Uber Technologies Inc. befriends an old enemy.
The company has struck a deal to include all New York taxis on its app, an alliance that could ease the ride-sharing mogul’s driver shortage and temper high fares while delivering more business to taxi drivers, including Livelihoods have been affected by the emergence of car-sharing apps and the pandemic.
While Uber has partnered with some foreign taxi operators and passengers in several US cities can use its app to book taxis if drivers choose to be listed, the New York City alliance is its first citywide partnership in the United States. one of Uber’s most lucrative markets, has been a battleground for the company and the city’s iconic yellow cabs for years.
“It’s bigger and bolder than anything we’ve ever done,” said Andrew Macdonald, head of global mobility at Uber. The company plans to launch the offering to users this spring.
As part of the agreement, the technology partners, licensed by the New York City Taxi and Limousine Commission (TLC), will integrate their taxi app software with that of Uber. These apps, operated by Creative Mobile Technologies and Curb Mobility, are used by the city’s roughly 14,000 taxis, according to Uber. Both companies allow payment by credit card in taxis and operate screens that display weather, news and announcements to passengers.
Passengers will pay roughly the same fare for taxi rides as for Uber X rides, according to the company. Uber drivers in New York are paid a minimum rate for time and distance set by the FTA, though Uber said its drivers often earn more than that rate. And taxi drivers who agree to take Uber passengers will receive the same payment.
The metered yellow taxi fare is based on a different calculation, which means taxi drivers can earn less, the same or more on an Uber ride, depending on the nature of the ride. Unlike Uber drivers in New York, taxi drivers will see expected earnings before a ride and can decline rides they don’t find useful, Uber explained.
Uber and its taxi partners will receive a portion of the fare. The companies did not want to specify the conditions. The global median acceptance rate for Uber rides in the fourth quarter was 20%.
Uber shares rose 5% to $34.70 on Thursday.
For Uber, the alliance represents a change of direction. After promising to disrupt the taxi industry in the United States, it is now betting on traditional taxis to drive its next wave of growth. By 2025, Uber wants to include all taxis in the world in its application. “It’s certainly ambitious,” Macdonald said, but “I certainly think it’s possible,” he added.
Meera Joshi, the deputy mayor of New York who oversees the FTA, said the alliance is creating economic opportunity for taxi drivers “without adding more and more cars”.
“The word ‘disruption’ was almost a superficial word in a way,” said Joshi, who previously served as NAFTA commissioner. Uber modernized the taxi industry, lowered barriers to entry and accustomed users to service at the touch of a button. But that hasn’t killed taxis or changed the fundamental nature of the service, he concluded.
Taxi groups have fought Uber for years. In many countries, unions and lobbyists for major taxi companies were behind lawsuits that banned the app. Regulators have cracked down on the company’s cash-for-work model. While taxi drivers in major European cities, such as London, Paris and Rome, have cut traffic more than once in protest against Uber.
The company initially forged alliances with taxis to save its business in some overseas markets, but doubled down on that strategy as it became a growth engine. Uber’s attempts to attract taxis gained momentum during the pandemic, when the main business of street taxi drivers dried up. The company says it registered more than 122,000 new taxi drivers in its app last year, four times more than in 2020.
In Barcelona, for example, Uber suspended operations after the local government imposed a rule requiring rideshare drivers to wait 15 minutes before picking up passengers. After a two-year hiatus, Uber returned to the city last year with several hundred taxis on its app, following the model’s use in Madrid.
Also in Austria, Uber turned to taxi hire when a regulation last year restricted its operations by requiring drivers to obtain taxi licenses. A recruitment drive has hired more than 2,000 taxi drivers in the country, making it one of Uber’s biggest overseas markets, according to the company.
In Hong Kong, where taxis are a cheaper and more convenient option for commuters, Uber acquired a popular taxi hire app last year, allowing it to hire thousands of urban taxi drivers.
Uber can earn more than your travel business. On top of that, Macdonald said 35% of people who started using the app to call taxis went on to use other Uber products, such as its food delivery service.
The pandemic has hit the taxi industry hard and drivers want to maximize their profits to offset those losses, said Ron Sherman, chief executive of Creative Mobile Technologies, one of Uber’s partners in New York.
The alliance with Uber gives drivers a chance to get a return passenger on trips out of Manhattan, when they often return empty, he said, which is especially painful when the prices of the gasoline are skyrocketing. Sherman’s company has a taxi app called Arro, but its user base is not the same as Uber’s, he said.
Meanwhile, Uber is running out of drivers in the United States. During the health crisis, these were dedicated to other jobs, such as food and food deliveries, and the resulting shortages caused travel prices to hit record highs last year. Drivers are coming back slowly, but passengers are coming back faster, Uber and rival Lyft Inc have warned. Prices for their rides are down from last year’s highs, but were still 17% higher on average on average. last month than January 2021, according to market research firm YipitData.
“They have the demand and we have the supply,” Sherman said. Uber “needed more supply, so it made sense that we started talking about a partnership,” he added.
Sheik Jalloh, who has been driving a taxi in New York for more than a decade, said the deal would help his industry keep up with the changing times. “It’s the technology that the next generation trusts. No one wants to wait for a taxi when it’s raining or snowing. They just want to call him,” he said.
Some Uber drivers, however, fear the alliance could discourage the company from paying them the bonuses it offers during the labor shortage. Many drivers have returned to ridesharing work thanks to these incentives.
“You’re going to have a lot of drivers waiting,” said Edison Morcelo, who drives full-time for Uber and Lyft in New York. The inclusion of thousands of new drivers could mean longer wait times for rides and fewer bonuses for Uber drivers.
Analysts said Thursday that Uber will have a head start with the partnership on Lyft in one of the world’s most lucrative ride-sharing markets. Lyft, for its part, responded that it was not immediately seeking deals with taxis.