Cruz Chavira has been operating his taxi for 24 years. The process has always been the same: he charges customers the established state regulated fee—now $2.60 per mile—and brings home a healthy commission at the end of the day, depending on what is left over after covering the operational expenses of maintaining a taxi in a major city.
In the past few years, the lifestyles of taxi drivers like Chavira have been turned upside down. The entrance of innovative ride-sharing companies into the marketplace has shifted business away from the taxi industry—swaying tech-savvy students and young-professionals with a greater focus on lower prices and on-demand service. Family providers like Chavira and taxi drivers across the world are being forced to adapt to the competition.
By now, Boston College students are familiar with Uber, a startup that allows people to request a ride with a few taps on a smartphone. The company is radically changing the way students navigate the city of Boston, and is showing no signs of slowing down its progress.
“Up to 40 to 50 percent of Boston College students are using Uber pretty frequently, and are relying on the service to get around Boston,” said Christian Sendler, a brand ambassador for Uber and A&S ’16.
Uber was founded as “Ubercab” in San Francisco in 2009, and since has expanded to 45 countries and more than 100 cities worldwide. Now valued at more than $15 billion, Uber is known for its use of disintermediation—a process that allows the company to use its smartphone app to directly connect passengers with drivers of vehicles for hire. Eliminating the uncertainty of trying to hail a taxicab, or hoping a dispatcher will send one when called, Uber allows users to track the arrival of their car in real time on a map. Uber launched in Boston three years ago with a priority of capturing the interest of some 250,000 students in the metro area.
“Twenty to 30 percent of the Boston population is tied to the college market,” said Eric Strader, the marketing manager at Uber’s Boston headquarters. “We realized, especially here in Boston, that there is an appetite for cheap transportation and there is an opportunity for us to capture the interest of everyone at various income levels, so the launch of Uber in Boston is very advantageous to the college market and anyone on a fixed budget.”
Uber has grown its Boston headquarters as a top marketplace for new users. Over the past year, the company has targeted various college areas, bars, food festivals, and other special events—including Boston Calling and CollegeFest—in order to offer its services to the younger generations across the city.
BC, in particular, has been one of Uber’s largest user bases in the greater Boston area. Located just outside of the city in Chestnut Hill, BC’s location often poses a challenge to those who are looking for alternative mode of transportation to the MBTA.
“BC students usually cannot just walk outside of our dorms and hail a cab,” Sendler said. “When I first got here, getting a cab right on Comm Ave. was a difficult experience. Personally, when Uber was introduced I thought it was super convenient to contact a driver right from my phone.”
“A lot of comments I’ve heard once people start using it is that they won’t go back to using a regular taxi cab”
-Tom M., Uber Boston driver
As the popularity of the app has disseminated across campus, the University has recognized Uber as a reliable method of transportation for students. Uber has partnered with the Office of Student Affairs, promoting the company as a transportation option on its website and through student newsletters. The startup has participated in various events on campus—ranging from campaigning to freshmen on the Newton campus, to promoting the brand with free merchandise and music in the Mods, to more formal events like participating at this year’s Student Activities Fair.
“BC has been open to the idea of working with us, and they know that there is a large number of students who are riding with us,” Strader said. “It’s to their benefit to make sure that there is a safe, reliable option for kids who are looking to go off-campus and into the city.”
Over the past year, Uber has focused on offering colleges cheap and reliable methods of transportation. The company dropped its prices twice this past year to tailor to more students with a fixed income—shifting business away from its original high-end, expensive UberBLACK to its new UberX, a service that connects users and drivers to smaller vehicles, like a Toyata Prius at a rate 40 percent off its previous UberBLACK price.
With the decreased prices, the service has become more appealing to students and young professionals looking to explore the city or take a trip that is longer than walking distance. This past September, demand for Uber cars has skyrocketed, and more drivers are working to keep up with the increased number of users.
“Everyone’s back for school now, and September has been one of the busiest months I’ve ever worked,” said Tom M., an Uber car driver in the Boston area. “I think we have really changed how people get around Boston. A lot of comments I’ve heard once people start using it is that they won’t go back to using a regular taxi cab—they will use Uber because they can get pretty quick service by ordering it right from their smart phones.”
Yet another advantage Uber has over the taxicab industry is that it functions as an independent service in cities around the world—avoiding some costly components that many other transportation companies have to bear.
“From standpoint of a business context, the lack of infrastructure the company has is a very interesting model —they do not have to own a fleet of cars, have parking spaces, or maintain any other elements that would create a barrier for others into the industry,” said Bridget Akinc, a lecturer in the marketing department of the Carroll School of Management.
Despite its enormous success, Uber is currently under a good deal of scrutiny for cutting into the traditional taxi business. Cab owners from Chicago to Berlin have protested against Uber’s entrance into the marketplace, arguing that ridesharing companies are competing unfairly because they offer lower prices and avoid licensing fees and other costly mandates imposed on the highly-regulated industry.
“No matter what the demand is, we regular taxi drivers are locked into the regular state rate of about $2.60 per mile, whereas Uber can change its rates up or down,” said Chavira, who drives a standard taxi. “If our taxi companies go away, many people feel that big companies like Uber will come in and set their own prices.”
Last May, hundreds of taxi drivers protested outside Uber Technologies’ local headquarters near South Station, claiming that many of these pricing regulations gave the company a distinct economic advantage. Uber currently faces federal lawsuits from taxi companies in cities such as Seattle, Houston, Chicago, and Boston claiming unfair competition.
“Drivers look to their daily incomes, and if they are covering their expenses,” Chavira said. “Some of these protests in Seattle, San Francisco, and Boston show that these guys are upset that companies like Uber or Lyft are destroying their prospective incomes.”
Across the globe, cities have been wrestling with similar questions about whether these industries should be regulated. Now, the Boston City Council is considering restrictions on Uber and other ride-sharing services like Lyft and Sidecar.
“Uber has taken a portion of what might have been a ZipCar or taxi set of travel before, and carved out an interesting market,” Akinc said. “The challenge is that some of the regulations haven’t caught up with them yet—there are some questions about safety and regulations that are being raised.”
In contrast to some of these concerns, a recent survey by 40 leading economists from an Economics Experts Panel at the University of Chicago agreed that consumers would benefit from letting car services like Uber compete with taxis on equal grounds—arguing that unregulated competition increases welfare.
Regardless of the concerns being raised around the company, BC students are utilizing the ride-sharing service now more than ever, according to Sendler. The app provides a distinct advantage for students living on the Newton Campus or those looking to get somewhere not accessible by the MBTA.
“Students use Uber most often when they miss the bus or if they need to get somewhere off campus quickly that isn’t within a walking distance,” said Maya Maddaus, A&S ’18. “It can be hard for some students to always make it in time for the last bus back to the Newton campus, so having an Uber as a backup is the next best alternative.”
“Uber is always useful for going out on weeknights or weekends, and has always provided a dependable service for getting in and out of the city,” said John Miotti, A&S ’17. “The app is useful because it shows you where local drivers are, how far away they are from your location, and who the driver is, to prevent you from getting in the wrong car.”
Looking to the future, Uber hopes to decrease its prices in the area and further establish itself as a transportation service for Boston students. In the meantime, taxi drivers like Chavira are waiting for a decision to be made on the company’s legal operations.
“We’re waiting to see how the legislation bears out,” Chavira said. “For now, all we can do is wait and see.”
Featured Image by Breck Wills / Heights Graphic