NEW YORK – Uber Technologies, the car- sharing service that lets people order transportation via a smartphone, is temporarily cutting fares on its taxi-like option to step up competition with New York City cab services.
The San Francisco-based startup reduced fares by 20 percent in New York for its UberX service, making it cheaper than a city taxi, the company said Monday on its website. The lower prices will be in place for an unspecified limited time.
Uber is using the slower summer months to experiment with lower fares to compete with traditional yellow cabs, Josh Mohrer, Uber’s general manager for New York, said. While there have been price cuts on UberX services in other cities, this is the first in New York. The company will assess its success at the end of the summer. If more people are using the service, then pricing will stay at the new lower level, said Mohrer.
“New York is Uber’s biggest market, and we’re growing fast, but we always hear, ‘I like Uber, it’s convenient but a taxi is still the best deal,’” Mohrer said. “It’s always been a goal of ours to be cheaper than taxis.”
UberX is the lowest-priced service offered by the company, which provides a range of vehicles from town cars to limousines. UberX’s service in New York isn’t a ride-sharing program like in other U.S. locations. Drivers in NYC have a taxi license and follow a more traditional commercial model. Over the July 4th weekend, Uber also provided helicopter service to the Hamptons from New York city for $2,500 for five people, Mohrer said.
Unlike taxis’ fixed fares, Uber’s fares change depending on demand. When supply is high, Uber can cost half as much a regular taxi or black car service, while when demand peaks Uber’s pricing can be twice as much.
The startup said an UberX ride from New York’s Grand Central to the Financial District would cost $22 under the new fares, compared with $24 for a city taxi. Uber will keep 20 percent commission for each ride, and drivers will make less per trip, though should see more riders in a day, Mohrer said. In all other cities where Uber has initiated price cuts for UberX, trips per hour have increased, Mohrer said.
A man who answered the media hotline at the New York City Taxi &Limousine Commission and declined to identify himself said it had no comment on the price cut.
Uber, which last month raised $1.2 billion at a valuation of about $17 billion, has faced regulatory hurdles around safety concerns and protests by taxi drivers’ lobbies in the U.S. and abroad. Traditional cab drivers worldwide say they are bound by rules that don’t apply to Uber’s smartphone-based service, putting them at a disadvantage.
While protests by taxi drivers who feel their business threatened by Uber have occurred all over Europe, New York has been a relatively friendly market. The company doesn’t anticipate any uprisings due to the UberX price cut, Mohrer said.
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