In recent years the transportation industry has begun to change dramatically. At first, ride-sharing companies did not have much hold over the industry as taxicabs and rental cars dominated the needs of business travelers as they searched for transportation so they could reach their destinations. However, recently this industry has suffered a loss has rates of people using these amenities have dropped, but the rates of people using Uber have dramatically increased.
Uber is a ride-sharing platform where you can request a ride from an app (sounds familiar right?) it's almost exactly like a modernized taxi. However, there are a couple key features that services like Uber provide in which taxis and the traditional temporary transportation do not. One of the key factors that draw its consumers is the easy use of the app and its services. Before you would need to take a chance and wave your hand in the street to see if you can catch a taxi or even call the number of a taxicab company and request a ride, but with the ease of uber and its close prices to taxis, consumers are immediately drawn into this new mode of transportation. Today, the ride-sharing companies make up for 70.5% of the market, taxis and rental companies now fighting over the rest, with rental cars getting 23.5% and taxis just 6% of ground transportation.
However Uber is not the only company dominating this new sector in the transportation industry, Lyft has recently been rising at a very fast pace. Prices inflate for an Uber ride depending on times of high passenger demand in certain areas. This phenomenon is called surge pricing which often leads people to declare that these ridesharing prices are too expensive, luckily for Lyft this allows them easy entry into the market as people will always need transportation. A possible reason for the growth is price, according to Certify's data, business travelers spend nearly $5 less on Lyft trips versus Uber trips.
Although the usage of ride-sharing has sky-rocketed the tips is where Uber and Lyft driver make most of their money. According to Certify's report, only 6% of business travelers using Uber tipped their driver while 2% of Lyft riders tipped.
https://www.uber.com/us/en/ride/how-it-works/
https://www.forbes.com/sites/michaelgoldstein/2018/04/30/destruction-of-taxi-industry-by-uber-lyft-affects-trump-lawyer/#5bc549302806
https://www.ridester.com/uber-vs-taxi/
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I guess the low level of tipping is due to the fact that people are using these services as a cheaper, more convenient, alternative to taxi services. The cheaper the service, the less willing people are to spend "extra money" on tipping, as is exemplified by the difference in tips between Uber and Lyft. People getting a ride from Lyft spend on around $5 less on rides, but they also tip 4% less. I wonder if the cost of the service causes the Lyft/Uber drivers to care less about how their passengers, or if the fact that the ride is cheap automatically makes people feel like they are getting less from a service even if that is not true.
ReplyDeleteGreat post Kayra!! I too remember when Uber was first introduced and people were amazed at how easy and efficient it was. With the start of these ride-sharing services, the taxi industry saw a decrease in business. According to an article published by Forbes, "With the ride-hailing companies grabbing 70.5% of the market, taxis and rental car companies are now fighting over crumbs, with rental cars getting 23.5% and taxis just 6% of ground transportation receipts." Uber and taxis are substitute goods. For example, if the price of taxis went up, that would then lead to an increase in demand and usage of Uber.
ReplyDeleteSources:
https://www.forbes.com/sites/adigaskell/2017/01/26/study-explores-the-impact-of-uber-on-the-taxi-industry/#718502d016b0
https://www.forbes.com/sites/michaelgoldstein/2018/04/30/destruction-of-taxi-industry-by-uber-lyft-affects-trump-lawyer/#2b65a6a72806
Thanks for the post Kayra! I had heard about taxis and Uber fighting for customer in New York City, and this post reminded me of the conflict. I wanted to check in on the story and found that in August of 2018 The New York City Council had created a cap or ceiling for new licences for "ride-hailing drivers". Taxis (in the yellow cab sense) favored this move as their competition with Uber has been fierce. Uber and Lyft have more competitive prices. The economic downturn for taxis has resulted in larger social issues; eight taxi men committed suicide. The New York Taxi Workers Alliances claims that Uber is responsible; these men no longer had stable jobs and could not afford to support themselves. The yellow cab is an iconic symbol of NYC that is quickly going away. Do you think the local government should step in to regulate how far Uber and Lyft can control the market?
ReplyDeleteSource:
https://www.cnbc.com/2019/02/15/uber-sues-new-york-city-over-license-cap.html
I think a main part of Uber and Lyft that make people prefer it over a regular taxi is the rating system because it makes them feel more safe in their ride. Although there was a scandal a few years back before people found out that the drivers weren't being background checked, the rating system makes people feel more secure because they trust the opinion of their fellow users.
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