Ride price inflation continues in Uber and Lyft

Want a bargain ride? Please call a taxi. Rideshare pricing may not be as accessible as it used to be.

For US consumers, Uber and Lyft vehicles were notoriously expensive in most pandemics. Ride service companies attribute much of the additional cost to a shortage of drivers, and recently made a big and costly push to solve it. However, even with improved driver supply, prices have not yet returned to pre-pandemic levels. They may not get there.

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Citing data published in Chicago, rideshare fares in Chicago rose nearly 50% per mile from 2019 levels, according to a survey note released last week by Gordon Haskett Research Advisors. The data show that prices have risen steadily since November as the amount of rideshare has improved. According to analyst Robert Molins, calling a taxi in Chicago has recently been cheaper per mile than calling a uber or lift. This is the “opposite of historical norms”. Back in January 2020, traveling by taxi was nearly 50% more expensive than using a stand-alone ride-sharing service around Windy City.

According to Edison Trends data, Chicago is just one part of the pie, accounting for only 5% of all US rideshare spending as of August. However, New York accounts for 23%, and trends there suggest that Chicago is not a complete anomaly. Data from the New York City Taxi and Limousine Commission show that taxis are regaining market share.

The driver is slowly returning. According to New York data, the number of unique ride-sharing drivers fell 29% from 2019 levels in August, but was slightly better than last month and significantly improved from 45% in January and February, Gordon Haskett. Mr. says.

Still, costs are still rising. According to YipitData, Uber and Lyft average fare is nearly 39% higher than New York City’s average taxi fare in August, and as of mid-September, Uber and Lyft fare per ride has risen monthly since the previous month. increase. As of two weeks ago, prices per mile driven by Uber and Lyft across the United States were up 26% compared to 2019 and 17% compared to January, according to YipitData.

Price increases may continue in part to keep the driver on the platform. Uber and Lyft wouldn’t want to motivate drivers forever from their pockets if sustainable profits are their goal. In September, Uber CEO Dara Khosrowshahi said at an investor meeting that rising consumer prices weren’t the take rate, or adjusted net revenue divided by bookings, and drivers gained fair maintenance. Said to do. As recently seen in the UK, the situation in the US could be exacerbated by future gig economy regulations, requiring higher wages and potentially even driver employee status.

It’s clear that Uber and Lyft are hoping that prices will be eased as driver supplies meet rider demand, but the exact degree is still uncertain. At the same investor conference, Uber’s Khosrowshahi pointed out that the pricing power of his company’s Rides business has always been assumed, but is now “certainly shown.” To that end, Uber also said it is actively developing alternative services for “people who want a cheaper way to travel.”

Given that some consumers are still wary of public transport alternatives, pricing power could simply be a pandemic feature. However, there is evidence that higher pricing may continue in the post-Covid-19 world. YipitData shows that in September, the amount of rideshare increased with pricing per mile in New York and across the country.

Gordon Haskett’s Mr. Mollins suggests that the recent increase in taxi use in some cities may be related to excessive waiting times rather than ride-sharing pricing. He says most people find the ride-sharing service a better experience than taking a taxi, suggesting that a taxi could be at a disadvantage again when the ride-sharing supply returns. doing. Although taxis have regained market share this year, according to New York City data, carpooling companies still own most of the hire car market.

Uber and Lyft have a reason to keep prices high as long as demand continues to improve. Rideshare companies can make a profit without having to put extra cash directly in their pockets. The more price increases passed to drivers, the less Uber and Lyft need to make their own money to motivate them to work.

At the end of the day, why do you charge less when you can get more?

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Ride price inflation continues in Uber and Lyft

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