Why Your Uber Ride Can Cost as Much as a Plane Ticket

Ride hailing apps, promising cheap and easy travel, cannibalized New York’s taxi industry. What happens when they no longer feel like a bargain?

By Ginia Bellafante of The NY Times. Someone living in Brooklyn paid $192 to get to LaGuardia airport for a "trip that typically ran about $35." Excerpts:

"prices always climb when demand is very high, and demand is always high during the holidays."

"A number of factors combined to produce this new reality. Chief among them, according to James Parrott, an economist who analyzes data on ride-hailing services both as an independent academic and adviser to the city’s Taxi and Limousine Commission is the fact that Uber and Lyft had discounted prices in advance of each company’s initial public offering last year.

Rides were artificially cheap. When those IPOs were completed, fares went up (presumably) to satisfy shareholder demand for profitability. Nevertheless, entry onto Wall Street has been disappointing. 

Beyond that, last February, a congestion surcharge imposed by the State of New York went into effect for Uber and Lyft (along with their competitors), which imposed an additional $2.75 fee for cars traversing Manhattan’s central business district. At the very same time, the city’s mandatory wage increase for drivers — which ensures a minimum hourly wage of $17.22, after expenses — also took hold."

"the wage increase, Mr. Parrott told me, has left Uber and Lyft paying a combined additional $50 million a month in driver pay. And then there is the cap on the number of new vehicles the city allows Uber and Lyft to operate, which was extended over the summer, a factor suppressing supply."

"if Uber stops seeming like a reasonable alternative to yellow taxis, people will use it less."

"One possible solution to any uneven distribution of burden might be to lift caps in parts of the city where congestion is less of a concern than it is in the core of Manhattan, below 96th Street. This would make more cars available in places where they are needed, which would in turn deflate prices in less affluent parts of the city.

Lawmakers could also think about simply making the cost of beginning a trip by Uber or Lyft in Manhattan more expensive than it is and leave the rest of the city alone."