Uber Strikes Alliance With Once-Bitter Foe: New York Yellow Cabs

When Uber arrived in New York City in 2011, yellow taxis ruled the streets and drivers paid $1 million for the coveted taxi medallions that gave them the right to pick up passengers.
Undeterred, Uber worked relentlessly to lure riders away, deriding the taxi industry as inefficient, corrupt, greedy and even a “cartel.” The taxi industry, in turn, accused the company of bringing economic ruin to its drivers.
Now, the once-bitter rivals, who have battled for years for control of the city’s streets, are striking an unlikely alliance: Uber will team up with two taxi companies, Curb and CMT, to allow New Yorkers to order a yellow taxi on the Uber app, the companies said Thursday.
The announcement — the first large-scale agreement of its kind in the U.S. — comes at a time when riders are increasingly embracing apps to order both Ubers and taxis. The companies are struggling to recover from a pandemic that has battered the ride-hailing industry as people have worked from home and tours have stayed away.
“On the one hand, Uber and yellow cab seem completely like water and oil,” said Bruce Schaller, a former city transportation official. “On the other hand, when you go hail a cab or go to your smartphone to get an Uber, it will be the same experience as it was before. So it’s kind of like a big change and the same thing all at once.”
Starting later this spring, riders will be able to open the Uber app and choose a taxi. Uber will then refer the request to the two taxi technology companies, which will notify drivers to pick up the passengers. The fare will be based on Uber’s pricing and policies, including surge pricing, which can significantly increase the cost at peak times.

The app will display an upfront price, as with all Uber rides, before the rider requests the trip. Riders will pay roughly the same price for a yellow taxi as they would for a standard individual Uber ride, known as UberX, the company said.
Yellow cabdrivers who respond to Uber app hails will also see a ride’s pricing upfront and, under the deal, will have the option to accept or reject it. Under city regulations, e-hail taxis — unlike street-hail taxis — do have the right to refuse fares.
Although Uber has clashed with taxi groups for years as it has attempted to take over markets around the world, it has discovered that partnering with taxi companies instead of fighting them can turbocharge its business, especially overseas. Partnerships with taxi fleets and technology companies in other countries allow Uber riders to order taxis on the app, as will be the case in New York.

Uber’s new partnership with the taxi industry in New York, which was first reported The Wall Street Journal, will generate more revenue for the company since it receives a fee on every ride ordered through its app.
At Uber’s investor day in February, Andrew Macdonald, Uber’s senior vice president of mobility and business operations, said the company wanted every taxi in the world on its platform 2025.
Macdonald said adding taxis was about money: When Uber offers more modes of transportation, the company found, customers often use several of those methods, “spend more and are more loyal.”
Muhammad Rahman, 37, who has driven a taxi in New York for eight years, said he hoped an Uber connection would bring more fares in neighborhoods where street-hails are uncommon. “Uber customers are everywhere,” he said.
A passenger gets into a taxi, Wednesday, Jan. 29, 2020, in New York. (AP)
But another taxi driver, Helmer Monroy, 67, was more skeptical. “I don’t think Uber is going to help the yellow cab industry,” he said. “They didn’t destroy the industry — but they damaged it.”
Antonio Cruz, 50, a Brooklyn resident who drives for Uber two days a week, said he was concerned that the new Uber-taxi partnership could mean more competition from yellow cabs, especially on the days when he works in Manhattan. “We could lose business,” he said.
Before the pandemic, taxi drivers in New York were losing fares to Uber’s and Lyft’s ride-app services and facing financial ruin after taking out loans to buy medallions at inflated prices.

Uber has faced its own challenges during the pandemic. Early on, with demand for rides plummeting and drivers worried about contracting the coronavirus, many left the platform.
As the U.S. economy rebounded and cities relaxed restrictions, customers returned but found that drivers had not come back in the same numbers, leading to drastically higher fares and long wait times for trips.
Both companies last year acknowledged that they were struggling to attract enough drivers to keep up with demand, but said more recently that the problem is easing. Uber said the number of drivers on its platform was at its highest level since February 2020.

Still, many drivers remain unhappy about how much money they make, and some said they were driving less or not at all since high gas prices began eating into their earnings. Adding thousands of taxi drivers could help offset other driver departures.
Bhairavi Desai, head of the Taxi Workers Alliance, a group that represents cabdrivers, said she believed that drivers accepting trips from the Uber app would earn less than if they picked someone up off the street and took them to the same place.
She urged drivers to negotiate better fares from Uber, noting that the agreement was struck “at a moment when the companies need this deal more than the drivers do” because Uber is “hemorrhaging drivers.”

“We’re going to seize it as an opportunity to negotiate proper terms for the drivers,” she said.
Others expressed more optimism.
Schaller said that if the new system was implemented properly, following exing regulations, it should benefit both drivers and customers.
“I’ve always expected there would eventually be a convergence of yellow cabs and ride-hail apps,” Schaller added, “but I wouldn’t have predicted 2022 if you asked me in 2019.”