Uber partners with yellow taxi companies in New York

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When Uber arrived in New York in 2011, yellow cabs ruled the streets and drivers paid $1 million for the coveted taxi medallions that gave them the right to pick up passengers.

Undeterred, Uber has worked tirelessly to attract riders, ridiculing the taxi industry as inefficient, corrupt, greedy and even a “cartel”. The taxi industry, in turn, accused the company of bringing economic ruin to its drivers.

Now the once bitter rivals, who fought for years for control of the city’s streets, are forging an unlikely alliance: Uber will partner with two taxi companies, Curb and CMT, to allow New Yorkers to order a yellow cab on the Uber app, the companies said Thursday.

The announcement – the first large-scale deal of its kind in the United States – comes at a time when passengers are increasingly adopting apps to order both Ubers and taxis. Businesses are struggling to recover from a pandemic that has hit the ride-sharing industry as people have worked from home and tourists have stayed away.

“On the one hand, Uber and the yellow cab are completely like water and oil,” said Bruce Schaller, a former city transportation official. “On the other hand, when you go to hail a taxi or go on your smartphone to take an Uber, it will be the same experience as before. So it’s kind of like a big change and the same thing all of a sudden .

Starting this spring, passengers will be able to open the Uber app and choose a taxi. Uber will then forward the request to the two taxi technology companies, which will notify the drivers to pick up the passengers. The fare will be based on Uber’s prices and policies, including surge pricing, which can significantly increase the cost during peak hours.

The app will display an upfront price, as with all Uber rides, before the rider requests the ride. Passengers will pay roughly the same price for a yellow cab as for a standard individual Uber ride, known as UberX, the company said.

Yellow cab drivers who answer calls from the Uber app will also see the price of a ride in advance and, as part of the deal, have the option to accept or reject it. Under city regulations, ehail taxis—unlike street taxis—have the right to withhold fares.

Although Uber has clashed with taxi groups for years as it tries to capture markets around the world, it has found that partnering with taxi companies instead of fighting them can boost 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 be the case in New York.

These deals, combined with the New York partnership, “would seem to reflect a new page or a new position in Uber’s drive to work more closely with the industry it once tried to disrupt,” said analyst Tom White. main search. with the financial firm DA Davidson.

Being “a little friendlier” to taxi companies could help Uber “indulge itself and soften Uber’s relationship with lawmakers and policymakers” in those cities, he added.

Uber said it integrated with more than 2,500 taxis in Spain, partnered with taxi service TaxExpress in Colombia, acquired local app HK Taxi in Hong Kong last year, started a partnership with SK Telecom in South Korea and had also worked with taxis in other countries including Germany, Austria and Turkey.

Uber’s new partnership with the taxi industry in New York, which was first reported by the Wall Street Journal, will generate more revenue for the company as it collects fees on every ride ordered through its application.

At Uber’s Investor Day in February, Andrew Macdonald, Uber’s senior vice president of mobility and business operations, said the company wants every taxi in the world to be on its platform. here 2025.

Mr Macdonald said adding taxis was all about the money: when Uber offers more modes of transport, the company has found, customers often use more than one of these methods, “spend more and are more loyal”. .

Muhammad Rahman, 37, who drove a taxi in New York for eight years, said he hoped an Uber connection would bring more fares to neighborhoods where street hail is rare. “Uber customers are everywhere,” he said.

But another taxi driver, Helmer Monroy, 67, was more skeptical. “I don’t think Uber is going to help the yellow cab industry,” he said. “They didn’t destroy the industry, but they damaged it.”

Antonio Cruz, 50, a Brooklyn resident who drives for Uber two days a week, said he fears the new Uber-taxi partnership will mean more competition from yellow cabs, especially on days when he works in Manhattan. “We could lose business,” he said.

Before the pandemic, New York taxi drivers were losing fares to ride-app services from Uber and Lyft and facing financial ruin after taking out loans to buy medallions at inflated prices.

Uber has faced its own challenges during the pandemic. At first, with demand for rides plummeting and drivers worried about contracting the coronavirus, many left the platform.

As the U.S. economy rebounded and cities eased restrictions, customers returned but found drivers hadn’t returned in numbers, resulting in dramatically higher fares and long wait times. waiting for rides.

Last year, both companies acknowledged they were struggling to attract enough drivers to meet demand, but more recently said the problem was easing. Uber said the number of drivers on its platform was at its highest level since February 2020.

Still, many drivers remain unhappy with the money they’re making, and some have said they’ve been driving less or not at all since high gas prices started eating away at their income. The addition of thousands of taxi drivers could help compensate for the departures of other drivers.

New York’s new Uber-taxi partnership did not require approval from the city’s Taxi and Limousine Commission, which oversees taxis and rental vehicles, including Ubers, officials said. town.

“We are always interested in innovative tools that can expand economic opportunities for taxi drivers,” said the agency’s acting commissioner, Ryan Wanttaja. “We’re excited about any proposal to more easily connect passengers to taxis and look forward to learning more about this deal between Uber and taxi apps and making sure it complies with TLC rules.”

New Yorkers will still be able to wave to yellow cabs on the street or order them through two taxi apps, Curb and Arro, which offer upfront prices like Uber rides.

The city’s 13,587 yellow cabs are equipped with technology systems from Curb or Creative Mobile Technologies, which operates the Arro app.

Curb, which has more than two million users in New York, has seen a surge in demand over the past year of the pandemic. Average daily trips for individual consumers soared to more than 15,000 trips citywide, from around 2,000 trips in 2019, according to Amos Tamam, chief executive of Curb.

“Taxis have returned to the consumer radar,” Tamam said, adding that the partnership with Uber could result in a “substantial increase” in rides for taxi drivers.

When a passenger requests a yellow taxi through the Uber app, both Uber and the taxi company will receive charges for the rides. Taxi drivers will continue to be paid through the Curb and CMT systems.

It’s hard to say how the deal will affect passengers and drivers, in part because trip costs and driver payments are controlled by algorithms that vary by app, duration and distance. of a journey, the time at which passengers request cars and others the factors.

In some cases, passengers may pay more for a taxi they order through the Uber app than for one they hail on the street, but not always. Likewise, drivers may sometimes, but not always, receive more for a metered ride than one ordered through the Uber app. Uber said it will provide more details on the taxi option in the coming months.

Bhairavi Desai, leader of the Taxi Workers Alliance, a group that represents taxi drivers, said she believes drivers accepting rides from the Uber app will earn less than if they pick someone up from the street and took him to the same place.

She urged drivers to negotiate better rates with Uber, noting the deal came “at a time when businesses need this deal more than drivers” because Uber is “hemorrhaging drivers.”

“We will take this opportunity to negotiate suitable conditions for the drivers,” she said.

Others were more optimistic.

Mr Schaller said that if the new system is implemented correctly, in accordance with current regulations, it should benefit both drivers and customers.

“I always thought there would eventually be a convergence of yellow cabs and ride-hailing apps, Schaller added, but I wouldn’t have predicted 2022 if you asked me in 2019.”

Brian Rosenthal contributed reporting.

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