Uber Partners With Yellow Taxi Companies in N.Y.C.

When Uber arrived in New York City in 2011, yellow taxis dominated the streets, and drivers paid 1 million for the famous taxi medallion, which gave them the right to pick up passengers.

Disappointed, Uber worked tirelessly to eliminate rides, ridiculing the taxi industry as inefficient, corrupt, greedy and even a “cartel”. The taxi industry, in turn, accused the company of causing financial ruin for its drivers.

Now, one-time bitter rivals, who have been fighting for years for control of the city streets, are making an unlikely alliance: Uber, along with two taxi companies, Curb and CMT, will allow New Yorkers to order yellow taxis. The Uber app, the companies said Thursday.

The announcement – the first large-scale deal of its kind in the US – comes at a time when riders are increasingly adopting the app to order both Uber and Taxi. Companies are struggling to recover from an epidemic that has hurt the ride-hailing industry as people work from home and tourists stay away.

“On the one hand, the Uber and yellow cabs feel like absolutely water and oil,” said Bruce Schiller, a former city transportation officer. “On the other hand, when you go to the cab to pick up Uber or your smartphone, it will be the same experience as before. So it’s like a big change and the same thing happens together. “

From the end of this spring, riders will be able to open the Uber app and choose a taxi. Uber will then refer the request to two taxi technology companies, instructing drivers to pick up passengers. Rents will be based on Uber’s pricing and policies, including additional costs, which can significantly increase costs at peak times.

The app, like all Uber rides, will display an upfront price before the rider requests a trip. Riders will pay about the same price for a yellow taxi as they would for a standard individual Uber ride, known as UberX, the company said.

Yellow cabdrivers responding to Uber App Hales will also see the price of the ride in advance and will have the option to accept or reject it under the deal. Under city rules, Ahel taxis – unlike Street-Hale taxis – have the right to refuse fares.

Although Uber has clashed with taxi groups over the years as it seeks to capture markets around the world, it has discovered that partnering with taxi companies instead of fighting them could turbocharge its business, especially abroad. Partnerships with taxi fleets and technology companies in other countries allow Uber riders to order taxis on the app, as will happen in New York.

The agreements, together with the New York partnership, “reflect a new page or new trend in Uber that seems willing to work more closely with the industry that it was trying to disrupt at one point,” said Tom White, a. Said the senior research analyst. With financial firm DA Davidson.

Being “a little more friendly” with taxi companies could help Uber “simplify Uber’s relationship with legislators and policymakers” in those cities, he added.

Uber said it has coordinated with more than 2,500 taxis in Spain, partnered with taxi service TaxExpress in Colombia, acquired a local HK taxi app in Hong Kong last year, launched a partnership with SK Telecom in South Korea and also worked with other taxis. Have done. Countries including Germany, Austria and Turkey.

Uber’s new partnership with the taxi industry in New York, first reported by The Wall Street Journal, will generate more revenue for the company as it charges a fee for each ride ordered through its app.

Andrew MacDonald, Uber’s senior vice president of mobility and business operations, said on Uber’s Investor’s Day in February that the company wants every taxi in the world on its platform by 2025.

Mr. McDonald said adding taxis was about money: when Uber offered more modes of transportation, the company found that customers often used many of those methods, “spending more and being more loyal.”

Muhammad Rahman, 37, who has been driving a taxi in New York for eight years, said he hoped the Uber connection would bring more fares to neighborhoods where street-hales are unusual. “Uber’s customers are everywhere,” he said.

But another taxi driver, Helmer Monroe, 67, was more suspicious. “I don’t think Uber will help the yellow cab industry,” he said. “They have not destroyed the industry – but they have damaged it.”

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 than the yellow cab, especially on those days when he works in Manhattan. . “We could lose business,” he said.

Prior to the epidemic, taxi drivers in New York were losing fares for Uber and Lift ride-app services and facing financial ruin after taking out loans to buy medallions at inflated prices.

Uber has faced its own challenges during the epidemic. Initially, demand for rides dropped and drivers were worried about the coronavirus infection, with many leaving the platform.

As the U.S. economy revived and cities eased sanctions, customers returned but found that the same number of drivers did not return, leading to a sharp rise in fares and long waits for trips.

Both companies admitted last year that they were struggling to attract enough drivers to keep up with demand, but only recently said the problem was easing. Uber said the number of drivers on its platform is at its highest level since February 2020.

However, many drivers are unhappy about how much they earn, and some say they are driving less or not at all, because higher gas prices are eating away at their earnings. Adding thousands of taxi drivers could help offset other driver departures.

The new Uber-Taxi partnership in New York does not require the approval of the city’s Taxi and Limousine Commission, which oversees taxis and hired vehicles, including Uber, city officials said.

“We are always interested in innovative tools that could expand the economic opportunities for taxi drivers,” said Ryan Vantaja, the agency’s executive commissioner. “We are excited about any offer to connect passengers more easily with taxis and look forward to learning more about this agreement between Uber and Taxi Applications and to making sure it complies with TLC rules.”

New Yorkers will still be able to fly yellow taxis across the street or order them via two taxi apps, Curb and Arrow, which offer the same upfront price as Uber Rides.

The city’s 13,587 yellow taxis are equipped with a technology system called Curb or Creative Mobile Technologies, which operates the Arrow app.

Curb, which has more than two million users in New York City, has seen an increase in demand during the past year of the epidemic. According to Amos Tamam, Kerb’s chief executive officer, the average daily rides by individual consumers across the city have increased from nearly 2,000 rides in 2019 to over 15,000.

“Taxis are back on the customer’s radar,” he said. Tamam added that the partnership with Uber could lead to a “significant increase” in rides for taxi drivers.

When a rider requests a yellow taxi through the Uber app, both Uber and the taxi company will charge a fee for the rides. Taxi drivers will continue to be paid through the curb and CMT system.

It is difficult to say how the deal will affect passengers and drivers, as the cost of the trip and the driver’s pay are controlled by algorithms that vary depending on the application, the length and distance of the trip, the time of day ride and the car’s request. Factors

In some cases, riders may pay more for a taxi ordered by the Uber app, but not always. Likewise, drivers can sometimes, but not always, receive more for a metered trip than a trip ordered through the Uber app. Uber said it would provide more details about the taxi option next month.

Bhairavi Desai, head of the Taxi Workers Alliance, a group representing cabdrivers, said she believes drivers who accept trips from the Uber app will earn less if they pick someone up from the street and take them to the same place.

She urged drivers to negotiate better fares from Uber, noting that the agreement was reached “at a time when companies need this deal more than drivers” because Uber is “hemorrhaging drivers”.

“We’re going to seize it as an opportunity for drivers to negotiate the right terms,” ​​she said.

Others expressed more optimization.

Mr. Scaler said that if the new system is properly implemented, following the existing rules, it should benefit both drivers and customers.

Mr Scheler added, “But if you had asked me in 2019, I would not have predicted 2022.”

Brian Rosenthal contributed to the report.

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