limousine– new special authorization · 2015-04-29 · delta sunshine taxi (1972) ltd. kimber...

Licence Application Decision Limousine– New Special Authorization

Application # 210-13 Applicant Ripe Holdings Inc.

Trade Name (s) Ripe Holdings

Applicant’s Representative

The Law Offices of Michael McCubbin, Barristers & Solicitors

Principals PERRICK, Otis GORAYA, Gagan

Address 218 – 470 Granville Street, Vancouver BC V6C 1V5

Current Authorization (s)

None

Application Summary

New Special Authorization (Reference: Section 26 of the Passenger Transportation Act)

• New point to point luxury sedan transportation service with 20 sedan limousines

Rates

(Section 24 of the Passenger Transportation Act)

• Per kilometer and time rates with minimum charges.

Date Published in Weekly Bulletin

September 25, 2013

Submitters & their representatives:

Delta Sunshine Taxi (1972) Ltd. Kimber Cabs Ltd. Guildford Cab (1993) Ltd. Newton Whalley Hi Way Taxi Ltd. Sunshine Cabs Limited North Shore Taxi (1966) Ltd. Richmond Cabs Ltd. Coquitlam Taxi (1977) Ltd. White Rock South Surrey Taxi Ltd. Griffin Transportation Services Inc. Imperial Global Chauffeur Services Inc. Excel Limousine Service Ltd. The above submitters represented by McLachlan Brown Anderson, Barristers & Solicitors

Passenger Transportation Board Decision

Yellow Cab Company Ltd. Black Top Cabs Ltd. MacLure’s Cabs (1984) Ltd. Vancouver Taxi Ltd. The above submitters represented by Gall Legge Grant & Munroe LLP, Barristers & Solicitors BC Taxi Association, represented by Mohan Kang, President

Hearing Dates & Location

December 8 – 11, 2014 Park Inn & Suites Vancouver 898 West Broadway Street Vancouver BC V5Z 1J8

Board Decision

The special authorization is approved.

Terms and conditions of licence are approved as set out in this decision.

Rates sought by the applicant are approved as set out in the application summary.

Decision Date April 27, 2015

Panel Chair Don Zurowski Panel Member Brenda M. Brown

I. Introduction

Application 210-13 is an application for a new passenger transportation licence. Ripe Holdings Inc. seeks a Special Authorization (SA): Passenger Directed Vehicle (PDV). The applicant seeks approval from the Passenger Transportation Board (PT Board) to operate a luxury sedan transportation service with 20 vehicles. Rates are based on time and distance. All bookings will be through an application on a mobile device.

II. Background

Application 210-13 was published in the Passenger Transportation Board’s Weekly Bulletin on September 25, 2013. After reviewing the application materials, the 18 submissions and the applicant’s responses to the submissions and PT Board investigations, we decided to convene and conduct an oral hearing into the application, which represented a new type of commercial passenger transportation service.

Ripe Holdings Inc. Decision Passenger Transportation Board

Although the Board holds few public hearings, it may do so if:

• there are many submitters

• there is conflicting evidence on file

• the application raises a significant policy issue. All three factors were present in this application. A Notice of Hearing was published on April 9, 2014. The hearing was initially scheduled for June 2 – 5, 2014, in Vancouver. At the applicant’s request, the hearing was adjourned until December 8-11, 2014. After publication of the Notice of Hearing, the Board received 17 submissions: 1 from a taxi association; 3 from limousine companies; and 13 from taxi companies. These submitters participated in the public hearing.

III. Procedural Matters

1. Pre-Hearing Rulings

A pre-hearing conference was held on May 5, 2014. As a result of that conference, we made rulings pertaining to:

• adjourning the hearing

• disclosure of witness lists and documents, including expert reports

• witnesses at the hearing. Participants generally complied with the pre-hearing conference rulings. On October 30, 2014, the Vancouver Taxi Companies requested an adjournment. On November 5, 2014, the Board, after considering the request and comments from the applicant and other submitters, refused this request. On November 26, 2014, we made the following rulings:

• Issued an order to attend the hearing to a witness of Ripe Holdings Inc.

• Refused to limit the number of witnesses from participants represented by Mr. McLachlan.


• Ordered Mr. McLachlan to re-submit a witness list to include a summary of

testimony from each witness, which was received on December 1, 2014.

• Approved a request from Mr. Gall, on behalf of the Vancouver Taxi Companies, to permit an expert witness to give evidence via “telepresence”.

On December 3, 2014, the Chair issued another order to attend to a witness of Ripe Holdings Inc.

2. Rulings at the Hearing

The Board revised its ruling to exclude witnesses, allowing them to remain in the hearing room. The Board accepted the following documents into evidence, although they were received after the pre-hearing disclosure dates: From the Applicant:

• Submitters’ positions & replies • Taylor Nicholl’s Report • Supplemental Documents • 2nd Book of Supplemental

Documents • GVRD Boundaries

• Comments and critique of the Chow Report data and analysis

• Vik Kambli – Linked in Profile • Vancouver Sun article (Jumpstick,

plus pdf. Received on December 18, 2014)

From Yellow Cab Company Ltd.; Black Top Cabs Ltd.’ MacLure’s Cabs (1984) Ltd.; Vancouver Taxi Ltd. (Vancouver Taxi Companies):

• Supplemental Documents (VTC)

• Metro Vancouver: Regional Development Indicators (VTC)

For the most part, the documents were accepted with little dispute. There were some objections, primarily by Mr. McLachlan to the introduction of the Taylor Nicholl’s report as a “rebuttal” to the Dr. Hara report. We indicated in marking the above noted documents as exhibits, that we would decide what weight, if any, to give these in our deliberations. Mr. McCubbin also objected to some of the questions put to Dr. Chow in direct examination that related to the report and testimony of Dr. Gillen. Mr. McCubbin indicated that he may


have to recall Dr. Gillen to respond to Dr. Chow’s testimony. This was not pursued by Mr. McCubbin. Finally, we determined that we would accept written closing submissions. Submitters were given until December 24, 2014 to provide their submissions. In recognition of the festive season, the applicant was given until January 9, 2015 to provide its closing submission.

IV. 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:

(a) there is a public need for the service the applicant proposes 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.

We will consider each of these points in making our decision.

V. Applicant’s Service Proposal & Operations

Ripe Holding Inc. seeks to be an innovative, unique, point to point luxury sedan transportation service, focused on bridging customers and drivers through smartphone technologies. It submits that there is no mid-tier service that meets luxury transportation needs at a reasonable price, integrates smartphones and overall fits the lifestyle needs of the GVRD consumer.

At the hearing, Mr. Otis Perrick, a principal, director and President of Ripe, who will be in charge of business, finance & strategy, outlined Ripe’s service proposal. Ripe proposes to operate in the Greater Vancouver Regional District (GVRD) with 20 luxury sedans. Vehicles will be dispatched via a smart phone or other mobile device using Ripe’s application technology. Passengers will be able to select a car and driver by the driver’s ratings and in


real time. Ripe will market its service using social media - “electronic word of mouth” -through such means as push notifications, cross marketing and cross communications.

Ripe’s target market is 18-46 year olds. Ripe’s service will be used for trips to concerts, events and nightclubs. It will also be used by the business elite.

