Uber strikes groundbreaking deal with NYC taxi industry

The move struck many by surprise and appeared to cap off a bitter struggle that has pitted Silicon Valley against a historically blue collar, regulated force backed by organized labor. But the gig economy companies have struggled with a driver shortage as of late and the taxis are seen as a potential relief valve.

“Uber has a long history of partnering with the taxi industry to provide drivers with more ways to earn and riders with another transportation option,” said Andrew Macdonald, Uber’s senior vice president for mobility and business operations. “Our partnerships with taxis look different around the world, and we’re excited to team up with taxi software companies CMT and Curb, which will benefit taxi drivers and all New Yorkers.”

The New York Taxi Workers Alliance, the union of 25,000 representing taxis and other for-hire vehicles in New York, said the move reflected the ride-hailing companies’ needs more than those of drivers.

“After its business model has shown the failures to protect drivers from ridership downturns and rising gas prices, Uber is returning to its roots: yellow cabs,” the group wrote in a statement.

Uber said it would launch the taxi offering later this spring, and riders will be able to match directly with a cab in the app. Riders can select the taxi option.

According to Uber’s website, the driver’s picture, vehicle information and arrival details will then show up in the app. Uber says riders will be charged through their payment method on file, meaning they would not have to wait for a traditional taxi meter to calculate their fare and pay at the end of the ride as usual.

The partnership was first reported by the Wall Street Journal.

Uber said integrating taxis is a way to give riders more options, expanding its ridership while also increasing reliability. The company faced a historic driver shortage stemming from the effects of covid-19 and the shift in the gig economy to food and grocery delivery.

The rising costs of operating a vehicle were expected to hit drivers hard again, though Uber said it had not seen any direct impacts from the increase in gas prices.

Uber recently added a 45 to 55 cent fuel surcharge to offset soaring gas prices from Russia’s invasion of Ukraine.

Like Uber drivers in New York, cabdrivers in New York would not be eligible for the fuel surcharge and would instead be paid according to New York City’s guidelines for for-hire vehicles. The company said drivers would be paid based on rates mandated by the Taxi and Limousine Commission — which differ from the metered fares on yellow cabs.

That means the rates users see on cabs in Uber could vary compared to what they would usually see in a taxi. Uber prices are subject to its algorithm and rely on a market-based system, which can sometimes go up during busy times, known as “surge pricing.”

But the drivers’ union provided examples where it said pay would pale in comparison to traditional taxi meter-based fares. It pushed for measures such as a fuel surcharge for New York-based drivers of vehicles for hire, as well as protections that would ensure drivers cannot be fired without just cause.

“We know who’s in the driver’s seat,” the group wrote. “And spoiler alert, it’s not a venture capitalist.”