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‘Que Legal,’ Uber é Legal

‘Que Legal,’ Uber é Legal
by Roger C. Lanctot on 10-11-2016 at 12:00 pm

 Uber went live in Florianopolis on September 30, a week before my wife and I arrived for some down time. But rumors suggested that the service was shuttered almost as soon as it started with a couple of drivers detained and their vehicles impounded. The word was spreading that the service was considered illegal.

As fate would have it, we stumbled into an Uber driver recruitment meeting and discovered that the service was indeed alive and well and legal – with huge demand and an inadequate supply of drivers. Turns out that Uber is legal throughout Brazil based on federal laws, but that local state and municipal authorities have twisted regulations to make life difficult for Uber drivers.

Depending on the city in Brazil, the local taxi concession may be woven into the fabric of local politics. It is not unusual for the mayors of major cities to own hundreds of taxi licenses, giving them a vested interest in making life difficult for Uber and its drivers.

The resistance in Brazil is equivalent to the resistance to Uber around the world and is based on the training and certification required for taxi drivers who must also acquire expensive medallions or certificates to enable them to pick up and drop off passengers. The same holds true for Brazil where taxi drivers must pass background checks and receive certification at the state, municipal and Federal level.

Uber drives can acquire all the certification they need online with virtually no background check, training and a professional driver endorsement on their driver’s license. The background check amounts to the driver giving his or her word that they have not committed any crimes.

While Uber is legal, the intimidation of drivers in Florianopolis has been effective. One Uber drive told my wife and I that there are only 10 active Uber drivers among a total of 60 certified drivers servicing Florianopolis – serving a population of more than 1 million citizens.

Many of the drivers who have been certified are afraid to start picking up customers for fear of being arrested and their cars being impounded. This fear persists in spite of the fact that Uber representatives told driver candidates at the recruitment meeting that they will handle all legal problems and legal expenses if there is any problem. The overriding message from Uber: “Uber is legal in Brazil.”

Uber’s arrival in Florianopolis is significant as Uber has been unsuccessfully confronted, protested and opposed in Rio and Sao Paulo. As in many other countries and cities around the world, Uber is filling a need for convenient, inexpensive transportation – and existing taxi services resent the intrusion.

Uber has existing app-based Brazilian competition in the form of EZtaxi and Taxi999. Consumers are attracted by Uber because the drivers are universally better educated and more polite than regular taxi drivers – and their vehicles are cleaner and newer.

The allure of Uber is powerful in Brazil. Transportation is a nightmare in most Brazilian cities with impenetrable traffic jams and, in some cases, limited public transportation options. Florianopolis is especially ripe for Uber given the limitations of the public transportation alternatives.

While Brazil was, until recently, one of the fastest growing automotive markets in the world, the economy has plunged into recession driving down vehicle sales. Even before the recession cars were expensive and heavily taxed – making app-based transportation even more enticing.

Alas, like most markets, the financial equation justifying Uber driver participation is as tenuous in Brazil as it is in most other places in the world. The $R1.10/km that Uber charges is rapidly eaten away by Uber’s 25% take, the cost of fuel and vehicle maintenance, insurance and food for the driver.

The economics of Uber are broken down by this Brazilian blogger: (in Portuguese)

Our intrepid Uber driver, Igor, said it took him only a week to realize that he’d better hang on to his job as a building superintendent along with his freelance videography. Even driving non-stop every day for Uber would never produce a livable income.

So, if you are a tourist visiting Brazil there is a good chance you will find Uber available and legal but frowned upon and harassed by local authorities and resentful taxi drivers. The long-term viability of Uber remains in doubt, but the short-term savings are impossible to resist.

The real revelation of Uber, aside from the convenience, which can be matched by local competitors, is the charm of the drivers themselves. But the blogger (noted above) points out that these charming drivers may turn nasty over time as they realize they cannot make a living charming Brazilians and visitors alike for pocket change.

It’s worth noting that the taxi drivers my wife and I met and chatted with in Porto Alegre were, in many cases, equally charming and interesting as Igor in Florianopolis. There is something to be said for getting a ride from a properly trained and certified professional who isn’t coping with the sneaking suspicion that he or she is being ripped off. For now, Uber is que legal. Oba!

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