Ripe has determined that 20 cars represent a breakeven point. The fleet will be scattered throughout the GVRD. Ripe will use customer data for positioning of cars. Ripe recognizes that it will not be able to serve every client. Some passengers may have to wait or they can choose alternate services. If the fleet is booked, customers will need to look elsewhere.

Ripe proposes an app that will use GPS coordinates to select routes and estimate fare calculations at the start of the trip. Passengers cannot pre-book and will only be able to book via the app. They will not be able to book via a call centre, as initially proposed. Technology exists to cover the issue of dead zones. Ripe will be “cashless”. Payment is via the app. At the time of the hearing, the app was in development and had not passed the beta point for testing. It will be beta tested if the application is approved.

Rates are based on time and distance. There is a $35.00 charge for the first 4 kilometers ($20 for the 1st kilometer plus $5.00 per kilometre for the next 3 kilometers). Thereafter, additional charges apply: $2.60 per kilometer and $0.75 per minute for speeds lower than 18 kilometer per hour. The cancellation fee is $10.00. Ripe believes that these rates represent a price point with which people are comfortable. The rates will be regulated and there will be no surge pricing. Ripe is not looking for exclusivity for its time and distance rates and suggests other sedan limousine operators seek the same rate structure.

It will take 3 to 6 months to get the service up and running.

Ripe submits that it is different from Uber, a US based company that provides transportation services via an app. Uber operates in various jurisdictions and was briefly operational in Vancouver in 2012 (although it did not have a passenger transportation licence). Ripe describes Uber as a technology company not a transportation company. Ripe is making every effort to work within the current BC regulatory regime. The Ripe service will be provided by its employee drivers and company cars. Ripe maintains it offers a service that is distinct from taxis as well as other limousine services.


VI. Overview of Written Submissions

Two sets of submissions were received: one set with the initial publication of the application and one set with the Notice of Hearing. These, along with Ripe’s replies, are found in Exhibit #13.

1. Submission Themes

The submissions have common issues and concerns, outlined as follows:

• Current license holders are already providing suitable transportation services in the GVRD. Efficient and reliable limousine services already exist with 72 licensees and a total fleet of 433 authorized to operate.

• There is no public need for Ripe’s service. The Board’s Licence Application Decisions on Peak Period Taxi Service in the City of Vancouver (published October 3, 2013) addresses the issue of peak period taxi service in downtown Vancouver. This decision authorizes an increase to 725 taxis during peak periods. As 38 suburban taxis have yet to be implemented, more vehicles could create a potential over supply. Previous applications from various GVRD taxi companies, such as Richmond Taxi Ltd., Royal City Taxi Ltd. and White Rock South Surrey Taxi Ltd. to increase their fleet size have been denied by the PT Board, either wholly or in part, due to lack of evidence to demonstrate public need for additional vehicles.

• There should be an existing customer base with support letters and contact information that show there is a demand for additional sedan limousines. Tweets and emails from the general public do not satisfy the demand requirement. They are unreliable, unverifiable and should not be considered as evidence.

• Support needs to be specific to the proposed rates. Applicants must provide relevant and reliable evidence that includes information from people who would use the service.

• There are marked differences between the services of Uber (a US based company that uses an app) and Ripe. The submitters maintain that support for Uber service cannot be taken as support for Ripe service.

• Ripe is proposing to serve a large operating area. With “on demand” service, Ripe becomes a cross-regional taxi operator, originating anywhere in the GVRD. No single taxi company can operate throughout the GVRD. How will Ripe provide the operation of such a service throughout such a large operational area?


• Ripe’s rates will create destructive competition in the taxi and limousine industries.

Ripe’s proposed rates are close to the Board approved taxi rates and lower than the Board’s set rate for sedan limousines. The point to point rates do not comply with the limousine industry standard. This creates an uneven playing field as Ripe would compete directly with taxis and limousines. The rates do not justify the costs that will be incurred for this hybrid service and there is no control over the rate structure. The application is based on an unprecedented and substantially reduced-rate scheme.

• The use of a smartphone application is not sufficient to distinguish the service from that of a taxi or limousine. Several current operators have their own apps to provide service from mobile devices.

• The applicant will not meet the requirements of the City’s Vehicles for Hire By-law # 6066, namely, that sedan limousines cannot be equipped with a meter and are only available for hire with a prior booking.

These themes were re-iterated in the public hearing through witness testimony, written evidence and closing submissions.

2. Applicant’s Responses

Ripe’s responses to the written submissions included: • Ripe is proposing a mid-tier rate structure and service that falls between taxis and

traditional limousines. The proposed rate is significantly higher than taxis fares so there should not be unfair competition.

• Mr. Perrick has the business skills necessary to run the business management side and Mr. Goraya has experience in the transportation industry. Rates are sufficient to cover all costs required to operate at a safe and high quality level. The applicant has the business resources to operate a business of this scale.

• Enforcement of rates will not be an issue. The smartphone includes an integrated digital payment system, so rates can be tracked.

• Many other limousine companies have the GVRD as an operating area. • Ripe’s target consumers are not having their needs met by the current limousine or

taxi services.


VII. Hearing Evidence

We received 25 exhibits and heard from 18 witnesses, including 4 expert witnesses.

A) Applicant’s Evidence

1. Written Evidence in support of Public Need (Exhibit #10)

1.1. GVRD economic indicators from 2011 census on population growth trends

The region’s population has grown 9.3% from 2006 to 2011, showing that people want to continue to live and work in the region. Ripe will focus its service in the City of Vancouver, primarily the downtown core, as it has the densest population of 600,000 people in 2011. The number of apartment buildings has increased in this area. The most recent data indicates BC’s GDP is increasing gradually. Transportation services and retail trade were two of the industries that have contributed to this. Positive increases in the economy mean there will be more jobs available. Prominent market sectors in the GVRD include the Scientific/Technical Services, Retail Trade, Tourism and Food/Entertainment. These are passenger destinations and describe a market niche. Restaurants and entertainment venues are moving towards middle/higher quality of product and service. A mid-tier luxury sedan service option is needed to be consistent with a customer’s purchasing power. The consumer is also requiring the use of mobile technologies.

Tourists value mid-range luxury services and passenger transportation is behind on this progression of transportation services available.

1.2. Applicant’s analysis of the transportation industry in the GVRD

o Personal car The City of Vancouver has seen a steady drop in the number of cars entering the downtown core in the last 10 years, even though the population has been growing.

o Translink Service hours and frequency for TransLink are limited. It is the cheapest option, with lower customer service levels.


o Taxis

The City of Vancouver is controlled by 4 major taxi companies. Pricing is on the low to medium scale depending on traffic and distance. Service and comfort is on the lower medium end as standard cars are used.

o Limousines Limousines must be booked well in advance and charge a base hourly rate, with no flexibility for shorter trip payments. This is the most luxurious option.

The applicant concludes that there is a clear market gap for a mid-range priced service that meets premium needs.

1.3. Survey Results

A small online survey was conducted by Ripe for people’s opinions on limousines and the transportation industry. A link to the survey was emailed and sent over Twitter to the applicant’s choice of recipients that it deemed as public opinion leaders and members of the GVRD community. It was offered to 200 people with 28 respondents. All respondents indicated they wanted flexible pricing in a limousine service. The majority of respondents also want courteous drivers, smartphone integration and a service that is easy to use.

