Ubers are supposed to be cheap. Like a fraction of the price of a taxi but also cleaner and safer.
That was always a scam. There are only 4 ways to make something less expensive:
Reduce profit margin
Reduce the cost of equipment and supplies
Reduce labour costs
Reduce regulatory costs
Uber is a nice case study:
By operating globally, their volume is high enough that they can shave margins to nearly nothing and still get bags of money.
They claim be only a booking platform, so they don’t actually have to buy anything related to the frontline provision of the service.
As only a booking platform, they have no labour costs associated with providing the transportation service.
Their booking platform claim means they’re not a taxi service, so they don’t have to pay for the relevant licensing. It also supports their claim that the drivers are actually independent businesses so that the burdens of pay, payroll, worker’s compensation, employment insurance, etc are the responsibility of the driver, not Uber.
Note that all of those costs that Uber is avoiding are still actual costs that must be borne by someone. That means the price to the consumer cannot actually go down, except in very narrow circumstances. Like when I’m driving my car some place that is compatible with your origin and destination, which is just a formalization of standard hitchhiking. When each driver is actually offering a true taxi service, the price must actually climb if the worker is to be fairly compensated, because there are no economies of scale.
The only way that Uber can work to provide taxi-like service at a lower price than traditional taxi service is for enough people to sign on that the formalization of hitchhiking can service the majority of trips. I’m guessing that the critical mass is probably well over 50% of car owners.
Safer is a function of training, regulation, and incentives. None of those are part of the Uber model. For safer taxis, mandate background checks, safety-oriented driver training, and structure the pay so that aggressive driving doesn’t increase earnings.
Unless your existing taxi services were wildly over regulated, wildly profitable, or paid very well, that price reduction might be temporary. The cars must still be paid for and maintained and fueled. The drivers still need to pay for food and shelter. There is only so much room to move on costs.
It could well be that a globally managed booking system is enough to kick the tires out from under traditional taxis, but I think the other costs have a much greater role in final pricing than mere booking.
It was never intended to be a primary source of income, just a side hustle. Do your regular job and rather than sitting in front of the tube just make a few extra bucks on your downtime.
Anyone claiming it should be a primary source of income has an agenda in the discussion.
Yes, increasing efficiency. I don’t know enough to say one way or the other whether efficiency can be achieved through any means other than economies of scale (profit margin) or process (labour costs), so I flipped a coin and left it off.
And you might not be using MS Word, but the platform does use the very common concept that the system knows better than you what number is appropriate. :)
Taxi’s where I live are prohibitively expensive (Belgium), so most people generally only use them when they can book ahead of time and negotiate a reasonable price. A spur of the moment taxi is for people with too much money or for emergencies.
Because taxi’s are so expensive, there is little demand. Because there is little demand, taxi’s do not find many customers. Because taxi’s don’t find many customers (and are badly organized), they spend a lot of time idle/empty. Because they spend a lot of time idle and driving empty, they charge an exorbitant amount to the few customers that they do get.
If they could spend less time idle/empty, they could offer better prices, increase demand, gain advantages of scale, …
It’s the same deal with general transport firms: a good firm will always try to get a return cargo. The cost of material and labor is the same, but efficiency reduces the cost for the customers of the good firm.
In contrast to Belgium, in Athens and many other places, taxi’s (often basically mini buses) are flexible, plentiful and affordable. But they are constantly driving customers around, they are being efficient and because they are efficient, cost for the customer is low and they get many customers.
The problem in Belgium with the established taxi system is organisation of the service first and foremost.
The key is to figure out why Belgium’s taxis are so expensive in comparison to other places.
What are the differences in regulation?
Are Belgian taxi drivers each completely independent operators responsible for covering all their costs with only one driver while other places have vehicles shared by multiple drivers?
What are the differences in standards of living and employment opportunities? In my experience, people migrate away from low paying jobs quite quickly when the opportunity arises. For example, in Canada you won’t find anyone other than management deliberately making a career out of working in fast food because the pay and working conditions are crap. The only reason anyone works fast food is because of lack of better options. That’s what’s killing fast food in certain places in Canada. There have been so many well paying jobs in the oil sector for long enough that in places like Fort McMurray, McDonald’s and Tim Hortons have often had trouble staffing their outlets.
It’s regulatory capture and people know, but … politics. There is no incentive for more efficiency, since the holders of the licenses are making enough, because it’s a captured market… It’s a protected sector with a limited number of licenses and the amount of licenses is very limited because the market is so small. A real chicken and egg situation.
