J ennifer Moody of The Jetsetter’s Homestead broke the news earlier today that Uber has announced another round of UberX rate cuts in 48 select markets. In addition to authoring her weblog and being a management consultant, she is also a driver for Uber and shares her exploits with readers — such as this article called Sex Love and Uber and this article pertaining to her several hours as a driver on New Year’s Eve.
Does the rate decrease mean that there is trouble ahead for the controversial car service?
Here is an excerpt from her article, where she has an insider view and has taken a pay cut of 46.5 percent since she first started:
Uber X drivers received this surprise news yesterday when logging onto the driver app to accept passengers. The notification required to acknowledge UberX rate cuts of up to 25% before being allowed to continue accepting new passenger rides. In related news, several drivers also reported receiving notification that their accounts were under quality review and risked suspension from the ridesharing service.
This latest news further clouds the economic viability of driving for UberX, a service where independent contractor drivers utilize their own private vehicles to participate in a shared economy coined “ridesharing”. UberX skirts traditional transport regulations by acting not as a transport operator but instead as a matchmaker pairing private individuals for a fee – one who wishes to obtain a ride, one who wishes to provide a ride – while taking a cut in exchange for providing the platform that makes the match.
Uber has received its share of bad publicity lately, including but not limited to the following incidents which occurred just within the last month alone:
- An Uber driver was on his way to pick up a passenger in New York recently when he reportedly hit a pedestrian who was crossing the street with his girlfriend, resulting in the killing the golf instructor who was 27 years old.
- A passenger was reportedly charged $908.00 for a ride after he fell asleep during an Uber ride which was on the way to a party after the Peach Bowl in Atlanta on December 31, 2014. He woke up in Alabama while on the way to an address in Mississippi. Despite this occurrence, the passenger supposedly will use Uber again.
- Travis Kalanick — the chief executive officer of Uber — was reportedly issued an indictment recently from the office of the prosecutor in South Korea for violating transportation services laws and faces a prison sentence of up to two years or a maximum fine of 20 million won.
- Uber offered free rides out of the central business district in Sydney for a limited period of time which started on December 16, 2014 as a result of the aftermath of criticism for charging its passengers greater than quadruple the typical rate — in a practice known as surge pricing— while a siege was underway at the Lindt Chocolat Café at Martin Place, causing the city to be in lockdown mode.
- After two Uber drivers were reportedly arrested for committing acts of sexual assault, advice as part of a “safe ride checklist” was supposedly issued by Uber to its customers about how to avoid becoming victims of similar experiences.
In the second comment as a response to this article in which Gary Leff of View From The Wing extols the benefits of surge pricing imposed by Uber during busier periods where and when high volume is expected — such as during holidays, for example — Kokonutz said that “Uber’s reach has exceeded its grasp. It now charges $90 for a (non surge) ride from Arlington to iAd. One can arrange a proper limo for less than that. They are pricing themselves out of their own market.”
As we have witnessed in recent years from airlines, lodging companies and car rental companies, they do not lower prices or offer benefits unless it is absolutely necessary to do so — or by accident. Something is causing Uber to lower prices by up to 25 percent on its UberX service; whether it may be increased competition, higher costs, Uber pricing itself out of its own market, negative publicity possibly resulting in reduced ridership — or perhaps a combination of factors.
Although I have never been a customer of Uber, I have no desire to see their business model suffer. Competition is good. It keeps prices lower and encourages improved products and services amongst all entities within an industry.
What are your thoughts?
