By on July 7, 2014

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An interesting development in the ongoing Uber vs. Taxi battle – an UberX now costs less than a standard yellow cab ride in the five boroughs.

As part of a promotion, Uber is dropping fares on their UberX (privately driven car) service so that it undercuts the equivalent trip on a New York yellow cab. New York’s Taxi and Limosuine Commission and Uber have a long, fairly acrimonious history, but this latest move has even broader consequences.

As Zero Hedge shows, the price of a New York City taxi medallion has skyrocketed in recent years – and you can bet that the parties who have invested in these medallions will be pushing back fiercely against Uber’s latest price cut.

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21 Comments on “Uber Drops NYC Prices Below Yellow Cab Fares...”


  • avatar
    CapVandal

    Given the price of medallions, New York is underserved by Taxis. They also have demand based pricing — a huge advantage when you need a Taxi and it is raining.

    I’m betting on the public that depend on Taxis over the medallion owners. There is a concentration of owners, so it isn’t that many people. Taxis can also use Uber. More or less.

    In Chicago, car services are frequently cheaper than Taxis — like to Ohare. It’s not like there has never been any competition before. In NY, I understand sedan service is a standard perk for higher level executives.

    • 0 avatar
      DrGastro997

      Very true. Going to Chicago’s O’hare will cost you $50+ from the northwest suburbs. Private hire is no more than $40+. Private hires are becoming very popular here in Chicago.

  • avatar
    schmitt trigger

    If only the MTA would lower the Subway fare…..
    Speaking of which, how is the 2nd Avenue line coming along?

  • avatar
    cartunez

    Funny how competition works.

    • 0 avatar
      stottpie

      Completely unsurprising how unregulated services can price cheaper than identical services that require regulation and local government.

      If you call that competition, you’re Funny.

      • 0 avatar
        VoGo

        Uber’s economic advantage lies in:

        1. a smart use of technology that matches supply and demand in real time.

        2. customer selection: Uber smart phone users are less likely to rob or stiff cabbies and have a mp on their phone, so are less likely to get ripped off by cabbies taking the long route.

        3. no medallion: Yellow cabs in NYC need a medallion, which can cost millions (requiring a return on that capital) and limit supply.

        • 0 avatar
          ixim

          1. True.
          2. Anecdotal or fact- based?
          3. The medallion allows street hails.
          Medallion prices track the NYC economy and are a proxy for the health of the taxi business. Uber is grabbing the low-hanging fruit, as are the green outer-borough cabs. So long as there are plenty of fares, all three services should do fine. The next downturn will determine the winner.

          • 0 avatar
            Pch101

            Medallion values have been driven by the fact that it has been illegal to drive a cab without one.

            In that sense, Uber is truly a disruptive technology. If the trend continues, then the price of a medallion should plummet because the lack of one will no longer be a barrier to entry into the cab business.

      • 0 avatar
        carguy

        “Completely unsurprising how unregulated services can price cheaper than identical services that require regulation and local government.”

        What he means is that when you have a continuous service improvement program driven by healthy competition, the results tends to be better than if you have a system where there is no competition and no incentive to improve the service to your customers. While Uber exists, I will certainly never sit in another old, dirty, smelly Crown Vic giving directions while the driver is on the phone.

        Note how the cleanliness and driver courtesy have nothing to do with regulation – its just terrible I-don’t-give-a-f@#k service brought about by a licensing systems that forbids competition.

        • 0 avatar
          cartunez

          Well stated carguy.

        • 0 avatar
          Steve65

          “Note how the cleanliness and driver courtesy have nothing to do with regulation – its just terrible I-don’t-give-a-f@#k service brought about by a licensing systems that forbids competition.”

          Um… you say it has nothing to do with regulation, and then go on to explain it as a direct result of regulation.

          Pick one.

        • 0 avatar
          Xeranar

          Except that the argument of ‘regulation = negative loss or stagnation’ is at best correlation but then if you look at other high-Taxi cities the quality isn’t as big an issue. The arguable problem with the limitation of medallions is that investment firms buy them at obscene rates and feed off the value of them as parasites which create a devalued position where only those who have no say in their relationship to the job are the ones taking it.

          In other words: All Uber is doing is inviting jitneys through the back door while Medallions are street hail-able. If you dislike the way the Medallion system is ran by limiting possible drivers, then a direct ownership system should be advocated for instead of simply using a technological cheat to game the system. Perhaps even changing the taxi fleet into a TLC owned system where they become government employees and the huge auctions simply end and the fares are treated more equitably as the TLC could easily maintain the fleet.

  • avatar
    jpolicke

    And you’ll still pay extra for the Rosetta Stone course so you know how to swear in Urdu.

  • avatar
    MLS

    UberX has long been cheaper than yellow taxis in other markets like Boston. Uber recently rolled out additional temporary UberX price cuts across the country in an effort to drive smaller rival Lyft out of business, and this promotion finally pushed NYC UberX prices below that of yellow cabs.

    • 0 avatar
      matador

      Uber needs to offer mustache rides like Lyft.

      Or, cheap fares. Cheap fares make people change. If their cost stays below the Yellow Cab, Uber will likely be looked at by a lot of new, prospective customers.

    • 0 avatar

      I tried Uber a few times now in New Orleans and Ft Lauderdale. Both times I tried There was a long wait for the car and the wanted almost twice what the cab costs. Not sure why but they haven’t quite got it figured out in all markets yet.

  • avatar
    TomHend

    De Blasio (or whatever his real name is) will not stand for competition in NYC, a better deal for the consumer? not on his watch.

  • avatar
    the passenger

    As MLS notes above, this price drop occurred last year in Boston. A 7-mile ride from downtown Boston to my home cost $21 plus tip via cab before I started using Uber; the exact same trip via UberX was $14 including tip. I will add, however, that of the seven or eight Uber rides I have had in the past year, it was the least comfortable (a BMW E90 3-series sedan).

    The ride experience with UberX is so much more pleasant than a cab ride. With the lower cost and convenience of using the app, it’s an easy decision.

  • avatar
    the_yeti

    Here is the email I received in San Francisco:

    “We just dropped uberX fares by 25%, making it 45% cheaper than a taxi. In San Francisco, the East Bay, San Jose and everywhere in between, uberX is the most affordable ride on the road.

    https://flic.kr/p/ofap27

    The picture shows their sample fares.

  • avatar
    HerrKaLeun

    I didn’t know Uber was more expensive in the beginning. I thought being cheaper was the point.

  • avatar
    the_yeti

    Uber = Black car, typically owned by a car service and registered with a TCP number. Expensive.
    UberX = some random dude in a Corolla or Prius driving you around for peanuts.

    Neither are about low fares, the first is about exclusivity, the second is about crushing taxis, so the can raise fares in the future.


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