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Uber Technologies Inc. has made deals with the taxi industry that it disrupted more than a decade ago, which could bring cabs into the Uber app for some riders as soon as this spring.
Uber Technologies Inc.’s
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partnerships with taxi apps means riders in San Francisco could have access to both ride-hails and taxi rides in the Uber app within the next month and no later than August, while riders in New York City may see the option in the spring. And that may not be all: Uber’s partners in the effort say the approach could spread to other cities in the nation, and Uber executives believe that taxis and Ubers will not exist separately within the next five years, according to the company.
Taxi riders will continue to use their separate apps, but their cars will appear within the Uber app as an option for consumers. In San Francisco, transit regulators on Tuesday approved rules that will allow the Flywheel Technologies and YoTaxi cab-hailing apps to dispatch trips that originate from third parties such as Uber — and to charge fares that will be based on Uber’s rates, not taxi-meter rates. The San Francisco Municipal Transportation Agency in its staff report and resolution said it wants to “reform and modernize taxicab rules.”
The one-year pilot program will allow taxi-hailing apps to offer customers a chance to lock in their fares like they are able to do in an Uber or Lyft Inc.
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ride, the report said.
Uber and its partners characterized the partnerships as a win-win for everyone involved. An Uber spokesman said Wednesday that the deals in the U.S. are part of a global plan that the company has been carrying out for the past several years, including in other countries such as Spain, Colombia and Hong Kong.
“San Francisco taxi drivers will have more access to demand and cities will get fewer empty miles driven, which is a win for drivers, riders and the cities we serve,” said Dennis Cinelli, Uber’s vice president of mobility for the U.S. and Canada, in a statement.
“This will revitalize regular taxi service in a big way,” said Hansu Kim, owner of Flywheel Taxi and the Flywheel app that is used by hundreds of cabs in San Francisco. “It’s going to resurrect the industry.”
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The partnerships could shore up Uber’s driver supply — which was affected by the pandemic, necessitating bonuses for drivers, at least for a while — but it is also sparking concerns among both cabdrivers and Uber drivers who are worried about how their earnings will be affected.
Mark Gruberg, a taxi driver and board member of the San Francisco Taxi Workers Alliance, drives for Green Cab, which uses the Flywheel app, so he expects to be directly impacted. Since taxi drivers listed on the Uber app will have the choice to take rides based on Uber’s rates, not the regulated taxi fares, fares might be higher or lower. He said some cabdrivers might be tempted by possibly higher earnings because Uber offers surge pricing.
“On the other side, it’s hard enough to make a living with taxi fares” if taxi drivers end up having to take lower fares set by Uber, he said.
Gruberg also said a lot of paratransit passengers depend on cabs, and he worried about how the deal might affect them.
“There’s very little detail and clarity about how it’s going to work,” he added.
Chris Sweis, chief executive of Yellow Cab in San Francisco, which uses the YoTaxi app, said “as far as I’m concerned I don’t see anything but upside for drivers. Once they see the value that additional rides will bring to drivers, most will participate.” He added that some drivers “will be staunch opponents of Uber and won’t do it.”
As for Uber drivers, Hector Castellanos said he is somewhat concerned about how the deal would affect ride-hailing drivers like him because he doesn’t think there is enough demand for rides in San Francisco yet.
Yet, he said “I’m OK with the taxis.” Mentioning high gas prices, he added, “I just want protections for drivers. It’s a super struggle right now.”
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Castellanos is one of the plaintiffs in the lawsuit against Proposition 22, the gig industry’s ballot measure that was passed by California voters in 2020 but whose fate is uncertain. Prop. 22, which allows gig companies to circumvent a state law that would require them to treat drivers as employees, was declared unconstitutional last year, but the gig companies are challenging that court decision.
The worker-classification issue as it relates to this development is on the mind of some taxi drivers, Gruberg said. “Another line of thinking out there is that this has to do with employee status and might make it easier for [Uber] to make the argument that they’re not an employer,” he said.
There are similar questions and doubts about Uber’s deal with the taxi industry in New York City. Amos Tamam — chief executive of Curb, one of the participating apps in the Uber deal in New York — told MarketWatch that after the deal was first reported last month, his company received “panicked calls from Curb consumers, asking if we’re going to do surge pricing.”
But he said “nothing will change” and that the deal is “just an additional source of ride demand for taxi drivers. We wouldn’t have done this type of partnership if we didn’t think this would strengthen position and income of our clients, the taxis.”
Curb calls itself the biggest taxi app in the nation, with more than 100,000 drivers connected to its network. Tamam also said there was a possibility for “enhancing other markets.”
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Like in San Francisco, though, Uber drivers, taxi drivers and the taxi drivers union in New York City are worried. Charlie Khalil, a custodian who has been driving for Uber in New York for four years, said he thinks having to compete with cabdrivers for trips will affect his ability to drive for Uber part time. He usually drives about five hours after 4 p.m. on weekdays, then as much as he can on weekends.
“This is how I make ends meet,” he said. “[If I lose] a lot of my pickups to cabdrivers, I don’t know if I’m gonna be able to do it.”
He said depending on what happens to his Uber earnings after the changes roll out, he might have to look for a different part-time job. Or he might look into getting a taxi license.
But taxi drivers have their own concerns. Bhairavi Desai, executive director of the New York Taxi Workers Alliance, told MarketWatch that according to the proposed rates under the deal, cab “drivers will be paid at rates below the taxi meter, which has not been increased in 10 years.”
She said the union — which was not “at the table” when Uber struck the deal — will be urging Uber, Curb and Arro, which is made by Creative Mobile Technologies, to raise the proposed rates. The union will also be asking the Taxi and Limousine Commission, which sets ride-hailing and taxi fares, to help.
“There’s a lot of suspicion about what’s Uber really up to,” Desai said. “Uber is doing this not as a charitable act for the cab industry. They’re doing it to fill up holes in a business model that doesn’t turn a profit.”
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The company, which was founded in 2009, posted a profit one year under generally accepted accounting principles after selling its ride-hailing businesses in Russia and Southeast Asia to competitors, and quarterly profit a couple of times from gains in its investments. In the third and fourth quarters last year, it posted positive Ebitda, or earnings before interest, taxes, depreciation and amortization.
