Transport for London have decided to revoke Uber’s license to operate.  This is a travesty not only for the 40,000 drivers whose work is facilitated through the app, but also for the three million Londoners who use Uber regularly.

Uber’s problem is simple: it’s very successful and so its competitors hate it.  However, its drivers in general benefit due to the flexibility it offers, as you only have to work when you want to work, which might be when prices surge.  The genius of this model is very simple: if prices surge there is a higher demand from consumers. Drivers meanwhile can make more money so more drivers start working, earning more money, and at the same time pushing down prices for consumers.  By comparison the taxi meter is an antique: you have no idea how much the journey is going to cost you, some cabs even require that you still have cash, and there are only a couple of price points based on an assumed on peak/off peak model.  You’re paying extra for a service that might be better, but which became antiquated as soon as sat navs became widespread.  Why pay extra for someone who knows how to get around town when you can pay less and get there pretty much just as quickly?  Uber simply made cabs accessible to everyone at the click of a button.

At the same time, its consumers, the people the London Mayor is finally answerable too, have a different set of considerations.  They want the cheapest and most efficient way to get from A to B, which is at the same time safe. Due to its pricing model, Uber is always going to be cheaper than taxis, and so is always going to win with the locals when it comes to pricing.  Taxi drivers may want to get rid of Uber because it is successful, but it’s very success should make that very difficult.  If the repeal isn’t successful, I am willing to bet that some mayoral candidate will promise to bring back Uber, or perhaps more likely, Uber will be forced to make some concessions and then be able to continue to function.  If Uber’s appeal is successful, then London’s cabbies are going to be faced with a choice: either lower their prices, or go out of business.  Going on strike doesn’t work:  When they tried that in Pall Mall a few years ago Uber’s prices surged and the apps downloads increased.  Let’s hope that this latest example of protectionist self-interest is repealed in favour of what is best for the City and its inhabitants.

Sadiq Khan may get lots of praise at the Labour party conference, where the unions (who despise Uber’s decentralised model) and are now once again in the ascendency, but this will not serve him well when it comes to the next election.  A city that is meant to be deregulated and be a centre of free enterprise and innovation, does not need its reputation sullied by mayoral grandstanding.  The message this ban sends out is simple: London supports protectionism rather than the free market.

Competition is good for business.  The ease of access to becoming an Uber driver relative to becoming a cabbie has meant that cabbies numbers have started to decline in London as people go for the option that will allow them to earn money faster.  While there are questions to be made about Uber makes any money – it has yet to turn a profit – and about its long term viability due to its failure to do so.  Yet if angel investors want to keep subsiding my cab fare then of course I am going to choose to do so for as long as it is possible. If I feel like spending more money to get somewhere in a black cab, then I can choose to do so to.  But why would do I that when it’s more expensive?    Uber is great because it is on the whole cheap, safe, and provides a good service, so let’s hope its license repeal is a success.

 

1 COMMENT

  1. Typical St Andrews views:
    I don’t care about people or their lives just give me what I want!
    I don’t care that Uber drivers don’t get benefits and a California company gets the vast majority of profits off gig labour.
    I don’t care that these drivers rape and assault women constantly or that they cause accidents and are unqualified.
    I don’t care that they undermine the fees and qualifications payed by black cabbies
    I don’t care that they have an unfair advantage in the market place because they don’t have to do nearly as much as a black cabbie to get on the road.
    JUST SAVE ME A TENNER ON MY TRIP TO THE CLUB!

    This author seems to think that get cheap services means the workers are getting paid well and clearly ignores the massive safety regulations mishaps admitted by Uber. Get out of the bubble and get a black cab.

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