1.4. Social Media Support

Case study using Uber:

Uber, an application based transportation service, has a similar luxury sedan service model to Ripe’s. In 2012, Uber operated briefly in Vancouver. The applicant states that Uber is an excellent case study of the public need for a mid-tier luxury sedan service. Ripe further says that while Uber had a disregard for safety and proper regulations while in the Vancouver market, Uber did bring a mid-tier priced sedan service to the public’s attention in a big way. This service was supported heavily through social media. When it was shut down, a large number of people protested on social media. Ripe submitted a plethora of tweets and retweets to confirm the community’s demand and support for a mid-tier priced luxury sedan service, such as Uber.


Ripe’s social media campaign:

The social media campaign was similar to the Uber campaign and was implemented with the Twitter username @RipeCarService. Ripe used the hashtags #affordablesedans; #Vancouversedans and #midtierVancouversedans. The campaign attracted positive social media participation from sources, such as Vancouver Tourism, with about 37,000 followers and Roberta Bolwitt with 42,000. Ripe reports that the Twitter based campaign generated letters from the public, responses to the survey and tweets asking about the service.

1.5. Support from local businesses

Ten support letters from businesses were included in the material. All were individually written, with contact information. They all had similar remarks, which included Ripe’s capable management; the desired features of smartphone integration, transparent billing, customer service, fair pricing and luxury vehicles. All would use and refer the service.

1.6. Email letters from the public

Eight emails were submitted to Ripe from individuals supporting an Uber-like service. Issues mentioned were: public transit does not run late; parking downtown is expensive; difficulty in hailing a taxi; a middle option that is comfortable, easy to contact; transparent pricing; ideal service for clients; feedback system; limo hourly charge does not make sense for short trips; on-demand service, pre-booking not required.

2. Experts’ written reports and hearing testimony

Dr. David Gillen Professor, UBC Sauder School of Business Director of the Centre for Transportation

Dr. Gillen’s professional training is as an applied micro-economist, transportation, regulation and competition economist. He attended at the request of the applicant and not on behalf of the university. In his written report, Dr. Gillen was asked by Ripe to respond to 5 questions concerning aspects of the Ripe application. The questions and Dr. Gillen’s responses are outlined below.


1. Is there a reasonable basis to conclude that there will be demand for Ripe Holdings’

proposed services, whether that be based on available economic and demographic data or other information or research you have conducted?

The City of Toronto 2012 taxi review provides information on how increases in population and employment increase the demand for taxi service. This is the principle of elasticity; a measure of how responsive one variable is in response to a change in another variable. Adding a new product to the market tends to increase the overall size of the market; an induced demand. Product variety is generally welfare enhancing. The Ripe product being proposed is flexible, easy to use, low travel time, point to point, relatively high priced and reliable. It is a predictable service. 2. Can the Metro Vancouver market support more sedan limousines than presently operate? It is Dr. Gillen’s view that the market can support the Ripe product because the population is growing, particularly the aging population and incomes are increasing. These increases create demand for faster more efficient transportation. It is a new product that will draw people from private automobiles, creating induced demand. Automobile ownership is declining. Ripe’s proposed luxury sedan service closely resembles the services provided by the private auto. Higher population densities will lead to a growing market for Ripe and taxi services. Tourism also increases the demand. Dr. Gillen reports that there is ample evidence that Vancouver is currently underserved and that an additional entry can be accommodated. Compared to the Fraser Valley Regional District and the Squamish-Lillooet Regional District, the GVRD is underserved in the limousine market. 3. Do Ripe’s proposed rates maintain a distinction from taxi rates? Taxis and Ripe are not in the same market due to the significant difference in price. Taxis are part of the regular urban transportation services. Income elasticity could be negative for taxis. The market share for taxis and Ripe should move together. There is little evidence of one gaining at the expense of the other. They are not substitutes. 4. Does the $75 minimum hourly charge for sedan limousines benefit the consumers? Society benefits from competition as it means that products and services are produced efficiently, distributed to the people who want the service and produced in the right


amounts. High fixed prices cut off demand and reduce the size of the market. The market is foreclosed to a number of customers. The price difference between taxis and limousines protects the operators and does not serve the customer. 5. Would Ripe harm the taxi or limousine markets? The introduction of a new product broadens the range of choices to the consumer. An increase in product diversity leads to an increase in market size. Taxi availability should increase, waiting times should fall and demand should increase. The markets are more different than similar, so Ripe should not have a large impact on the taxi industry. There is room for taxis, traditional limousines and Ripe’s service to co-exist. Highlights of Dr. Gillen’s oral testimony are as follows:

• Dr. Gillen reported using the technique of hedonic analysis to break down characteristics that are bundled, such as price and service. Characteristics of demand are then combined to predict aggregate demand.

• A derived demand can be determined from such variables as population and income, leading to a prediction in demand. In terms of macro-economics, when income, employment, and the GDP are growing, demand increases. When supply is limited the price goes up.

• Ripe is a new service with no research done on this type of product. Consumers only use a product knowing it is available.

• Ripe is different from a taxi service. Taxis are homogeneous. Ripe is not in the same market and not a substitute for taxis. Ripe’s access is electronically dispatched; quality of the service is different and price is different. If there is more than a 5% difference, then the services are different.

• Taxi service and Ripe are horizontally and vertically different on Dr. Gillen’s analysis scale. Mercedes and Hyundai are both cars but they are not competitors.

• Dr. Gillen made reference to the UCTC (University of California Transportation Centre) report on ridesourcing to support his premise that Ripe and taxis are not competing services. This report is detailed below.

• A new product brings new consumers that stimulates demand and results in aggregate demand rising. Customers are young, tech savvy.


• Wait times do not equal reliability. Consumers would choose reliability and pay a

premium.

Economics rely on market forces but some regulation is necessary as a tool to solve market imperfections. Different regulations are required for different services. Ripe is not seeking de-regulation. As discussed, taxis are fundamentally different and Ripe is not a substitute for traditional limousine service, due to pricing and reserving in advance. Dr. Gillen does not subscribe to a zero sum gain. A new product grows the market. It should reduce taxi wait times leading to increased taxi demand. In response to cross-questioning, Dr. Gillen agreed that if a product is brought to the market at a lower price than the competition, there is an economic advantage. However, he maintains there is little substitutability to the current products. Ripe would learn its market and use this learning to position the 20 vehicles.

Dr. Jan Kietzmann Associate Professor Beedie School of Business Simon Fraser University

He received his PhD from The London School of Economics. This thesis was “In Touch out of the Field: Coalescence and Interactive Innovation of Technology for Mobile Work”. Dr. Kietzmann’s research interests combine organizational and social perspectives related to new and emerging technologies. Dr. Kietzmann, in the introduction of his written presentation, remarked that not even a decade after the introduction of social and mobile technologies, which have fundamentally transformed how we interact as individuals, the business world is wrestling with the consequences. The adoption rate shows an enormous appetite for networked business models that puts the consumer at the core Dr. Kietzmann offers that his expertise is to develop insights into the public need for Ripe services. This comes about by understanding consumer and consumption behavior. It is


the author’s intention to provide a polemic evidence-based account of the changing nature of public need and how this relates to the passenger transportation industry. Today, smartphones and tablets drive the growth of social consumer behavior. Real time, consumer generated content and updates are generated ‘on the go’. New social dynamics and business models are propelled by significant technological advancements since 2007. The world has become a different place in the past 10 years. People today connect differently. Significant external developments require that underlying regulation is reviewed to ensure it still serves the interest of the public and that the rules are still relevant. Governing bodies must review their rules and regulations in the face of technological progress. Do the new socio-technical dynamics support a change of the existing pricing structure, so that new business models can be developed to serve Vancouverites? New technologies, new social mindsets and new networked business models have changed the public need for different types of transportation services. As suggested throughout the report, new ventures often create new demand and markets.

