Uber Disrupts Taxi Establishment

Have you ever been uncomfortable riding in a cab in a large city wondering if you are being ripped off? I travel a lot, and I rent cars whenever feasible, which is most of the time. My only exception is when I am going to be staying in a downtown hotel where parking a car costs an extra $25 a night and where I don’t really need one. I don’t like cabs, and I always feel I am better off renting.

There are several Internet-based services now that are intruding on space that taxis have held for almost a century. Uber is one such commercial “car service” that is threatening to transform the rigged urban transportation system. Lyft.me allows you to find a “friend” with a car to give you a ride, so it’s more of a personal service, but it still takes away business from cabs.

To use either service you download an app, which you use to locate nearby drivers, you summon them, and you pay the calculated fare online. It’s fast, it’s efficient, it’s safe and you don’t pay a middleman. Since all users, drivers as well as customers, are registered, it’s actually much safer. While I don’t have statistics or evidence of  this, it would seem to me that it’s less likely that you pick up a serial killer when your fares have to be registered, including payment information, and when the time and location of the pickup is memorialized in a database.

Of course, none of the syndicated cab services in the big cities like these companies. They are clearly taking away their business.

You need a “medallion” to drive a cab in most cities. Medallions are scarce, regulated and difficult to get. There are only 13,150 in New York City and they cost $1 million to get. Yes, if you want to operate a taxi in New York City, you must buy a taxi and you must obtain a medallion. So unless you have a way to get or finance $1 million cash you cannot drive a taxi in New York.

Somebody is skimming a lot of money off the taxi business, and it’s not the Bulgarian driver. I am using Bulgarian because I honestly cannot remember ever having an average American taxi driver. They all appear to be immigrants.

Uber faces a legal and regulatory battle in every city it enters, and they think of it as part of getting business done. The established cab companies are fighting back.

But I believe that resistance is futile. Consumers like the convenience of app-driven hailing of cars, the safety of a registered driver and a recorded pickup time and place, and the fairness of a consistent, market-driven fare that is not rigged. And consumers love to cut out the middleman.

Sorry, cabbies, a century of dominance is enough. Make room for the entrepreneurs.

One thought on “Uber Disrupts Taxi Establishment

Leave a Reply