Taxi Price War !

When we ride in a taxi we are accustomed to seeing and hearing the meter ticking away and calculating the cost of the journey by both the distance travelled and the time factor if traffic causes delays.  We pay the cost of the trip irrespective of whether the hirer is a single passenger or a group of several people. That number depends on the quantity of seat belts the taxi can legally accommodate.

When Uber burst onto the taxi scene by incorporating drivers of private vehicles in its taxi fleet it caused massive disruptions to the conventional taxi industry.  The government regulates the number of taxis on the road by limiting the taxi plates issued  and consequently they are of high value.  Since Uber, plate value has dropped sharply.

Now Uber is introducing a new pricing method that seems certain to further disrupt hires between Uber and the conventional taxi companies.  Uber will give passengers a fixed price quote for each journey at the time of hire.  This will be calculated on the known length of the journey according to road maps, expected time it will take given known traffic conditions and by taking in the reported experience of other Uber fleet drivers reporting the traffic situation.

Uber drivers gain their livelihood by way of a share of the fare charged and if traffic disruptions cause a major delay under this arrangement they become the loser.  A traffic snarl can see the journey time double and that is reflected in the fare in a conventional taxi.  A Uber driver is expected to deliver his passenger to his or her destination for a fare that it entirely controlled by the Uber company.

Many Uber drivers report they make little profit and their take home pay is below the minimum wage.  They see a further danger to their earnings in a new scheme Uber is about to introduce.  Called UberPOOL  it seeks to attract fares by offering shared rides for passengers who are generally heading in the same direction.

How that works is not abundantly clear, but the general idea seems to be to lower the journey cost by each passenger enjoying a discount rate.  Uber drivers are suspicious that combined with this quote price for each journey the end result may be a further drop in their take home pay.

Many people are astonished that Uber has been legally able to disrupt what was a tightly controlled taxi industry.  The government had cab numbers in its hand by the issue of taxi plates and each vehicle needed to be sign written and outfitted according to strict regulations. Drivers needed to wear a uniform and undergo a probity check.

Uber managed to snare a share of the taxi business on a world wide basis. Moves to close it down by regulations failed and it is a company providing hire services in most world cities.  Whether its drivers are " employees " or " contractors "  remains unclear and ultimately governments may decide the taxi issue by regulation.   That is a power that market newcomers challenge - at their peril !