Understanding the Public

Analog technologies have become digital. The population is mainly digital immigrants, individuals who were born before the existence of digital technology, and digital natives, who came of age in a world where digital devices were commonplace. Digital natives are highly networked. Dr. Kietzmann uses a “Consumer Behavior Honeycomb” to show how society and the public have changed. It is a tool intended to define today’s social interaction and discuss changing public preferences for emerging business models. Its seven functional building blocks provide an analytical means to understanding the public’s interests, activities, opinions, values and behaviors. It is a market force that cannot be ignored. It is the interaction of supply and demand. Searching for others’ opinions has become the norm.

Understanding Public Need

The Consumer Behavior Honeycomb indicates that public and society have changed. Dr. Kietzmann, in his written report, states that the Business Model Canvas, a strategic


template for developing new or documenting existing business models, is an appropriate tool for understanding public need for passenger transportation. There is a public need to reduce or avoid negative outcomes and a need for developments in society to progress. Assessment of public need is based from a consumer’s perspective. Public need supports a more granular approach today, where individuals demand services tailored to their identity, priorities and preferences. Customers are looking for choice and value. The right service at the right price. There is a gap in the market. Dr. Kietzmann further concludes that the calls for on-demand transportation options that offer various service levels and booking options are loud and clear. Public need today is all about choice. A public need for different choices supports a service, such as, booked on-demand transportation via mobile devices. Established fares and services continue to be needed to provide a stable consumption platform and certainty for passengers. Along with choice, consumers consider value. Value is enhanced by customization that is based on the likes and dislikes of each individual. The cost of a service is no longer measured as either expensive or inexpensive but treated as good value for the money. The customers expect choices that tailor to their personal circumstances.

Public Need for Ripe’s Business Model

Ripe’s business model focuses on a status conscious customer segment. Customers are tech-savvy and have disposable income for a luxury product. There is no historical data, consumer testimonials or usage statistics available to evaluate a new proposed business model. Ripe’s business model responds to the public need for technologies that are available on the go and transparent (via public ratings of the service). It is a response to today’s consumer behavior. The consumer-first focus and transparency can drive quality control, continuous improvement and reliability of service. There is a consumer demand for seamless interaction; a silent commerce. Ripe’s business model is a response to these elements of public need. It is anticipated that Ripe’s value proposition will attract new customers and generate new demand. In closing the written report Dr. Kietzman says:


In summary, we need to be respectful to the established businesses that helped Vancouver become the place it is today, but we also need to respond to changing public need to ensure that Vancouver remains a smart, sustainable city that ranks top of the world in terms of places to live. Based on my knowledge and experience, together with research I have conducted and consideration of Ripe’s proposed business model, I am convinced that Ripe’s business model offers a strong product-market fit for Vancouver.

Oral testimony presented by Dr. Kietzmann

Consumer behavior is analyzed by using the Consumer Behavior Honeycomb model. Over the past decade consumption has changed. How we do business has changed; for example, road maps have largely been replaced by GPS. There is now a relationship between consumers, which is how value is created and how one depends on peer opinions. YELP is a 3rd party platform for individuals to share their opinions. This leads to community building. The public use mobile devices because they are more personal. The value of a service can be established by a feedback system - usually by electronic word of mouth. For Ripe, knowledge is a key asset, understanding the public demand and fitting the service to the consumers’ need. It allows for individual choice. The app is at the core. It will supply transparency, driver ratings and develop a trust relationship. New products get to the market in a logical sequence. The first users are the innovators, technology enthusiasts, early adopters, visionaries – the customers who want technology and performance. There is usually a chasm before the market is joined by customers who want solutions and convenience, which in turn changes the value level for the new product and brings new customers. Ripe will provide a different experience from a taxi. Consumption will be determined by the behavior of choice. Convenience and value are consumer driven. Technology pushes innovation and legislation. Performance is also driven by the technology. The assessment of the business model will depend on performance delivery. The resulting consumer vetted information provides feedback that establishes value. In response to cross-questioning, Dr. Kietzmann said that new demand can be created for the new service; however, some clients may come from taxis and limos.


The proposed app will provide qualitative data but it is difficult to supply data for a service that does not exist. In concluding his remarks, Dr. Kietzmann said there is a need to progress and respond to ‘consumer drivers’ if we want to move ahead and keep Vancouver in the forefront. “Vancouver is a technology savvy and hungry city and this spreads to the general public.” An example is the TED conference and outgrowths. Vancouver is an innovative community and a centre of new technology.

Taylor Nicholls

Taylor Nicholls has a Bachelor of Environmental Studies (BES) in geography with specialization in geomatics and a Diploma of Excellence in Geographic Information Systems (GIS). Taylor Nicholls has 12 years of experience in managing, architecting, and developing geospatial solutions, analyses, and applications and has training as a geomatics professional. Taylor Nicholls prepared a report: Using Mobile Location-Aware Smartphone Applications and Server-side Processing to Accurately and Reliably Calculate by Time and Distance Travelled. The paper provides professional confirmation that smartphone applications and processing can accurately and reliably calculate time and distance travelled.

3. Other Witnesses on behalf of the Applicant

Seven individuals, not related to Ripe, testified at the hearing in support of the application. They are follows: Derek Archer, Michael Colman, Paul Stoilen, Jason Tarnow, Vikram Kambli, Margarita Cordero and Jeremy Gow. The witnesses were from the restaurant industry, the entertainment industry, the technology industry, a lawyer, a limousine dispatcher and a limousine driver. All were familiar with Ripe’s proposal for a luxury sedan service. Common elements of their testimonies are as follows:

• Current limousine service has its shortcomings, with a high minimum hourly charge and advanced booking required. It lacks flexibility. Point to point rates are preferred for short trips. Often advance notice is not possible.

• Some limousines are operating illegally by flagging and charging discounted rates.

• There are frequent requests for last minute limousine service and price is an issue.


• Ripe’s service is an option that is not currently offered. There is no mid- point

service between taxis and limousines. There is a service gap. Some have used Uber when travelling and recommend the app based system and service.

• Ripe’s proposed rates and application billing are not issues.

• Many clients require a minimum standard that is not met by taxis. Wait times and cleanliness are factors. Little interaction with drivers. There is no choice of vehicle or driver. Customers are seeking a higher level of sophistication.

• There is a mid-market demographic. Ripe will find this niche market.

• There are business customers who will use and refer Ripe’s service which is not currently available.

4. Supplemental Documents Binder (Exhibit #20)

This binder consisted of 10 documents. Some had little relevance to this decision and some were critiques on the shortage of taxi supply in Vancouver. Two documents were reports on the regulation and deregulation of taxis. These reports were not relevant to this decision as in British Columbia commercial passenger transportation is regulated under the Passenger Transportation Act. The Board receives its mandate from this Act. Changes to this regulatory structure are within the purview of Government, not the Board. Also submitted was a UCTC (University of California Transportation Center) report: App Based, On-Demand Ride Services: Comparing Taxi and Ridesourcing Trips and User Characteristics in San Francisco. This report was referred to in Dr. Gillen’s testimony. Some excerpts from this report are noted as follows.

