will trigger a 12-month period in which no single shared travel license will be issued except for vehicles for people with special needs. In the one-year period, will be explored the impact of these services on the environment, traffic and traditional taxis.
The new regulations also allow city authorities to set minimum wages for drivers of this type of service.
“The action will stop the flow of cars that contributes to congestion in the streets”, he said.
The number of shares travel cars operating in the city has jumped from 12,600 in 2015 to around 80,000 this year, according to the information of the New York Taxi Services and Limousine Commission. In comparison, the yellow taxis that work in the city are about 14,000.
Restrictions on transport services in New York, which is Uber’s largest US market, hamper the business of shared travel companies.
“The 12-month break in issuing new licenses will threaten one of the few reliable transport options without doing anything to fix the subway or ease congestion”, said Uber in official statement.
According to Lyft the decision will lead to people in New York “going back to the era when it was difficult to find transport”.
Via, which runs shared travel with fixed stops, hopes the city will make an exception for such services, which it says reduces congestion and provides drivers best pays.
In emails to nearly 5 million New Yorkers last month, Uber said that passengers would face higher prices, longer waiting times, and fewer offers at the city’s outer suburbs.
The Allied Taxi Workers Alliance, a 18,000-member union representing the taxi drivers of the city, welcomed the Council’s vote as a victory.