Home » Blog » A New and Innovative Alternative to Traditional Taxi Service

A New and Innovative Alternative to Traditional Taxi Service

Five years ago, Uber was a start-up technology company beta-testing its ‘Uber mobile app’ in its home city of San Francisco.  The basic idea was to match smartphone users with drivers: press a button on your mobile phone, order “a drive”, track its approach—usually relatively quickly—and pay automatic credit card deduction.

A year later, Uber launched officially in San Francisco, and then, starting in May 2011, expanded every month thereafter into a new US city.  Overseas expansion followed rapidly. By May 2015, Uber was operating in 300 cities in 58 countries, had fundraised $44.5 million and, in attempting to raise $1.5 billion, been valued, albeit unofficially at $50 billion.

But it hasn’t all been ‘smooth sailing’.  Indeed, if the world could be united in one thing, ‘stopping Uber’ might be the mission.  Taxi companies, taxi drivers, and local government leaders and activists have taken to the streets and the courts on every continent saying Uber competes unfairly, doesn’t pay licensing fees or business taxes, and endangers passengers by using untrained, unlicensed and uninsured drivers perpetually distracted by incoming smartphone calls for business.

In the midst of this ongoing challenge, however, a study by two business professors at Philadelphia’s Temple University—Brad Greenwood and Sunil Wattal—has quietly offered Uber safety credits for reducing impaired driving fatalities in California cities where the service is offered.  Based on data from 2009 to 2014, the study suggests that the availability of UberX—the low-cost Uber’—decreased impaired driving fatalities by 3.6% to 5.6%.  Speculation is that because Uber is often cheaper and more easily and promptly accessible than regular taxi services, more people are calling Uber for their drive home after consuming alcohol.

The Greenwood/Wattal study also shows that Uber’s surge pricing model, which generally increases prices on weekends, has resulted in no decrease in weekend impaired driving fatality rates.  (Uber has a patent pending on an algorithm that during times of increased rider demand increases prices to ‘surge’ levels to attract more drivers and also to reduce demand.).  Extrapolated nationally, these tentative study results hold the potential for support Uber-like services to save 500 lives every year from the continuing serious impact of impaired driving, currently suggested by some studies at 13,000 fatalities per year in the US.

Critics like Carolyn Bauer, the head of the Vancouver Taxi Association point to the 54 percent drop in impaired driving fatalities from 2010 to 2014 resulting from tougher penalties and better enforcement, and not from Uber availability,  Vancouver (along with Calgary) thus far having successfully resisted Uber.  Ms. Bauer was quoted as saying, “[Taxi drivers across Canada] pay their dues here and insurance is not cheap, so is it fair for someone to come and not be on a level playing field?”

Professor Mark Wexler of Simon Fraser University also downplays this finding, reportedly saying that the inevitable increased regulation of Uber will likely reduce its breakout pricing and service level advantages: “Any time that you flood the market with a new idea, it’s just a matter of time until the old problem present itself.”  Well, we will see.

Back to Road Rules

Leave a Reply

Your email address will not be published.