• The rapid growth of on-demand ride services, or ridesourcing, has prompted debate among policy makers and shareholders. How ridesourcing and taxis compare were addressed in an intercept survey.

• The findings indicate ridesourcing serves a previously unmet demand for convenient, point to point urban travel. Although taxis and ridesourcing share similarities, the findings show differences in users and user experiences.

• By leveraging advances in technology, ride service companies promise to increase reliability and reduce wait times of point to point transportation. Supporters view ridesourcing as part of a suite of transportation options that serves previously


unmet demand for fast, flexible and convenient mobility in urban areas. The survey results suggest that ridesourcing services fill an important urban mobility gap.

• In recent years, advances in information and communication technology have enabled new services that provide a wide variety of real-time and demand-responsive trips. Many of these applications maintain a rating system that allows for drivers and passengers to rate each other after the trip is completed. A passenger’s credit card information can be saved within the system to facilitate future trips.

• Ridesourcing differs from traditional taxis due to the efficiency and reliability of the matching platform and pricing mechanisms, along with the accountability of the rating system.

• Transportation innovation has begun to outpace policy.

• The cross-tabulation of reasons for alternate transportation modes suggests speed (shorter wait times and travel times) and convenience make ridesourcing more appealing than the alternatives. Convenience seems to be the key.

• Ridesourcing is not necessarily competing directly with taxis as much as appealing to customers in the marketplace.

• In conclusion, the findings suggest ridesourcing meets a latent demand for urban travel, appealing to generally younger, well-educated users looking for short wait times and fast point to point service. Despite similarities, ridesourcing differs from taxis in important ways, especially in consistently shorter waiting times.

5. Dr. Gillen’s Comments and critique of Chow analysis (Exhibit #23)

In this document, Dr. Gillen called into question Dr. Chow’s rounding down of wait times and the choice of excluding longer wait times in his data calculations for taxi service.

B) Submitters’ Evidence

1. Vancouver Taxi Companies

1.1. Documentary Evidence

The Vancouver taxi companies provided various written documents. Exhibit #16 included definitions, Board policies, various government documents and insurance tariffs. Exhibit #17 contained the consumer price index by city and a profile of seniors’


transportation habits, MLS home pricing graph, a taxi report for Calgary and taxi regulation in North America. Exhibit #22 was a series of graphs under the heading of Regional Development Indicators with no interpretation of the data. Attached were various copies of news reports discussing “fake” on-line reviews. This evidence was not referred to in detail in the oral hearing or submissions of the Vancouver taxi companies. Nor was any analysis of this material provided with regard to its relationship to Ripe’s application. Therefore, we found it was of little relevance to our decision and assigned it little weight. The Vancouver taxi companies also submitted 2 expert reports. Oral testimony was from the expert witnesses only. No principals from the Vancouver taxi companies gave oral evidence.

1.2. Experts’ Written Reports and Hearing Testimony

Dr. Garland Chow Associate Professor, Sauder School of Business, UBC Department of Operations and Logistics

Dr. Chow received a Doctor of Business Administration from Indiana University in the subject areas of transportation, quantitative business analysis and business economics and public policy. He attended the hearing at the request of the Vancouver taxi companies and not as a representative of the university. In his report, Dr. Chow states that Ripe’s proposed service is indistinguishable from taxi service except for higher fares. Ripe’s service characteristics are similar to a taxi service. The core service is identical; transportation from point to point. The services are differentiated marginally by the type of vehicle and the mobile app. The pricing difference creates an unfair playing field. There is no public need for additional conventional taxis and in Dr. Chow’s opinion the current taxi service level is excellent. In his oral testimony, Dr. Chow responded to Dr. Gillen’s critique of his data analysis that alleges his research into taxi service in Vancouver overstated dispatch service levels by averaging wait times down. Dr. Chow reviewed his methodology and stated that he did not include pre-booked trips or trips that were dispatched in more than 60 minutes. According to Dr. Chow, there is no evidence of public need for Ripe’s service due to the good performance of taxis. Of dispatched trips, 97.178% have a 15 minute or less wait


time. Ripe’s wait time would need to be superior to taxis and he does not agree they will be shorter. Taxis and the Ripe product and service are the same. Price difference does not create a separate market. Ripe is in a similar market to taxis and will compete directly. They are close economic substitutes and are more compatible than not. However, Dr. Chow agreed that a Kia and a Mercedes are not economic substitutes. Vancouver taxis already have apps. The core benefit is indistinguishable from a taxi, but Dr. Chow did say that Ripe has some value added features. He does not agree that increasing supply will increase demand but did say it could make a difference. Economic activity has increased the demand for taxis in Vancouver. In response to questioning Dr. Chow agrees that if Ripe had an improved service it could result in increased demand for quality taxi service. Would the consumers be indifferent to difference in fares? Dr. Chow replied some would, some wouldn’t. He also agreed that a faster payment method is desirable and that perhaps Ripe could free up taxis allowing faster response times, which in turn could effectively but nominally increase taxi availability. When asked if it is unfair to deny the Ripe service to clients, Dr. Chow replied “yes”. Replying to the question of Ripe and taxis being in the same market, Dr. Chow answered; sometimes, it depends on the client and values. Dr. Chow remarked that reliability and total service response time are not the most important service factors. How the consumer values the difference is along a continuum. “There is no citable evidence that Ripe defined a separate service.”

Dr. Daniel Hiroshi Hara President, Hara Associates

Dr. Hara’s expertise is in applied micro-economic theory, practice and policy. His expertise has led to a strong practice in program evaluation and performance monitoring. In his written report, Dr. Hara states:

• The use of GPS smartphone technology in the place of meters risks the integrity of the rate structure. There is no technical standard for such a system. It is a substantive change.

• Ripe will draw from current taxi users. The rate is closer to taxis than to limousines.


• Public need is better met by adding part-time taxis at peak periods.

• The enforcement of illegal hails will be difficult to distinguish between taxis and limos.

• Choice and service may decline as it did in the US with de-regulation in the 1970s.

• Reduction in taxi business volume will reduce the business volume needed to support accessible taxis.

• The vehicle choice of Ripe and taxis will overlap.

In his oral testimony, in response to questioning, Dr. Hara noted:

• There is no evidence of a market for Ripe. New entrants can make a mistake and harm industry. New entry control is needed.

• The present rates of taxis and limousines allow them to co-exist. Ripe would be setting a precedent by removing the price barrier. It will allow a price continuum. There needs to be a market separation.

• The best solution is part-time taxis. Ripe would be “cream skimming”, taking business at peak times that would affect taxi operators at other times. Taxi users will substitute Ripe at peak times, impacting the taxi business.

• High plate values of taxis may indicate that there is a need for a regime change to add more taxis and lower the rates.

• An increase in supply of taxis leads to an increase in demand.

• Dr. Hara disagreed with Dr. Gillen and stated that taxis and Ripe are competing services.

• Price difference is not evidence of a difference in service.

