One of Silicon Valley’s [most closely guarded secrets is how much taxi-hailing companies Lyft (NASDAQ:LFYT) and Uber (NYSE:UBER) charge customers. A Chicago law requiring the companies to provide their fare data has offered information on how one of the companies is trying to make a profit.
Ridesharing fares increasing
Over the last year, shared rides fares in Chicago have increased tremendously according to the data. However, over the same period, fares for singe rides have remained relatively stable. The data indicate that the increase in fares mostly affected the city’s low-income neighborhoods. This is because these neighborhoods are where there is a significant booking of poled rides. Interestingly as the taxi-hailing companies hike fares, the number of carpool ridership in contrast dropped.
However, the data does not indicate the most affected company because Chicago doesn’t differentiate the data. Uber, Lyft, and Via operate rides in Chicago, but it is Uber that controls a large share of the market. Also, the data does not show whether the companies have rolled similar strategies in other cities.
Ridesharing companies reducing discounts on shared rides
Ride-hailing companies have been changing fare prices, such as the case in Chicago in recent times. They are reducing discounts for shared rides as they try to convince investors that ride-sharing is a profitable business model. On the other hand, companies have been facing increasing crackdowns in various cities across the globe.
For instance, cities are taking the companies to task regarding driver treatment, passenger rights as well as congestion in the city. On November 25, regulators in London revoked Uber’s license regarding what they termed “patterns of failures” on security and safety.
Uber indicated that it has been making losses from the shared rides segment. CEO Dara Khosrowshahi indicated that they lost a considerable amount of money because of discounts on the rides. The company wants to ensure the rides are sustainable across cities, and they can achieve that through pricing.
Lyft indicated that the strategy revealed from the data was mainly Uber’s. This is because Uber controls a large share of the market.