Uber Temporarily Cutting NYC Prices to Compete With Yellow Cabs

By | July 9, 2014

Uber Technologies says it is temporarily cutting its prices in New York City with the aim of making its service cheaper than an average taxi ride, the car service app announced Monday.

The San Francisco start-up said it is reducing fares by 20 percent for its UberX service, which allows smartphone users to hire drivers of livery cars. It does not apply to customers using the app to e-hail a yellow cab.

“We’re starting it as an experiment,” but if it works, it will continue, said Uber New York City general manager Josh Mohrer.

He said that Uber offers itself as a highly reliable way to get a lift, and “we also want to be the most affordable.”

But he insisted the app-car service isn’t out to eviscerate the city’s yellow-cab industry.

“It’s not that we’re trying to crush anybody,” he said.

Drivers are paid per-fare, getting 80 percent of the total, so a lower fare means a lower take for each fare, but the company believes that the price cut will bring in more business and that drivers will come out even in the end, Mohrer said.

It wasn’t clear how Uber’s “surge pricing” scheme would compete with taxi fares. The controversial strategy increases the price of rides as demand increases. Uber faced criticism when it instituted surge pricing in the aftermath of Superstorm Sandy.

Mohrer said customers are charged the basic price more than 90 percent of the time.

The Taxi and Limousine Commission, which regulates yellow cabs, said it is “committed to maintaining high standards for safety and consumer protection.”

“As long as services meet those standards, the consumer can choose which service best serves their needs, whether that’s based on price, vehicle type, base location, or something else entirely,” Taxi and Limousine Commission Chair Meera Joshi said.

Bhairavi Desai, executive director of the Taxi Workers Alliance, which represents yellow-cab drivers, worried the price cut could mean less income for its drivers, adding that some of the group’s members have quit driving yellow cabs to drive Uber cars.

“People already don’t make very much,” Desai said.

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