When questioned, Dr. Hara did not seem to be aware of the degree of the price spread between taxi rates and Ripe’s proposed rates. He also did not seem to realize that most Vancouver sedan taxis are eco-friendly Toyota Corollas or Prius’.

1.3. Limousine & Suburban Taxis

Two limousine companies testified as to the impact a Ripe service would have on the limousine industry in the Lower Mainland. No exhibits were submitted.


Griffin Transportation was represented by its manager, Mark Mahedy. Mr. Mahedy remarked that service “must keep up with the Jones” and that “Uber has transformed the industry”. He stated that the car and the drivers are the main cost and that 50% of revenue goes to operations. It is his opinion that Ripe could not function at the proposed rates and it would create an uneven playing field. Mr. Mahedy noted that advance notice time has been shortened and the company must adapt to last minute changes. A 30 minute turnaround is not unusual. Customers pre-book for certainty of service. In his opinion the economy is improving. His company grew 20% in the past 4 years. The company is also developing a new software program that is in the transition period. He stated that rates were calculated with a Griffin sedan limo for 1 hour at $100 plus tax and Ripe with a time and distance fare for 1 hour would be about $154. Mr. Mahedy identified the Vancouver downtown core on Friday and Saturday nights as prime time. This is when several limousines operate illegally which “devalues the industry”. Mr. Sarb Nagra testified for the BC Limousine Association and claimed that Ripe would have an advantage. There has been an increased requirement for on demand trips versus pre-booked and that customers are requesting point to point service. Limousine drivers operating illegally was also mentioned by Mr. Nagra. Two suburban taxi companies were represented by Gurdip Singh Sahota, general manager of North Shore Taxi (1966) Ltd. and Khushpal Gill of Sunshine Cabs Limited. Mr. Sahota pointed out that no taxi company has such a large operating area. The direction of taxi companies is to eco-friendly vehicles. Since 2007, all new taxi licences and additional vehicles are to be eco-friendly. Replacement vehicles are the operators’ choice. The 38 suburban peak period taxis have not been operational, therefore public need has not been tested. Ripe rate structure is the same as taxis. North Shore Taxi has an app in place, has a driver dress code, evaluations and driver ratings. Ripe would affect North Shore taxis because of the demographics. Mr. Sahota said “he would like to have a black car service”.


Mr. Gill, a time ago, was going to re-instate a limousine operation but found no interest. He found clients to be price conscious.

1.4. BC Taxi Association (BCTA)

The BCTA submitted an exhibit book of documents that included industry notices or advisories from the PT Board and PT Branch, plus information on transportation options in Vancouver. Manjural (Emon) Bari, General Manager of Bonny’s Taxi Ltd. gave oral evidence on behalf of the BCTA. BCTA includes 22 companies which collectively operate 980 taxis in the Lower Mainland. The organization is developing a regional app with many payment options and the ability to dispatch the closest car from the overall group. Other transportation options are affecting taxi service; such as vehicles with a General Authorization licence and car sharing operations (car2Go etc.). Bonny’s Taxi has two 6-11 passenger limousines in its fleet and has no requests for mid-size limousine service. Mr. Bari remarked that “consumers benefit from a range of options”.

VIII. 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. It 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 looks for a reasonable connection between the number and types of vehicles requested and public need.

Analysis and Findings

We have reviewed the evidence presented, both written and oral, and have made the following determinations regarding a public need for the proposed service.


Experts’ written reports and hearing testimony:

We find Dr. Gillen’s report and his testimony to be persuasive in addressing the fundamental differences between the service proposed by Ripe and taxi service. We support the premise that Ripe is a new product and a different service from a taxi. They are not in the same market, due to the significant difference in price and at most times are not a substitute. The markets are more different than similar. We accept Dr. Gillen’s opinion that, for reasons of income, population and employment growth, Metro Vancouver can support the Ripe product. In macroeconomics, when these are growing, demand increases. A new product brings new consumers. An increase in product diversity leads to an increase in market size. We accorded this testimony considerable weight in supporting the viability of this new service. We also accorded significant weight to the evidence presented by Dr. Jan Keitzmann. We find Dr. Kietzmann’s conclusion, that there is a gap in the transportation market, to be persuasive. He states that calls for on-demand transportation options have shown to be loud and clear. Ripe’s proposed service responds to the public need for technologies that are available on the go and the consumers’ need for transparency of the public’s rating of the service. Ripe is a response to today’s consumer behavior. Dr. Kietzmann remarked that Ripe will provide a different experience from a taxi. Use of the different services will be determined by the behavior of choice. Convenience and value are consumer driven. Dr. Kietzmann’s conclusion that there is a public need to progress and respond to consumers’ demand for choice is convincing. We considered the reports and testimonies of Dr. Garland Chow and Dr. Daniel Hara. Dr. Chow states that Ripe’s service is indistinguishable from taxi service, except for higher rates. The services will directly compete. Upon questioning, Dr. Chow acknowledged that some differences would exist. Dr. Hara also stated that Ripe would draw customers from current taxi users and is a competing service. He states that Ripe’s proposed rates are closer to taxis than limousines. Dr. Hara commented that the vehicle choice of Ripe and taxis would overlap. However, he seemed unfamiliar with the homogeneous makeup of the Vancouver taxi fleets. We did not find Dr. Chow’s or Dr. Hara’s testimonies, that Ripe and taxis offer the same service and would be direct competitors, to be persuasive. We are convinced that there is a recognized demand for a mid-tier, point to point luxury sedan service with fares calculated, by an app, on time and distance. We have determined


that there is a gap in the commercial passenger transportation market. The rationale for more choice is compelling and convincing.

Support witnesses:

The witnesses that appeared in support of the applicant, for the most part, indicated that they and others are customers who will use Ripe’s service and businesses in the community that have large clientele, who will refer the service. Business partnerships could be formed. The proposed service does not currently exist and is frequently requested. We gave considerable weight to these testimonies. We did note that some of the submitters questioned the reliability of the support witnesses as they were acquainted with the Ripe principals or its counsel. We found that this concern did not unduly affect the reliability of the support testimony.

Submitter witnesses:

Witnesses for the submitters noted that there has been an increase in requests for on demand limousine trips requesting point to point service. The 1 hour minimum fee and advancing booking requirement are often issues. Such statements corroborate the position that there is a public need for a mid-tier transportation service proposed by Ripe.

Applicant’s additional support material:

The applicant submitted additional written material in support of establishing a public need. This includes:

• GVRD’s positive economic outlook, evidence of population growth and the decline of personal car use.

• An online survey regarding limousine service, somewhat limited in the small number of respondents.

• Social media support. The Board acknowledges that social media has become a major source for public opinion. However, the applicant did not provide documentation to validate the authenticity of social media sources as required in PT Board’s Operational Policy II.6. “Submitting Social Media Information”.

• The support letters from local businesses and emails from the public supported the testimony of the witnesses on behalf of the applicant.


We considered that the economic factors and the support letters added to the evidence of supporting a public need.

The UCTC Report corroborated some of the testimony that was presented on behalf of the applicant. In particular, it states that supporters view on-demand ride services as part of a set of transport options that serves previously unmet demand for fast, flexible and convenient mobility in urban areas. On-demand services fill an important urban mobility gap. Advances in information and communication technology have enabled new services to respond to this unmet demand.

