Recently I’ve been using the ride sharing service Uber more and more – it’s one of the latest innovations in the ‘sharing economy’.
The idea behind the ‘sharing economy’ is that individuals with an existing asset – like a car or a home – can share that asset with others in return for a fee.
With Uber, anybody with a car can sign up to become an Uber driver and earn money by giving people lifts to where they want to go.
I’ve just returned from the US and I used both Uber and taxis in San Francisco.
The taxi fare from the airport to my downtown hotel was $60 USD. The cab was an old rusty, clapped-out sedan that had seen better days. The driver had a hint of body odour and he said nothing to me for the entire journey. Upon arrival at my hotel, the expectation was that I would pay him a tip, even though the service was nothing extraordinary – in fact, it was very ordinary.
On the return journey back to the airport, I took an Uber. I used the Uber app on my phone to request a car to my hotel and to nominate my destination. The app told me the anticipated cost of the fare and the expected time of arrival of the car. The app also allowed me to track the vehicle as it made its way to my pickup location.
Within two minutes, the car had arrived – a shiny, clean hatchback driven by a jovial Lebanese engineer with a very distinctive, hearty laugh. We struck up a conversation about his Uber business and he explained that he had generated more income in a week than he had in a fortnight as a practising civil engineer. He had recently decided to quit his engineer work and had taken up Uber as his full time job.
And he was loving it. No longer did he have to stare at a computer screen all day, he was out in the sunshine and he was meeting new people – and he was making more money to boot.
When I got to the airport, I said goodbye and got out of the Uber – payment for an Uber ride is processed electronically without any need to physically make payment at the destination. No waiting for the taxi EFTPOS machine to power up, no need to get a tax invoice printed, no tip calculations. Just get out. Your credit card or Paypal account is debited automatically and an invoice is sent via email.
And the final cost of the ride – $25 USD. Less than half the cost of the taxi. Plus an engaging conversation, a clean vehicle and a thoroughly more satisfying experience for me as the customer.
Of course, the ‘sharing economy’ does result in pain for others – here in SA the State Government and the taxi lobby are at war with Uber over regulatory issues. That’s entirely understandable – if I was a taxi owner and had paid $150K for a taxi licence, then I’d be up in arms too. Uber’s modus operandi is to circumvent all of the regulatory and insurance requirements that taxis are subject to.
Then of course there are all of the issues relating to the ‘casualisation’ of the workforce – a lack of job security, no leave or superannuation provisions, etc.
It’s only a matter of time before taxis go the way of the dinosaur. The taxi industry may be able to achieve a stay of execution here in SA, but ultimately economics – supply and demand – will win. And that will cause some real pain for vested interests in the taxi industry.
The ride-seeking consumer will, seemingly, also win. But someone will have to pay.