Taxi license driver holders are almost exclusively Belgian natives. Shuttle drivers come from all over the eu, but they’re not allowed to pick up fares, only work through reservations or on fixed trajectories.
That was always a scam. There are only 4 ways to make something less expensive:
Uber is a nice case study:
Note that all of those costs that Uber is avoiding are still actual costs that must be borne by someone. That means the price to the consumer cannot actually go down, except in very narrow circumstances. Like when I’m driving my car some place that is compatible with your origin and destination, which is just a formalization of standard hitchhiking. When each driver is actually offering a true taxi service, the price must actually climb if the worker is to be fairly compensated, because there are no economies of scale.
The only way that Uber can work to provide taxi-like service at a lower price than traditional taxi service is for enough people to sign on that the formalization of hitchhiking can service the majority of trips. I’m guessing that the critical mass is probably well over 50% of car owners.
Safer is a function of training, regulation, and incentives. None of those are part of the Uber model. For safer taxis, mandate background checks, safety-oriented driver training, and structure the pay so that aggressive driving doesn’t increase earnings.
And yet I can get an Uber in Vegas for a fraction of the cost of a taxi. So it can work.
Unless your existing taxi services were wildly over regulated, wildly profitable, or paid very well, that price reduction might be temporary. The cars must still be paid for and maintained and fueled. The drivers still need to pay for food and shelter. There is only so much room to move on costs.
It could well be that a globally managed booking system is enough to kick the tires out from under traditional taxis, but I think the other costs have a much greater role in final pricing than mere booking.
It was never intended to be a primary source of income, just a side hustle. Do your regular job and rather than sitting in front of the tube just make a few extra bucks on your downtime.
Anyone claiming it should be a primary source of income has an agenda in the discussion.
Edit: in the editor it says “5.” FIVE. But somehow it gets changed to “1.”. Am I using Ms word here?
Yes, increasing efficiency. I don’t know enough to say one way or the other whether efficiency can be achieved through any means other than economies of scale (profit margin) or process (labour costs), so I flipped a coin and left it off.
And you might not be using MS Word, but the platform does use the very common concept that the system knows better than you what number is appropriate. :)
Taxi’s where I live are prohibitively expensive (Belgium), so most people generally only use them when they can book ahead of time and negotiate a reasonable price. A spur of the moment taxi is for people with too much money or for emergencies.
Because taxi’s are so expensive, there is little demand. Because there is little demand, taxi’s do not find many customers. Because taxi’s don’t find many customers (and are badly organized), they spend a lot of time idle/empty. Because they spend a lot of time idle and driving empty, they charge an exorbitant amount to the few customers that they do get.
If they could spend less time idle/empty, they could offer better prices, increase demand, gain advantages of scale, …
It’s the same deal with general transport firms: a good firm will always try to get a return cargo. The cost of material and labor is the same, but efficiency reduces the cost for the customers of the good firm.
In contrast to Belgium, in Athens and many other places, taxi’s (often basically mini buses) are flexible, plentiful and affordable. But they are constantly driving customers around, they are being efficient and because they are efficient, cost for the customer is low and they get many customers.
The problem in Belgium with the established taxi system is organisation of the service first and foremost.
The key is to figure out why Belgium’s taxis are so expensive in comparison to other places.
What are the differences in regulation?
Are Belgian taxi drivers each completely independent operators responsible for covering all their costs with only one driver while other places have vehicles shared by multiple drivers?
What are the differences in standards of living and employment opportunities? In my experience, people migrate away from low paying jobs quite quickly when the opportunity arises. For example, in Canada you won’t find anyone other than management deliberately making a career out of working in fast food because the pay and working conditions are crap. The only reason anyone works fast food is because of lack of better options. That’s what’s killing fast food in certain places in Canada. There have been so many well paying jobs in the oil sector for long enough that in places like Fort McMurray, McDonald’s and Tim Hortons have often had trouble staffing their outlets.
It’s regulatory capture and people know, but … politics. There is no incentive for more efficiency, since the holders of the licenses are making enough, because it’s a captured market… It’s a protected sector with a limited number of licenses and the amount of licenses is very limited because the market is so small. A real chicken and egg situation.
Taxi license driver holders are almost exclusively Belgian natives. Shuttle drivers come from all over the eu, but they’re not allowed to pick up fares, only work through reservations or on fixed trajectories.
Thanks for the insight. Regulatory capture is a problem with everything, it seems.