We found the report by Taylor Nicholls persuasive in confirming that smartphone applications can accurately and reliably calculate time and distance travelled. In conclusion, we find that the applicant has presented sufficient evidence to establish that there is a demand for this niche transportation service. This mid-tier luxury sedan service, with app calculated fares based on time, distance and cashless payment fills a market gap and provides a transportation option. We find that there is a public need for the service that the applicant proposes to provide under a special authorization. (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 principals of the applicant, Ripe Holdings Inc., are Mr. Otis Perrick and Mr. Gagandeep “Ricky” Goraya. They submit that collectively they have the relevant business skills and experience to successfully provide their proposed service. The principals met in 2007 and formed the company in 2012, seeing an opportunity to meet an unmet transportation demand. The partners will play different roles in their business. Mr. Perrick’s focus will be on corporate management, financing, administration, business strategy, accounting, budgeting, and legal responsibilities. His title is “Director of Business”. Mr. Goraya will


oversee the majority of Ripe’s operational details. These will include input into hiring and screening of drivers as well as maintaining control over the vehicles and customer service. His title is “Director of Transportation and Service”.

Mr. Perrick has proven business experience, most specifically in the electronic arts and digital technology sector. He has led a staff of over 30 people, managed a budget of over $10 million and generated revenues in excess of $100 million. He has demonstrated the ability to develop human capital to management teams and has achieved bottom line results. He has developed a network of supporters and provided evidence of financial strength. Additionally he has provided evidence that he has the financial resources to finance the Ripe startup period.

No information was brought to our attention that causes concerns regarding Mr. Perrick’s fitness. Mr. Goroya has worked in the passenger transportation industry since 2000 and has substantial experience in the limousine industry; 10 years as a chauffeur; assorted management and supervisory roles with more than one small limousine company. Mr. Goroya was questioned in the hearing about the numerous driving infractions he incurred since 2006. Mr. Goroya was also charged and convicted of operating a passenger directed vehicle in the City of Vancouver without a PT Licence. He received this in the course of his work as a professional driver. He responded that he made some mistakes in the past and has learned from them. We have considered Mr. Goroya’s driving record and charges. We find that Mr. Goroya’s record of offences is not, in and of itself, a barrier to the approval of this application. We note on page 43 of the applicant’s operating plan, the section on traffic violations references Ripe’s position on driving infractions. We expect that Ripe will hold all of its company personnel and drivers to a high standard of compliance. The two partners have different and complementary strengths and skills and have defined their specific areas of responsibility and focuses. On the witness stand each partner seemed reluctant to answer questions that related to the other partner’s area of responsibility. This was not helpful to us in understanding the operations of Ripe. However, we recognize that Mr. Perrick has considerable business acumen and is the


president of a successful business. We are confident he will apply these skills to a new business and provide appropriate oversight of the company. We also note that there are detailed operational plans and policies. The applicant submitted its application materials in Exhibit #10. These included a business plan, condensed operating plan and various operating policies and documents such as, health and safety policies, employee policies, agreements and codes of conduct, confidentiality agreements and organization and management.

When Mr. Perrick and Mr. Goroya were questioned about details in their business plan, it became obvious that the business plan was based on a set of assumptions at a specific point in time, some of which have since evolved. Examples include:

• The business plan stated that Ripe would make its technology available to others for a fee. However, when questioned, Mr. Perrick stated Ripe would not share its software as it is unique to them.

• Ripe’s stated in its February 2012 Condensed Operating Plan, page 2, that: “We will initially focus our service hours to be during rush hour times and weekend evenings. Based off continuous demand evaluations, we will build our service hours to match what the public needs.” When questioned on this during the oral hearing, the Ripe principals responded that their service will be a 24/7 service.

• Also, the business plan says that Ripe will pay its drivers “about $2,000 per month”. However, upon learning that this rate, if applied to drivers working 5 days a week for 12 hour shifts, would represent less than the minimum wage, Mr. Goraya said that Ripe would ensure that it was in compliance with employment standards requirements.

• Ripe’s application states that it intends to concentrate its services in the City of Vancouver. However, when questioned in the oral hearing, the applicants’ response did not indicate an understanding of the City of Vancouver Vehicles for hire Bylaw 6066

• Ripe did not seem familiar with ICBC definitions of “taxi” and “limousine” use and their impact on vehicle insurance. The company plans to address this.

Nevertheless, Ripe’s principals were able to provide us with a clear sense of the company’s management structure, target market, positions of vehicles and financial resources. We find


that the modifications to the business plans outlined at the hearing, do not materially change the nature of the service or the operations. We are convinced that, based on the approach taken by the principals of Ripe to date, they are making efforts to comply with the provincial government’s regulatory regime. We find that this is an indication they will take a similar approach to the multi-jurisdictional regulatory regimes. We gave significant weight to the in-depth operational materials and policies submitted with the applicant’s Book of Documents (Exhibit #10). These detailed documents indicate that the partners have put a lot of time and thought into Ripe’s operational plan. These documents will help to focus their operations and business practices. In consideration of the overall evidence, we find the applicant fit, proper and capable of providing its proposed service. (c) Would the application, if granted, promote sound economic conditions in the passenger

transportation business in British Columbia? There are many markets for limousines. Some limousine companies may serve the wedding or special event market. Others may serve corporations. Still others may offer a specialty services. A healthy, competitive limousine industry provides the public with a range of service options while enabling efficient operators to run a successful business. The Board discourages competition that could unduly harm existing service providers. Ripe’s rate structure, based on time and distance, is similar to the rate structure of taxis, as opposed to traditional limousine hourly rate structure. However, Ripe is markedly different from a taxi service. Ripe cannot flag passengers; its rates are higher for short trips; it has a cashless payment system and unique customer service level. Ripe is also distinctive through its use of a smart phone application that has a constant on-demand feedback loop between customers and the service. Those in opposition to the approval of this application contend that its approval would be destructive or devastating to the taxi and limousine industries. Dr. Hara contends that to allow any erosion of the price separation between the taxi and limousine industries would erode the effectiveness of the current regulatory regime.


On the other hand, Dr. Gillen contends that there is no evidence that the operation of sedan services operating with time and distance rates in other jurisdictions have had any such an effect on the taxi industry. The Board has traditionally sought to maintain a clear delineation between taxis and limousines, causing them to be less substitutable by customers. This is accomplished by such things as not allowing limousines to hail or flag customers, vehicle banding, and by setting minimum fares for limousines that do not compete with taxi fares. The Board, however, does not regulate in a vacuum. We need to be aware of technological and societal changes and respond accordingly. We need to acknowledge innovation and the opportunities it creates for the travelling public. We do not have a mandate to maintain the status quo. We are convinced that there is a demand for a mid-tier luxury sedan service in Greater Vancouver. We find that there are significant distinctions between Ripe’s application and taxis in terms of service, price and rate separation, payment options and vehicles. Although Ripe’s rates for shorter trips are lower than the minimum hourly rates for sedan limousines, for trips of longer time and distance, minimum hourly rates are competitive with Ripe’s rates. We find that approval of this proposed mid-tier service should not create destructive competition in the passenger transportation industry. We are convinced that the commercial passenger transportation sector will benefit from providing choice for the consumer and will allow this sector to advance by allowing innovation within the current regulatory regime. We have considered arguments from the submitters, notably the taxi companies, regarding the large operating area requested by Ripe. We do not consider Ripe to be a taxi service. We consider it a mid-tier transportation service, using luxury vehicles. Vehicles must meet the Board’s requirements for sedan limousines, which will maintain the separation from taxis. The proposed service is not a larger originating area than is common to other limousine licence holders. We are approving the originating and destination areas as requested.


