Uber, Lyft, Las Vegas And The Death Of Taxis

I was in Las Vegas last week and, for the most part, got from hotel to hotel by walking. But when I needed to go someplace farther away, I did something that I had never done before (in Las Vegas): I took a ride share. It occurred to me at the time just how quickly one of the city’s primary industries, transportation, was dying. There was no line for taxis, but a pen of people at the ride share station.

Technological Destruction

It is impossible to overestimate the importance of the taxi business in Las Vegas. Unless you are walking along the Strip, the city is spread out, and public transportation is poor. At one time, a taxi strike would have practically shut the city down.

Uber was founded in 2009, but it was 2012 before the first UberX was introduced. Within a few years, the taxi business’s obits were being written.

It was, of course, the industry’s own monopoly that led to its downfall. Like the music industry, the taxi industry had made few changes over the past few decades and had forced customers to operate on its terms. It wasn’t that long ago that taxis didn’t accept credit cards, drivers smoked freely and getting a cab required either luck or a phone call and callback. There was no incentive to give up healthy profit margins.

And then there were the charges. In Las Vegas, taxis were D on Uber’s OA in 2016. Taxis charge $3.50 for the initial pick-up, a $2.00 airport fee, $2.76 per mile and a potential $3.00 credit card surcharge. You could end up paying over $10 as soon as the driver hit the accelerator. On the other hand, Uber has a base fare of $1.50, service charge of $2.75 and a per mile fee of only $.80 (in addition to a $.21 per minute charge). Uber does have the annoying surcharges, but their cost is still low.

By the time taxis introduced convenience changes, such as apps for rides, it was too late. Ride shares had become so pervasive that the cab industry had been disintermediated.

Are Rideshares Eliminating Their Biggest Cost?

uber, lyft

Look, Ma, no driver!

Today, I got a pop-up notification from Lyft asking me if I would be willing to take a self-driving car. As of now, the cars would still have Lyft employees in the front seat, just in case anything went wrong. But it might not be too much longer that all the drivers who have benefited from ride share technology might get disintermediated themselves.


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