Uber Disrupting NYC Taxis

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Here’s something you probably knew: Uber is not good for the yellow cab business. Here’s something you might not have known: how bad it actually is for it.

There are people who love Uber, in fact so many that it has caused one cab company to lose 50% of its business.

To have a taxi in NYC you need a medallion. The companies that lease and sell medallions have been able to sell them for upwards of $1 million dollars in the past.

As people switch to services such as Uber, the companies that give medallions have seen demand for traditional taxis plummet.

Private companies own the taxis and the ability to use the taxi to pick people up in the city is controlled by the Taxi and Limousine Commission (TLC) in New York City. The TLC sets regulations for the taxis. This impacts the amount they can charge a customer. Uber on the other hand doesn’t have these restrictions and has more control over its prices.

By cutting out the cost of medallions, vehicles, and regulations, Uber is saving a lot of money and this saving can be passed on to the customer through lower prices. Or it can be used for higher profit margins in the company.

The decrease in traditional taxi riders, to the tune of 3.83 million between April and June of this year compared to last year has lead some companies into bankruptcy and lead to companies being unable to pay back loans for taxis.

Now some of these companies are taking this issue to court and they are suing New York City over it.

While things like Uber are good for us, they’re completely changing the game in ways we might not even realize.

Unfortunately, it seems that with any disruptive innovation, some people will benefit and others, well, you know…

 

http://mobile.reuters.com/article/idUSKCN0T700J20151118

https://www.google.com/?gws_rd=ssl#q=what+is+a+taxi+medallion

http://arstechnica.com/tech-policy/2015/11/cab-medallion-owners-sue-nyc-blame-uber-for-ruining-business/

10 thoughts on “Uber Disrupting NYC Taxis

  1. I believe that the taxi business is dying because of Uber. It is very interesting to think about this now because the convenience and cost of companies like Uber who have no inventory are starting to take over many different industries. One example of this is AirBnb which has a similar business strategy in where people can put up their own houses for rent through the AirBnb website. This is mostly cheaper and easier than going to a hotel and is starting too cut into hotel business. I think that we need to start to realize that the world around us is changing and that we need to embrace these changes even though we might not like them at first.

  2. Personally I do not see the issue with Uber and the taxi business. Plenty of companies offer similar products and services for different prices. Never before has it been such a big issue that 2 companies or services cannot compete. While I can see that this is not good for the taxi businesses, I believe that Uber did what was best for consumers by finding a way to charge lower prices for the same service. Uber has also been very beneficial for the job markets because it allows people to work their own hours at their own convenience. Also, with things like driver an user ratings, both sides are able to feel safe and more confident about who they are getting in the car with. Uber overall has been exceeding expectations of normal taxi services in a way that makes users more comfortable and drivers more able to work their own schedules. I give my kudos to Uber for fixing the issues consumers had with the taxi business and I look forward to seeing them grow.

  3. I tend to agree with points made by both sides of the argument. Hitchhiking in itself is illegal and there are laws to protect against it. However, because you register an account with Uber, its not as if you are picking up a complete stranger, there are few pieces of background information on the person you are picking up. Uber is great for those that want to use it, however if Uber is going to have multiple drivers in a high traffic area such as New York, they should have to comply with any standards that have been set for taxi companies in that particular area, that way Uber does not have any advantage in the market.

  4. Companies like Uber are the future. Companies like cab companies will either change their business models drastically or be killed be cheaper, more efficient companies like Uber. Unless Uber starts to get regulated more they will continue to grow and heavily challenge standard taxi companies for business. The decline in use of taxis as shown in OP’s post is rather astonishing and just goes to prove that the world is changing fast and only the fittest will survive.

  5. I will just come right out and say it, Uber is a blessing. I want to start here, in State College. Having Uber just in State College is such a benefit. It is easy and affordable. Unlike with taxi drivers, with an Uber driver you can view their profile on the app and see what they are rated. You get to know your driver before they pick you up!

