On Thursday, Uber Technologies Inc announced that it will list New York’s Yellow Cab taxis on its ride-sharing app. This is a move that signals the company’s expansion into the taxi market.
The decision also hopes to address Uber’s current driver shortage in its biggest US market.
Taxi Industry Worth $120 Billion To Join Uber
During its investor day last February, Uber outlined taxis as a major growth proposal. The company called the taxi industry a highly-fragmented but lucrative sector worth $120 billion. Taxis, with their 20 million active vehicles, outnumber Uber vehicles five to one.
Specifically, Uber said it plans to include all taxis on its Uber app by 2025. Last year, the company added 122,000 new taxis to its platform.
Given the struggles to secure and retain gig drivers during the pandemic, the new taxis added 3% to its workforce.
Yellow Cab Taxis to Join Uber App
With their deal with New York Yellow Cab taxis, Uber adds a potential 13,600 vehicles to the Uber app. This is assuming that all of New York City’s registered Yellow Cab taxis will participate.
The potential attracted the interest of investors early Thursday. Stock prices went up 6% but settled back down to close 1.7% higher than the previous day.
The deal involves Uber collaborating with taxi software companies Creative Mobile Technologies and Curb. Eventually, the plan is to expand this partnership nationwide.
The difference lies in how drivers get paid. Passengers will still pay roughly the same rates as hailing an Uber X ride.
However, Yellow Cab taxi drivers will get paid according to the city’s ride-hail wage standards. On average, this is higher-paying than metered rates.
The War Between Uber and Yellow Cab Taxis Ends
Prior to the agreement, New York City became a disputed area between yellow cab taxi drivers and Uber rideshares. Taxi drivers opposed Uber for eating into their earnings.
Meanwhile, Uber said that integrating with taxis can lead to a mutually profitable arrangement.
The company said it already merged with taxis in many countries including Spain, Germany, Austria, Turkey, South Korea, Hong Kong, and Colombia. In fact, 35% of Uber users that ordered a taxi eventually used its other ride sharing offers.
Andrew Macdonald, Uber’s senior vice president of mobility, said that the market is big enough to accommodate everybody. “When we look at the next five years, we just don’t see a world in which taxis and Uber exist separately. There’s too much to gain for both sides.”
Win For Drivers and For Passengers
Guy Peterson, Uber’s director of business development, said in a statement that everybody wins in this deal. “This is a real win for drivers – no longer do they have to worry about finding a fare during off-peak times,” he said. “And this is a real win for riders.”
The official merging of Uber and New York Yellow cab taxis will begin this summer. Uber app users will now have access to the thousands of New York taxis.
Meanwhile, taxi drivers will now receive Uber-originated fares on their monitors.
Watch the Yahoo Finance news video reporting that the Uber app now shows all NYC yellow cab taxis:
Do you support the merging of Uber and New York Yellow Cab taxis to provide ride services in the city? In addition, do you agree that it’s a win-win situation for both parties?
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