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Horse riding with ‘Uncle Diego’: Uber wanted to drive for growth in Chile

SANTIAGO (reuters) – The Uber driver pulled up to the international airport outside of the chilean capital. As his passenger hopped into his shiny, Suzuki, he looked around surreptitiously for signs of trouble.

“Working in the airport is not easy,” he said in a Reuters reporter, a rosary on the rear view mirror waving as he drove in the direction of the highway. “Uber in Chile is not easy.”

That is because Uber drivers can be fined or have their vehicles seized if they are caught by the authorities ferrying passengers. Chile has yet to work out a regulatory framework for ridesharing.

“It (Uber) – application is not a legal,” Chiles Minister of Transport Gloria Hutt said last year. “It is at this moment do not meet the Chilean law to carry paying passengers.”

Uber is unregulated status in rapidly growing markets, such as Chile represents a potential risk for the company as it prepares for a highly anticipated initial public OFFERING.

It is also started with a cat-and-mouse game of sometimes comical proportions in this South American country. Drivers warn each other of pick-up and drop-off points in which the police and transport department inspectors are on the prowl.

Also they call the passengers as accomplices. The riders are regularly instructed to sit in the front seat and remember a cover story – just in case.

“If anyone asks, I’m your friend’ s Uncle Diego,” a so-called Uber driver told Reuters on another recent run.

The other, a 41-year-old Guillermo, told Reuters his standard alibi for male passengers is that they are football friends. He and other drivers refused to be their surnames out of fear of being identified by the authorities.

Uber app and the website make no mention of the still unresolved legal status in Chile, where it now has 2.2 million monthly users and more than 85,000 drivers since the launch here in 2014.

The company advertises prominently on billboards around Santiago and promotional e-mails as if nothing was in order.

Veronica Jadue, the company spokeswoman in Chile, urged that Uber was legal. She pulled out a 2017 decision of the Supreme court against the efforts of the Chilean taxi companies and the trade unions are looking to stop the service in the northern city of La Serena. The court cited legislation introduced in 2016 by the government of former President Michelle Bachelet to regulate ride-hailing services. “The aim is to regulate, not to prevent the development of” the three judges said.

That legislation, nicknamed the ” Uber of law, is still pending from the government, the powerful taxi unions and app-based start-ups are trying to strike a deal.

Jadue taken to check whether the company knew that the drivers in Chile were coaching help passengers to deceive them transit officials. “We have stressed the importance of cooperation with the government,” she said.

A series of scandals has damaged already Uber’s reputation. The company is excoriated for the frat-house culture, sharp elbowed business tactics and battles with regulators around the world. While the San Francisco-based start-up is valued at $120 billion, the growth has slowed. [uL1N20925L]

The clean-up of its status in Chile and elsewhere will help. Nevertheless, would-be shareholders probably will be more interested in Uber’s ability to use its dominance in Latin America and other places where rivals such as China Didi Chuxing moving in, according to Nathan Lustig, a managing partner at Magma ners, a Santiago-based seed stage venture capital fund.

“They will suffer more market share and or Uber can be profitable in places…where there’s competition,” said Lustig.

CAR PARK RENDEZ-VOUS

In a statement to Reuters, Uber said it is “working hard” to ensure that ridesharing regulation goes forward in Chile.

FILE PHOTO: A taxi driver has a flag with the text “Not Uber” during a nationwide strike to protest against Uber Technologies in Santiago, Chile, July 30, 2018. To match Insight UBER-CHILE/ REUTERS/Ivan Alvarado/Photo File

In the meantime, sanctions keep piling up. Since 2016, inspectors from the chilean Ministry of Transport have issued 7,756 fines ranging from $700 to $1,100 to Uber drivers. The local police have handed out thousands of citations.

Drivers told Reuters Uber them will reimburse the cost of the fines to stick to the rollers. Uber said that it is not so “on a case-by-case basis.”

The company also helps. For example, Santiago-area riders had complained on social media that drivers are frequently cancel rides from and to the airport, a hot zone for quotes.

The solution: a special category of the service at Uber Chilean app known as UberX SCL, named after the code for Comodoro Arturo Merino Benítez International Airport. That runs are treated with the courage of the souls are willing to take the risk of getting a fine, drivers told Reuters.

The securing of a driver, only half of the battle. On the Chilean website, Uber tells passengers departing from the airport in order to meet their drivers in a short-term parking. Drivers told Reuters that they use the Uber apps messaging system to enable meeting points if they suspect that quote writers float.

Uber declined to discuss the reasons for tailored communication in Chile. Spokeswoman Jadue said Uber Chili products are designed to deliver a positive experience for the riders and the drivers.”

Matias Muchnick, a member of Chile’s vibrant start-up community, said the “chaos” is embarrassing. The country touts its orderliness and refinement to foreign investors, who might not see the adventure in ducking transit cops after the abandonment of their international flights.

“People get a bad first impression,” the artificial intelligence entrepreneur said on December investment conference in Santiago.

But David Brophy, professor of finance at the University of Michigan, said such stories can be a selling point for some IPO investors.

“The important thing is that people want to use it, even though it is not nice if you stopped by the police,” he said.

EVEN THE POLICE USE UBER

Uber has tangled with regulators all over the world, including in other parts of Latin America.

In Argentina, for example, the company will remain unregulated years after entering the market. Lawmakers in Buenos Aires are largely sided with the taxi drivers, who complain about Uber at artificially low rates, while avoiding all the overhead-born cabbies.

But the region’s commuters are addicted to the price and convenience, while the car owners see opportunities. Uber says that the 25 million active monthly riders in Latin America and one million drivers.

In country after country, it has found success by following a familiar playbook: expand quickly in a legal vacuum, then leverage the popularity and market power to shape regulation.

Still, some local governments are back from their authority. In the United States, for example, the City of New York last year capped the number of vehicles driving on the streets. Los Angeles is contemplating a ride-from tax to reduce congestion on the road.

In Chile, the negotiations on the Uber Law are slow.

Taxi unions want lawmakers to limit the number of rideshare drivers and to ensure that their rates are not that of a taxi. Transportation startups, led by Uber, have their own energetic lobbying. The riders have voted with their smartphones; many have little sympathy for the “taxi-mafia” that long kept prices high and provided irregular service.

Caught in the middle of his Chilean officials. Hutt, the minister of transport, admitted publicly that her children used the app and that she had also, until they took her post last year. Uber drivers told Reuters that officials – including the police – are frequent customers.

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In an interview in Santiago his office, Jose Luis Dominguez, the country of the subsecretary for transport, acknowledged his agency’s dilemma.

“(Uber) should not be operated. Passengers may not be used,” Dominguez said. “But…ignoring that it exists would be like trying to block out the sun with your finger.”

Reporting by Aislinn Laing; Additional reporting by Cassandra Garrison in Buenos Aires and Helen Murphy in Bogota; Editing by Christian Plumb and Marla Dickerson

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