Conversely, we do not find the applicant’s request for “reverse trip” authorization consistent with its business model and are not approving the request. The applicant submits that: “the main attribute of the Ripe app will be the location software that is built into every smartphone. The location software will communicate with the app to display where the drivers and customers are located.” Reverse trip authorization is complementary to a pre-booked transportation service as opposed to an app based, on-demand dispatch service. We also considered the argument that the applicant cannot serve the entire GVRD, in a timely way, with only 20 vehicles. The applicant submitted that it would position the vehicles according to location demand. We accept that this new enterprise will take a demand driven approach and are approving the 20 vehicles, as per the application. Regarding concerns that the service may not be approved by municipalities, such as the City of Vancouver, these are not relevant to the Board’s mandate or jurisdiction. As noted in the BC Court of Appeal decision Yellow Cab Company Ltd. v. Passenger Transportation Board, 2014, BCCA, 329, “the Board is required to make its own licencing decisions based on statutory criteria”. It cannot defer or delegate this function to a municipality. It is the responsibility of successful applicants to seek proper municipal licensing authority. We do not accept that this service will encroach significantly on the traditional taxi markets or the traditional limousine markets. While there might be some initial market adjustments, with the introduction of a new service, the addition of a mid-tier service will not prove destructive competition and will promote sound economics in the transportation industry in the GVRD.

As noted earlier, the app was still in production at the time of the hearing. Before Ripe is issued a licence, Ripe must provide the Board with a report from a qualified third party, certifying that the application calculates fares, by time and distance travelled, reliably and accurately. In the terms and conditions of licence, we refer to the app as a “digital payment and booking service”. We are approving this application based on the understanding that Ripe’s business model is one of company owned cars and company employed drivers. As such, we are requiring that any vehicles attached to this licence must remain in the ownership of Ripe Holdings


Inc. and in no circumstances can the company issue shares, beneficial or otherwise, with respect to the vehicles for a period of five years.

IX. Rates

The Board has minimum and maximum rates and standard rules for limousines operating in Victoria, Vancouver and surrounding areas. The minimum rate for a sedan limousine is $75 per hour. We are varying the minimum one hour policy with approval of this application. We base this on our determination of public need and an identified existing market. A luxury sedan service with a digital booking and payment system that measures time, distance and wait times will now be able to operate within the current regulatory regime. The rates are approved as set out in the application summary.

X. Conclusion

For the reasons above, this application is approved as set out in this decision. We establish the activation requirements and the terms and conditions of licence that are attached to this decision as Appendix I. These include activation requirements and share restrictions. We establish the rates that are attached to this decision as Appendix II. These form an integral part of the decision.


Ripe Holdings Inc. Appendix I

Digital Booking & Payment System

A. Ripe Holdings Inc. must provide to the Passenger Transportation Board, within 3 months of the date of this decision, a report prepared by a qualified third-party that certifies both the validity and reliability of the digital booking and payment system that Ripe will be using. Specifically, the report should include:

1. descriptions of the mobile equipment, backend servers, application software and algorithms developed or used for the system

2. field test results for 1, 5, and 20-kilometre trips in urban areas within the Lower Mainland.

3. the accuracy of trip fares during the field test in item 2 and the overall standard of accuracy that can be relied.

4. Confirm that the system meets the requirements set out in “Express Authorization” below.

B. Ripe Holdings Inc. must not make any changes to the digital payment and booking system that affects the calculation of time, distance and rates without Passenger Transportation Board approval.

Approval of application may expire

1. The applicant must activate at least 10 vehicles within 6 months of the date of Board approval of Ripe Holding Inc.’s mobile application.

2. If the applicant does not meet the requirements set out in 1, this Special Authorization expires.

3. The Passenger Transportation Board may vary the requirements set out in, if circumstances warrant it.

4. If an applicant needs more time to activate its vehicles, then the applicant must make a request to the Board before the end of the 6 month activation period.

(Note: “activate” means that the applicant has submitted the documents required to obtain a Special Authorization Vehicle Identifier to the Registrar of Passenger Transportation.)

Notice to Registrar

The Registrar must not issue the Ripe Holdings Inc. a licence or any Special Authorization Vehicle Identifiers until the Passenger Transportation Board has confirmed to that Ripe Holdings Inc. has


met the requirements set out in “Digital Booking & Payment System” to the Board’s satisfaction.

Special Authorization

Passenger Directed Vehicle (PDV)

Terms & Conditions of Licence

Vehicles

Maximum Fleet Size

20 sedan limousines

Specialty Vehicles A sedan limousine, including an eco-friendly sedan limousine, may only be operated when the vehicle meets the applicable criteria, rules, policies and orders of the Passenger Transportation Board.

Vehicle Age Limit 1. At the time of initial activation of a special authorization vehicle identifier (SAVI), any vehicle associated with the SAVI must not be more than 2 years old as calculated from the year of manufacture.

2. At the time of renewal of a SAVI, any vehicle associated with the SAVI must not be more than 5 years old as calculated from the year of manufacture.

Vehicle Capacity (S)

Sedan limousines must accommodate a driver and not less than 3 and not more than 5 passengers.

Service Limitation Transportation may only be provided when passengers book the transportation service electronically through Ripe Holdings Inc.’s digital booking and payment system.

Express Authorization

Transportation may only be provided if the digital booking and payment system used: (a) transmits the estimated trip fare to the mobile device of a passenger before the trip starts, (b) calculates the trip fares on a time-and-distance basis, and (c) transmits a record of the trip fare and route taken to the mobile device of the passenger.

Service 1

Originating Area Transportation of passengers may only originate from any point in the Greater Vancouver Regional District.

Destination Area Transportation of passengers may terminate at any point in British Columbia and beyond the British Columbia/United States border


when engaged in an extra-provincial undertaking.

Ownership & Share Restriction

1. For a period of five years following the initial activation of any special authorization vehicle identifiers (SAVIs), approved in this application, any vehicles attached to a SAVI must remain in the ownership of Ripe Holdings Inc. and in no circumstances can the company issue shares, beneficial or otherwise, with respect to the SAVIs, or vehicles associated with the (SAVIs).

2. For a period of four years following the initial activation of any SAVIs approved in this application, Ripe Holdings Inc. must, at the time of licence renewal, submit a notarized letter confirming that the SAVIs and any vehicles associated with the SAVIs remain in the ownership of the company and no shares have been issued with respect to the operation of the vehicles or the SAVIs associated with the vehicles.


Ripe Holdings Inc. Appendix II

The applicant Board approves the following rates.

Rates Rate $ First kilometre 20.00 Next three kilometres (per km) 5.00 After four kilometres (per km) 2.60 Per minute (speed less than 18 km/hr)

0.75

Trip cancellation charge 10.00 Taxes are not included General:

• All distance rates (per km) apply in one-kilometre increments to each kilometre travelled (or portion thereof).

• Time rates are added to distance rates in one-minute increments.

• Other rates and rules may be set out in the rates document received from the applicant.
