When we look back to the early days of Uber, the company emerged out of the 2008 recession. The ability to download an app and start earning money immediately was the lifeline for so many who had lost their job and savings. Investors backing the new paradigm shifting platform that changed the way that people move through cities, were outspending each other to capture new customers. But as riders became used to the convenience, discounts became fewer. Covid19 could bring an end to the affordable subsidized rides we’ve been enjoying thanks to competition between companies like Uber and Lyft.
Ride hailing is down sharply in the pandemic, there are no more discounts. Lyft has said they’re now focused on profitable growth not growth at all costs.
The pandemic has pushed ride sharing companies into the next phase where they will rely less on aggressive discounts. This means prices will go up. We would have gotten here eventually. Companies would grow and stabilize and figured out what people were willing to pay for a quality service. The world that allowed for companies to run at a loss isn’t there anymore. What would have been a slow and acceptable increase to a market price will be sudden.
And for good reason, Lyft CEO said that in April, rides plummeted 75% year-over-year. Uber’s bookings were down 80% the same month.
Work from home trends aren’t going anywhere and reduced business travel means fewer airport rides and rides attached to those padded expense accounts.
But people are also more likely to grab a car over risking exposure on public transportation. If the price of cars is out of reach, especially with budgets tightening, we will see bicycles and scooters rise in popularity. Which are areas that all ride hailing companies have been moving more aggressively into over the last year and even more since the pandemic started.
I don’t think that ride sharing is going to switch to the prices as high as taxi’s, which are not affordable for most people. But, we should be ready for our trips to get more expensive. Prices will go up to just below the point where you’d rather risk the subway then pay for a car. That number will be different for everyone, but there is no doubt that the number will be higher than before. We should be ready for the days where you could almost cross town for a few bucks in a Uber Pool are gone. I’m not saying discounted rides won’t return, but the world that allowed someone with an average salary to call an Escalade to drive them to the airport are.
