Why are Uber and Lyft fares so high in Los Angeles?
If you’ve used Uber or Lyft recently, you’ve probably noticed that it’s not as cheap or convenient as it used to be. Waiting times for boarding can reach 20, 30 and 40 minutes, followed by fares. It’s not uncommon for a ride from downtown LA to LAX (which should normally be $ 40 to $ 50) suddenly drops from $ 120 to $ 160. but why ?
When we hear Uber and Lyft explain it, we’re in the worst case. More and more people are using carpooling services, but there is a shortage of drivers.
And there is some truth to this. “Demand levels are increasing 60-70%,” said Daniel Ives, managing director of equity research at Wedbush Securities, while there is a dearth of pre-pandemic engines “40-50% below peak levels ”. I am going to explain.
“In 2020, many drivers stopped driving because they couldn’t expect enough trips to make up the time. Uber said in a statement in April that “2021 is a great time to become a driver, as more cyclists request a trip that the driver cannot afford.” “
However, the driver does not fully agree with this sentence. What they see is the ongoing problem of work that makes this perfect storm inevitable.
According to Ben Valdes, who has driven Uber and Lyft for six years, drivers regularly leave the platform because Uber and Lyft are constantly lowering wages. “At LAX, we went from 60 cents to 32 cents,” says Valdez, where drivers were earning 60 cents a mile on Uber. “And in the case of San Diego, they lowered it to 34 cents a mile. The IRS estimates the cost to be 57 cents per mile. [for drivers]Thus, the IRS is paid below what the operating costs should be. “
Valdez, who is also a member of Rideshare Drivers United, explained that most of the drivers stopped driving after a short time because the tariff was so bad. “Sales are about three to six months away for people to notice, hey, it’s not worth it,” Valdez continues. “This contributes to the constant influx of new drivers. Uber offers these incentives to new drivers to join and “guarantees to earn an amount of X,” he says. The new driver runs the route, then cycles.
“It’s a big overhang of the business model because it puts pressure on the drivers and business models of these companies,” Ives explains. Los AngelesHe says Uber and Lyft need to be more aggressive with incentives to get drivers back on the road, but they need to increase driver discounts on every trip. “The driver shortage is underestimated and about 20% of the demand is not on the table,” says Ives. “Look, investors are worried, which is reflected in Uber and Lyft stocks. Prices and driver shortages have created a dark cloud in these stocks when demand returns. I am. “
But it’s true that fares skyrocket 50-60%, so drivers make more money, right? “Thanks to the incentives and dynamic pricing, drivers may be making a little more money now, but when it’s gone, they’ll be back to normal rates,” says contributor Chris Gerace. Rideshare Guy Blog A $ 20 ride can cost $ 30, but most of that extra is sent directly to the rideshare platform, not the driver. “Unfortunately, they put as much pressure on the driver as possible.”
To account for rate cuts and other changes, Valdes says he can spend most of his driving at UberEats to see his destination and keep his mileage low. California Law AB5 Enacted in January 2020, Uber and Lyft were forced by state drivers to make certain concessions. For example, we have set rates per mile (drivers call them “multipliers”) and allow drivers to see where queued passengers are going. By looking at the destination, the driver was able to strategize for the vehicle and maximize profits. For example, if you board from downtown Los Angeles to Palmdale at 3 a.m., you might be paying a reasonable fare, but you’re stuck in Palmdale without a profit-hungry commute when you return to a crowded area. Empty-handed in LA. On the other hand, traveling a little later in the city center or in Hollywood is much more advantageous. But, Proposition 22 In November, Uber and Lyft rewrote the rules and removed all multiplier and destination previews together.
“Uber and Lyft deceived California voters,” Valdez says. “They made them believe that if Proposition 22 was not passed, the price would go up instead of starting to stabilize as they were.” Ironically, behind the wheel. After adopting Proposition 22, The Hand started dropping Lyft and Uber because they “decided it wasn’t worth it anymore,” and passengers are still paying bonuses.
Uber did not respond to multiple requests for comment on these issues, but Lyft said in an email: “We are working to meet demand by offering incentives to drivers who are busier and more profitable than before the pandemic.”
Eventually, some drivers will return to the platform when extended unemployment benefits end in September and people scramble to pay the bills. “I think 60 to 70% of drivers will be back on the road because of the dynamics of unemployment,” Ives said, which could reduce passenger fares and wait times. Gerace predicts that “after unemployment the increase in the number of drivers will return, but it will gradually decrease” and slowly return to normal by next year.
In other words, don’t expect lower Uber / Lyft prices and wait times, at least until late summer. Yet I know who, how long and how long.
Will all of this turn Angelenos into public transit in their backyard? Ives said: [CEO] Dara [Khosrowshahi] At Uber. “
Metrobus fares are currently free and the metro costs $ 3.50 day and night.
Relationship: Carpool drivers and worker groups attempt to overturn Proposition 22
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Why are Uber and Lyft fares so high in Los Angeles? Source Link Why Are Uber and Lyft Fares So High in Los Angeles?