(Reuters) – Israeli transportation company Gett said it will end its New York City ride-hailing business Juno on Monday, citing “misguided regulations” enacted to combat city congestion earlier this year.
The company told Juno users on Monday its service would cease to operate that evening, directing riders instead to former competitor Lyft Inc, which it has struck a strategic partnership with. Beginning in 2020, users of the Gett taxi app will be able to request Lyft-operated rides.
Gett and Lyft declined to provide financial details of their partnership.
Gett said it would increasingly focus on the corporate transportation sector.
The company faced growing pressure as regulation damaged ride volumes, making profitability a distant and difficult prospect.
“Juno was a player that started with a lot of promise, but ultimately if you’re not able to pay your drivers a fair wage and are not able to operate in a way that’s environmentally responsible, then you probably shouldn’t be operating in NYC,” Bill Heinzen, the acting commissioner of New York City’s Taxi and Limousine Commission (TLC), said in a statement on Tuesday.
The TLC last year implemented several laws challenging the way ride-share companies operate in North America’s largest city, one of the industry’s biggest markets.
Since January, private ride-hailing trips below Manhattan’s 96th Street are taxed at $2.75, while shared rides are charged 75 cents. The charge must be passed on to passengers and cannot be taken out of drivers’ pay, the law says.
New rules also cap the number of app-based, for-hire cars and established minimum pay for the city’s 80,000 ride-share drivers based on how much time they spend transporting passengers.
Beginning next year, the law also limits time drivers spend “cruising” – driving to or waiting to pick up new passengers.
Juno, which launched its NYC ride-hailing service in 2016, marketed itself as retaining happier drivers by taking a smaller commission from every ride. Gett acquired the company in 2017 for $200 million.
“Juno’s closure in New York City is further evidence that the TLC’s approach has created an uneven playing field that reduces choice for riders and drivers,” Lyft said in a statement on Monday.
Asked about the impact of NYC’s regulation, Uber Technologies Inc Chief Executive Dara Khosrowshahi told investors during a third-quarter earnings call on Nov. 4 that significant price increases were slowing down trip growth, but that the business overall was “quite resilient to the environment around it.”
Reporting by Tina Bellon in New York; Editing by Marguerita Choy and Dan Grebler