Uber and Lyft Fare Cuts Hit NYC Taxis, and Their Lenders, Hard

by Sean Riley

The Street

Price cuts by Uber and Lyft are hurting New York City yellow taxi revenues harder than ever, new data show.

Uber's 15% fare cut for UberX in New York City on January 28, quickly matched by ride-hailing competitor Lyft, set the stage for an interesting test case in February 2016 on how sensitive New York City for-hire transportation demand really is to price changes. Uber fares in New York have been closer to yellow cabs than other cities where transportation network companies' (TNC, like Uber) fares are typically 30%-to-40% lower. In New York, data show a 27.4% decline from peak of trips for yellow cabs, relative to cities like Chicago and Boston, where trips are reportedly down in excess of 50%. So, it stands to reason the rapid market share gains for Uber and others in New York prior to the fare reduction have had more to do with qualitative factors like convenience, vehicle cleanliness, driver ratings, real-time digital tracking of trips and higher quality service.

In February 2016, New York City yellow taxi trips were down 11.7% versus the prior year, and farebox revenue was down 11%, according to the latest New York Taxi and Limousine Commission data, obtained by TheStreet before release to the general public. (TheStreet has also obtained data for March and April -- see table below.)

February 2015 was a terrible month weather-wise, weighing on taxi revenues in general (making February 2016 a favorable comparison month for yellow cabs), suggesting the impact of the fare reduction might be understated by the year-over-year comparison. Weather provided another assist to yellow cabs in the March comparison, but yellow taxi cab numbers were still down markedly. There was significantly less rain and snow, far fewer days of precipitation and much warmer temps in March 2016 versus 2015, yet the year-over-year drops were negative 8.5% and 7.6% for yellow cab trips and farebox revenue, respectively.

In April, the year-over-year comparisons were negative 8.7% and 8.1% for trips and farebox, respectively, and weather was not a factor in the comparisons, though favorable for street hailers both years. For perspective, the 397,780 trips made by yellow taxis in April 2016 compares to 451,508 in April 2009. [MORE]