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How does Uber work?

How does Uber work?

04 06 15

Uber has shaken up the taxi industry across 130 cities worldwide. In most cities, airport taxi fares are exorbitant and this is where Uber really cuts above the rest and gives its competitors a run for its money. But how does Uber work and how did it become so popular so quickly?

Why is Uber so popular?

Like Airbnb, the Uber app was founded in 2008 and is a poster child of the P2P (Peer-to-Peer) business model, also known as the ‘sharing economy’.

The smartphone app connects drivers with anyone who needs a ride at a slightly more affordable rate than a standard taxi. No one wants to pay the same amount for a ride home as they do for a nice dinner, and Uber competes with traditional taxis on price point.

Getting a ride with Uber couldn’t be easier; all you need is a smart phone with an internet connection to download and use the free app. Place a booking on the app and it will let you know how far away your ride is. If you’re in the city centre, there are usually plenty of Uber cars around. The app will also update you about the waiting time, so you can choose an alternative if you want (unlike with traditional taxis).

How much does it cost?

There two options available at the moment for Uber users. Uber X is for low-cost rides and Uber XL is for larger groups. A trip to Auckland Airport from the CBD costs up to $60 on Uber X and $76 for Uber XL compared to a standard taxi that can cost around $90.

Another attraction of Uber, particularly for the smart-phone generation, is its non-traditional feel. You can rate your driver and they rate you. You have an idea of how friendly the operator is and this makes it more like having your own personal driver or catching a ride with friends.

Uber drivers can use their own private vehicles to earn a little extra income and this has become a big draw card for people who wants to make money with a relatively low investment upfront. Uber affords drivers freedom; they don’t have to lease a taxi from a licensed service provider to start driving, and they can work whenever they want.

Who can become an Uber driver?

Anyone who has a driver license can apply to be an Uber driver. Uber drivers are vetted like any other driver, and are subject to the standard rules and laws. It’s designed to be a consumer-driven operation; Uber drivers earn more if they work when there is more demand, so the workforce adjusts to meet the requirements of the passengers.

But the growing popularity of Uber has generated outrage from taxi companies worldwide, because of the speed with which the new service has eaten into their market share. In New Zealand, taxi companies argue it’s an illegal service because it doesn’t fulfil the requirements that taxi companies need to – though others say Uber is not a taxi company, but a booking agent for a network of private drivers, and so is not subject to the same regulations.

The popularity of the ‘sharing economy’ has meant more competition in existing markets to the benefit of consumers. With the success of Uber, it looks like this business model isn’t going anywhere soon. 

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  • 0

    What an absolute exaggeration! Even on the most severe Auckland traffic days, a 'standard' taxi would find it hard to be reaching $90 on the meter. A 'standard' taxi during peak times leaving the Aucklands cbd to the domestic is between 68-76 on average. $90 is definitely not standard!!