    Now, moving on to the problem at hand here, taxi’s in NYC. Yes, the taxi business is dying and pretty quickly too. Uber has changed the game and will continue to change the game (that is as long as it is deemed “legal” and okay by NYC, which I believe is total B.S.). Not only is Uber saving money, but so are the riders. Taxi’s in NYC are not that cheap, and if I can save an extra buck or two by calling an Uber, than I am all for it! (Nothing in New York City is cheap).

    Do I feel bad for the taxi businesses that are losing money and approaching bankruptcy? I wish I could say yes, but to be honest with you, I do not care. All I care about is getting from point A to point B quickly, safely, and cheaply. So in the end I do not wish for Uber to be “illegal” in NYC like selfie sticks and those new “hover boards.” What I do wish for is a way to travel around the city for less money.

  6. In my opinion, this is a great example of the free market at work. The popularity of Uber has exploded, and it has sent the taxi industry into a tailspin. I personally think the lawsuits against New York City are completely unwarranted. Now is the time for taxi companies to step in, not the government. Taxi companies should use the growing popularity of Uber as a spark to be innovative and change their business model in order to compete. In a free market, that is what these companies must do in order to survive. It will be interesting to see what some of these big cities do with the situation, however. For example, certain mayors of big cities have already expressed their distaste for Uber and corporations alike. Nevertheless, it is certainly an intriguing debate.

  7. My father owns a limo taxi business himself. He has to file for permits every year, do background checks for all employees, have insurance for his cars.. anything you can think of he has to file and report to the city, state, and government. Taxis need to have a minimum charge for many factors therefore their prices can’t easily fluctuate to meet consumer demand. My father luckily works within my small town, drives kids to school, and customers to the airport so he has not been affected by Uber as much as others have. On one hand, Uber is able to drive prices down because drivers charge their own price. On the other hand, they also take advantage of their own pricing service and may actually charge more for convenience and other personal reasons. People are willing to pay those prices because they are quicker. I do not think taxi’s will go out of business but they do need to restrategize their business models and appeal to the customers.

  8. This is a good example of business darwinism. One cannot expect that a business lasts forever. When a better model and implementation is available the customers will switch to that new one without looking back. It is just the way things are. If the taxi companies don’t want to go out of business, they need to change something about their business model to address why they are losing popularity to Uber now. If not it will only end badly just like how companies like Netflix caused the downfall and eventual bankruptcy of Blockbuster. Especially in such a commercial as New York City, it should be realized that only the best will survive, and those who can’t keep up will be left in the dust. For all we know, the same popularity decrease with taxis may happen to Uber in the future if someone comes with an even better business that caters to customers in a better way.

  9. According to most Millennials, Uber is in and taxi’s are out. The taxi business is still a generally popular are – for now. As mentioned in the blog post, the drop in the usage of taxi’s is mind boggling. Soon the taxi business might be out of business; this can be taken back to the rule of supply and demand or just the fact that the times are changing. If the demand for taxi’s dwindles, then amount of taxi’s are going to dwindle too. The amount of taxi drivers went down from 233,000 in 2000 to 178,260 in 2014. And this was before Uber really took off.
    The widespread usage of Uber means many taxi drivers are going to eventually be unemployed. This is probably the most negative side effect of Uber taking over. However because I believe in the free market and that in the long run this is what is best, I don’t think that the government should intervene in this situation.

  10. This all boils down to one thing. How the law was worded. Some people may take it that it means that specifically. But in my opinion, it is describing a service that can pick up unfamiliar passengers. There are laws that prevent hitchhikers because of deaths and crime related to it. In response the government regulated the industry. The regulation allows gives them background checks and other information that people have requested. Allowing uber to operate in the industry that the law would (and should based on its meaning) regulate. A true capitalist might argue that they should allow the free market to take over. But if the law was made it should be undone due to its usefulness.

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