This week saw a hostage situation that shut down the Sydney CBD. Bus and train services were disrupted and people evacuated from office buildings in the heart of the city. Most had to make alternative travel arrangements just to get home at the end of the day - and Sydney saw a prime example of predatory pricing.
Uber - this new service that encourages citizens to use their private cars to provide a cut price taxi service - immediately took advantage of high demand by imposing a minimum fare of one hundred dollars for every trip. It drew a huge groundswell of outrage and it was quickly rescinded and some cars offered a free ride out of the city CBD as a form of compensation.
Many citizens have mixed feelings about what Uber is offering. It brings a taxi service into the ubiquitous area of servicing by app. The enticement is a fare calculated by the Uber company based on the distance travelled that is much cheaper than the fares charged by the metered cab services.
The down side is that the car that arrives to deliver the service can be any make or model on the market - and of any age and condition. That same criteria applies to the driver. It could be a man - or a woman. He or she may be young - or very old. Their driving skills and history behind the wheel - is completely unknown. Anyone stepping into that cab is taking a big chance - and hoping for the best !
The response to that siege underscores the difference between Uber and traditional cab companies. Uber drivers are not scheduled and take up fares when and if they please. The fare hike was intended to motivate more drivers to get in their cars and come and service the inner city. It is very much an ad hoc situation in contrast to the predictability of the metered cab fleets.
The traditional cabs live by a very different code. Their cars are of a uniform colour and carry identifiable signage. Their drivers wear a uniform and they operate from known taxi stands in convenient parts of the city. Cabs have regular inspections and are required to be clean and serviceable. The person driving has to display personal identification - and the charge is constantly in view from a meter recording the cost of the journey.
The other big difference is that the number of taxi license plates is strictly regulated - and each exchanges ownership for a very big fee. This is devalued if competitors can freely steal fares from traditional taxis by offering cheaper prices and avoid all the obligations imposed on the registered cab companies. It brings freelancers into the realm of "Gypsy "cab fleets that operate on the fringes of many overseas big cities .
The legal situation appears to be opaque. Some jurisdictions have cracked down hard on the Uber principle and seek to protect the livelihood of the registered cabs which pay a big license fee for their right to trade. The issue of insurance protection is also unclear. At the moment this is still being determined by legal minds and even the insurance industry is uncertain. In all probability, it will take the outcome of a high profile court case to clear the air.
This price hike to take advantage of an inner city siege certainly throws the spotlight on the contrast between the two systems. The metered cabs continued to do business unchanged - and the newcomers hiked their prices outrageously. Perhaps a very good reason for the licensing authority to inject a little sanity into this pricing situation !
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