The New York City’s yellow taxis will finally be appearing on Uber’s app. The development is the first alliance of its kind in the US, an effort that’s aimed at easing driver shortage and pressure on fares. Following this first-of-its-kind alliance, Uber Technologies Inc. shares leapt 5 per cent. Could this be the beginning of awesome things for the ride-sharing pioneer.
Uber reached the landmark deal with stakeholders from the Big Apple, including New York City Taxi & Limousine Commission’s technology partners. The companies, Creative Mobile Technologies and Curb Mobility, officially acknowledged the deal in separate statements. Their apps, Arro and Curb, are the engine behind most of the city’s four-wheeled yellow army, and will now allow riders to book rides in their vehicles from the Uber app.
The partnership is a potential win for all sides, and will roll out in the spring, with more cities planned to follow suit in the summer. This expansion could be brisk, especially as Uber stock quickly rose to $34.73 after the market opened in New York on Thursday.
Drivers vs. Riders: What’s in It for Them?
Uber’s Director of Business Development, Guy Peterson, in a statement hails the development as a “real win” for drivers as they won’t have to bother any more about finding a fare during off-peak times or not having a commuter riding back to Manhattan when in other boroughs.
But, riders will be winners too. They now have access to thousands of yellow taxis in the Uber app.
Uber and relevant rival Lyft Inc. have been struggling with a shortage of drivers pushing fares and wait times through the roof for customers. As gas prices have surged around the US, driver earnings have taken a huge hit, leading several to consider migrating to other apps.
Uber has reported not seeing a decrease in the number of active drivers on its platform since gas prices soared. In fact, there are now more drivers using Uber in the US than at any time during the pandemic.
How Does this Help Uber’s Stock?
The New York City partnership looks likely to help Uber boost driver supply and reduce wait times, possibly increasing its slice of the ridesharing market, relative to Lyft. Taxis will be available to Uber customers at the same price as UberX rides for the same ride.
Prices may be lower than a metered cab fare, or higher. The determining factor will depend on any surge that may be in effect, according to Jason Gross, VP and Head of Mobile at Curb. Drivers will also have the ability to see fares prior to accepting a ride.
Uber maintains partnerships with taxi companies in other countries such as Colombia and Spain. In a few markets like Hong Kong and Turkey, cabs are Uber’s primary market.
The prevailing hope is that cabs will have access to more passengers as the city recovers from shutdowns caused by COVID-19.
While the Big Apple is Uber’s largest market, it has not had the best of relationships with the city. The NYC Taxi & Limousine Commission (TLC) limited the number of Uber and Lyft vehicles that could operate in the city as rising congestion and concerns about driver wages took centre stage.
There’s still a difference between Uber’s legion of independent drivers and the taxi drivers now taking Uber rides. The former only see limited information about a trip before picking up a passenger, whereas taxi drivers turned Uber ride-takers will see the fare and destination before starting the trip, and have the liberty or decline without penalties.
Uber is increasingly expanding its app to accommodate other transport options outside its own driver network. This could be in response to regulatory restrictions, or in places where there isn’t a reliable gig worker network.
Uber acquired Autocab in 2020 in the UK, a traditional minicab dispatching service that allows access to customers outside major regions.
The company’s first public sector partnership was with a minibus service in Marin County, San Francisco. The New York deal is the first of many to have a significant impact on Uber’s fledgling stock.
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