Forbes has a great piece on the escalating war between Uber and Lyft, two of the leading companies disrupting the taxi market. It’s a two-front war. On the recruitment front, the companies are offering more and more generous bonuses to drivers. At the same time, they’re in a price war trying to attract customers in major cities.
Uber’s feud with Lyft is great for customers
“To reel in users, companies make rides cheaper and cheaper, which angers drivers,” Forbes’s Ellen Huet writes. “When Uber and Lyft battle, drivers lose in the long run.” Drivers worry that the big bonuses will be temporary, while the lower fares will be permanent.
In its focus on drivers, though, the article fails to mention an important point: lower fares are great news for consumers. Regardless of who ultimately wins the car-sharing wars — Uber, Lyft, or yet another Silicon Valley startup — the competition is making urban transportation more convenient and affordable for millions of people. That’s good for urban travelers. And because it makes an environmentally-friendly urban lifestyle more affordable, it’s good for the environment too.
At the same time, it’s important to remember that the old system wasn’t so great for drivers either. Before Uber and Lyft came on the scene, many cities had regulations that kept fares high by limiting the number of taxis on the street. But those higher fares didn’t necessarily go into the pockets of drivers. Often they’d go to the owners of taxicab companies, or the owners of scarce (and therefore very valuable) taxicab licenses. In Los Angeles, for examples, some traditional taxicab drivers lease a vehicle for $500 per week, reducing their annual income by around $25,000.
So it’s not clear whether the increasingly competitive taxi market will be good or bad for drivers in the long run. But growing competition in the taxi market is a big win for consumers.
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