Uber Partners With Yellow Taxi Companies in N.Y.C.
The ride-hailing giant is teaming up with two taxi technology companies in New York City.
New Yorkers ordering a ride on the Uber app will soon be able to choose a yellow taxi under a new partnership between the ride-hailing giant and two taxi technology companies.
Starting later this spring for anyone in New York City, the deal will enable Uber riders to pay roughly the same price for a yellow taxi as they would for a standard individual Uber ride, known as UberX, the company said.
They will get a price upfront in the app before they request the trip, as they currently do with all Uber rides.
Yellow cabdrivers who respond to Uber app hails will also see a ride’s pricing upfront and under the deal will have the option to accept or reject it.
The Uber-taxi partnership is the first such large-scale deal in the United States. and comes as New York City’s embattled yellow taxi industry has been decimated by the coronavirus pandemic, with many people still working from home and many tourists staying away.
The partnership is also something of an about-face for Uber, which has clashed with taxi groups for years as it has attempted to take over markets around the world. But Uber has discovered more recently that partnering with taxi companies instead of fighting them can turbocharge its business, especially overseas. Partnerships with taxi fleets and technology companies in other countries allow Uber riders to order taxis on the app, as will be the case in New York.
Those agreements, combined with the New York partnership, “would seem to reflect a new page or a new stance in Uber being willing to work more closely with the industry that it was once trying to disrupt,” said Tom White, a senior research analyst with the financial firm D.A. Davidson.
Being “a little more friendly” with taxi companies could help Uber “curry favor and smooth Uber’s relationships with legislators and policymakers” in those cities, he added.
Uber said it had integrated with more than 2,500 taxis in Spain, partnered with the taxi service TaxExpress in Colombia, acquired the local HK Taxi app in Hong Kong last year, begun a partnership with SK Telecom in South Korea and also worked with taxis in other countries, including Germany, Austria and Turkey.
Uber’s new partnership with the taxi industry in New York, which was reported earlier by The Wall Street Journal, will generate more revenue for the company since it receives a fee on every ride ordered through its app.
Before the pandemic, taxi drivers in New York were losing fares to Uber’s and Lyft’s ride-app services and facing financial ruin after taking out loans to buy medallions — city-issued permits required to own a yellow cab — at inflated prices.
Uber has faced its own challenges during the pandemic. Early on, with demand for rides plummeting and drivers worried about contracting the coronavirus, many left the platform.
As the U.S. economy rebounded and cities relaxed restrictions, customers flocked back to Uber and Lyft apps but found that drivers had not returned in the same numbers, leading to drastically higher fares and long wait times for trips.
Both companies last year acknowledged that they were struggling to attract enough drivers to keep up with demand, and they offered incentives like cash bonuses to get drivers back. The companies say the problem is easing, and Uber said the number of drivers on its platform was at its highest level since February 2020.
Gridwise, an app that helps drivers track their earnings and tallies data, has found that driver earnings on ride-hail apps have also risen in recent months.
Still, many drivers remain unhappy about how much money they make, and some said they were driving less or not at all since high gas prices began eating into their earnings.
Antonio Cruz, 50, a Brooklyn resident who drives for Uber two days a week, said he was concerned that the new Uber-taxi partnership could mean more competition from yellow cabs, especially on the days when he works in Manhattan. “We could lose business,” he said.
Bruce Schaller, a former city transportation official, said the short-term benefit of the deal was to provide Uber with access to more drivers.
“If they’re saying they’re fine with drivers now, fine, I just don’t buy it,” Mr. Schaller added. “With the pandemic plus gas prices, more drivers is always good. Even if they have ‘enough,’ having a bigger base of drivers out there is good for Uber.”
At Uber’s investor day in February, Andrew Macdonald, Uber’s senior vice president of mobility and business operations, said the company wanted every taxi in the world on its platform by 2025 and that it had already added 122,000 taxis to the app last year.
Uber’s deal with taxi companies in New York could also put pressure on its rival, Lyft, to respond.
“I would expect Lyft to make a similar deal — in fact I expect them to make the exact same deal,” Mr. Schaller said. Lyft did not immediately respond to a request for comment.
The new Uber-taxi partnership in New York did not require the approval of the city’s Taxi and Limousine Commission, which oversees the taxi industry, city officials said, though the agency will still have oversight of the rules covering all for-hire drivers.
“We are always interested in innovative tools that can expand economic opportunities for taxi drivers,” said the agency’s acting commissioner, Ryan Wanttaja. “We are excited about any proposal to more easily connect passengers with taxis and look forward to learning more about this agreement between Uber and the taxi apps and ensuring it complies with TLC rules.”
New Yorkers can still wave down yellow taxis in the street or order them through two taxi apps, Curb and Arro, which offer upfront pricing like with Uber rides.
The city’s 13,587 yellow taxis are equipped with technology systems from Curb or Creative Mobile Technologies, which operates the Arro app. The systems also provide driver and passenger information monitors in each vehicle, take credit card payments from riders and pay drivers.
When a rider requests a yellow taxi through the Uber app, the trip will be referred to Curb or CMT, which will use Uber’s pricing and payment structures. Both Uber and the taxi company will receive fees from the rides. Taxi drivers will continue to be paid through the Curb and CMT systems.
It is hard to say how the deal will affect passengers and drivers, in part because trip costs and driver payments are controlled by algorithms that vary depending on the app, the length and distance of a trip, the time of day riders request cars and other factors.
In some cases, riders may pay more for a taxi that they order through the Uber app than for a taxi they hail on the street, but that may not always be true. Similarly, drivers may receive more for a metered trip than a trip ordered through the Uber app, but that may not always be true, either. Uber said it would be providing more details about the taxi option in the coming months.
Bhairavi Desai, the head of the Taxi Workers Alliance, a group that represents cabdrivers, said she believed that drivers accepting trips from the Uber app would earn less than if they picked someone up off the street and took them to the same place.
She urged drivers to negotiate better fares from Uber, noting that the agreement was struck “at a moment when the companies need this deal more than the drivers do” because Uber is “hemorrhaging drivers.”
“We’re going to seize it as an opportunity to negotiate proper terms for the drivers,” she said.
Others expressed more optimism.
Mr. Schaller said that if the new system was implemented properly, following existing regulations, it should benefit both drivers and customers.
“I’ve always expected there would eventually be a convergence of yellow cabs and ride-hail apps, but I wouldn’t have predicted 2022 if you asked me in 2019,” Mr. Schaller added.