Is Uber Lowering Prices Causing Cab Companies To Go Out Of Business?
By Robert Stitt
Uber will be lowering its prices in 100 Canadian and United States’ cities to increase passengers during a “winter slump”, according to Uber’s website. This may seem like a coincidental timing since Uber’s competitor, Lyft, just received a $500 million deal with General Motors. However, in many cities, Uber has lowered prices in January for the last three years. Maybe there really is nothing beyond what Uber claims.
Uber says, “Pricing is a science, every city is different: different economic circumstances; different regulations; different competition. Last year, for example, earnings fell in some cities and we changed back…And in two cities, including Seattle, we ended up reversing the price cuts entirely when it became obvious that prices were already low enough.”
The price cut cannot be going over well with the cab companies, since Uber is in direct competition with them, and they are already complaining about Uber’s unfair business practices. Just two months ago, London’s famed school for cab drivers shut down. They blamed Uber for its loss of enrollment and eventual decline.
This month, Yellow Cab Co-Op in San Francisco told shareholders that it would be filing bankruptcy. They blame Uber and Lyft for their financial struggles. Yellow Cab Co-Op president Pamela Martinez noted, “We are in a midst of serious financial setbacks. Some are due to business challenges beyond our control and others are of our own making. Today we are faced with fiscal obligations that far exceed expected income.”
According to Black Enterprise, Uber has 16,000 drivers who serve the San Francisco area and Yellow Cab only has 530 drivers. It is not only the ratio that has upset the taxi service, but the claim that Uber has an unfair advantage since they don’t have to pay all of the fees that cab services have to pay. As a result, the cabs are priced out of business.
In the end, Uber has to do whatever it can to bring in money since they are being sued from every side. The cab companies are suing them, their drivers are suing them, and even their passengers are suing them. Sounds like a good time to lower prices.