Business

NYC Taxis Make A Move To Beat Uber At Its Own Game

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Guy Bentley Research Associate, Reason Foundation

A band of entrepreneurs and tech developers is giving fresh hope to New York City’s struggling yellow and green taxis with a new app called Arro to rival Uber.

The new app will connect riders with taxis and could help the ailing industry stage a comeback, providing even more intense competition in a burgeoning marketplace. One of the advantages claimed for Arro over competitors like Uber and Lyft is that it doesn’t include surge pricing.

This could prove and advantage for riders during times of high demand when the cost of Ubers rise sharply. The app is being beta tested in 7,000 taxis but is set to expand in the coming weeks.

Cabs will be hailed via messages that are sent directly to the drivers through their data terminals. Arro has partnered with Creative Mobile Technologies, which operates the payment technology for about half of the taxis in NYC.

The driver will be sent the passenger’s name and pickup address. Users save their credit card information in the app, allowing them to pay the metered fare and a tip. The passenger will be given the driver’s name and ID number.

Speaking to Crain’s, Arro’s director of product management Mike Eply said “We thought that there was a void in the taxi industry, certainly in New York and in other big cities.

“We see the demand, both on the driver side and on the passenger side. And we want to fill that,” he added. It hopes to be used by all 20,000 cabs. In 2013, medallions were $1.3 million.

Uber has proved immensely popular in NYC and a major headache for the established industry. Yellow taxi drivers have to shell out a fortune to abide by the medallion system and purchase the exclusive right to pick up street hails.

Since Uber arrived in NYC a little over four years ago traditional cabs have lost out with fares consistently declining. The price of a medallion has fallen 30 percent in two years from $1.3 million in 2013 to around $700,000 in 2015.

Credit Unions that are seeing rapidly rising delinquency rates from taxi drivers who can’t keep up their payments have sought to use the courts to introduce greater regulation of ridesharing apps. (RELATED: Financial Backers Of Yellow Taxis Want Emergency Hearing To Block Bulk Of Uber’s Business)

Mayor Bill de Blasio’s attempt to cap Uber’s growth was defeated in July after the tech company launched a vigorous public relations battle to win public support. (RELATED: Uber Doubles Down On Ad War With Bill De Blasio)

However, NYC politicians are still on the warpath to limit the use of surge pricing. Councilman David Greenfield introduced a bill last November “prohibiting for hire vehicles from charging excessive rates.” The legislation would cap surge pricing to 100 percent of the basic fare. The bill has yet to pass the city council.

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