Monday, January 19, 2015

New Uber Fan - Just not in NYC

DISCLAIMER - clicking on one of the links on this page may give you $20 in free Uber credit from my Five Star Painting. You've been a 3 year old.

We've been hearing about Uber for years now. After it launched in San Francisco, New York was the next logical target market. Of course, for us, we didn't really pay attention since we're not "black car" types and prefer MTA options.

Then the company launched UberX where it took "regular" drivers and turned them into make-shift taxi operators at a price point that was supposedly competitive with the NYC standard, the Yellow Taxi.

However, the few times we tried using UberX, the price always came out higher than a typical cab, because it was always set at Surge Pricing (where prices are temporarily increased 1.2x to 5.0x regular pricing to match higher levels of demand).

So we pretty much kept our Uber apps unused for months, if not years - even when American Express had special promotions of $10 off Uber rides last year. However, my father found some niches where Uber was a better value proposition.

A. Rides to/from Newark Airport
Given we're still loyal to United (more so because they have a hub in Newark where we can catch direct flights), we find ourselves driving to/from Newark Airport quite often. The most cost effective way would be to take public transportation - a $15/person shuttle bus from Bryant Park. Including the taxi/subway ride from our apartment, that would run around $50 total for our family of three.

However, since I joined the family, the logistics got more challenging and the premium to have a private car/taxi became most justifiable. So for $70-75 all-in ($52 ride + tolls/tip), we had been using Dial-7 limo service which lets us schedule in advance and gets us door-to-door to the airport.

But there's an expression we use a lot in my family - "You get what you pay for." So when you choose the cheapest option ($52), we don't expect to get the shiny 2014 Lincoln Towncar. We'd often get the 2003 Toyota Camry or even a Dodge Minivan. Basically, they offer the fare to any driver who's willing to take the lower fare.

UberX, however, offers a very compelling value proposition for this route.

First, they have a "flat fare" of about $65 (though it does vary very slightly to account for tolls). For example, our most recent fares were $67.45 and $68.15.

Second, they have much higher standards for all their drivers. Every car is kept very clean and relatively new.

Third, the payment system is seamless. No paper slips to fill out. No Square readers to swipe. No awkward moments where the driver stands over you while you fill out the tip. You just step out and say, "thank you."

So for a lower price, you get a better experience.

B. Non-Manhattan Cities
Uber is currently in multiple cities across the world, but they face a lot of political headwinds in just about all of them. Because they're so disruptive (basically adding tons of unregulated driver capacity into a tightly regulated ecosystem), there's a lot of push back from incumbent services.

Take Orlando for example. My father was suggested Mears Transportation to get from the airport to our hotel (Disney Swan). That's a 22 mile drive each way. To take 6 passengers, we would have needed a van and Mears quoted us $103 total. UberXL quoted us $41-53 total!

The customer will always gravitate towards the option that makes the most compelling value proposition. And when UberXL is able to offer ~50% lower pricing than Mears Transportation in Orlando, it's hard for many passengers to pass up that kind of savings for the benefit of the driver having a regulatory license. Unfair? Definitely. Dangerous? Perhaps. But well received? Absolutely! After all, the masses will vote with their wallets.

Another Orlando example. Each day this weekend, my father and Paul had to go to the Convention at the Rosen Centre. It was about a 10.5 mile trip each way, mostly on Highway 4. How much do you think it cost with UberX?

Before you answer, here are some NYC UberX data points.

(A) the above UberX trip from our apartment in Manhattan to Newark Airport was 17.5 miles and cost $68 including tolls.
(B) a Manhattan UberX ride going 22 blocks north and 2.5 blocks west in Midtown was 1.6 miles and cost $13.62 (before surge pricing was applied).

The 10.5 mile trip in Orlando (from Disney Swan to Rosen Centre) cost just $11.90.

1 comment:

  1. it was always set at Surge Pricing (where prices are temporarily increased 1.2x to 5.0x regular pricing to match higher levels of demand).uber from airport