Uber - Just how good are they?

Since they started out 12 years ago and launched in San Francisco 10 years ago (yes only 10 years ago) Uber have experienced a meteoric rise, and are now one of the most well known companies in the World. No matter where you are, or who you are, you almost certainly have heard of Uber, and chances are, you have been in one at some point.

Two years later, they came to the UK, when they launched in London in 2012, and four years later, they landed in Wales. First Cardiff, then Newport a year or so later. Love them or hate them, Uber have had an impact on almost everyone's lives in one way or another. Customers, or Riders as Uber prefer to call them, love Uber. The company introduced a convenience that had not been known before. Simply pull your phone out, press the screen a few times, and a few minutes later a car arrives to whisk you away. When you get to your destination, simply thank the driver, and exit the car. No need to dig out your wallet or purse, or wait for the driver to find the change. Payment is automatically deducted from your card or pay pal account. Simple & efficient, and usually significantly cheaper. Traditional taxi drivers loathe Uber. Many of their customers have opted for the cheaper, simpler and more efficient Uber, which has had a drastic effect on their earnings. Then there is the subject of "cross-bordering" which is much talked about in the industry, with just as many for it as against it. Cross Bordering is the practice of being licenced by one council, and working in another council. Uber have exploited this law, and inflated their fleet by first, obtaining an operators licence in a busy city, such as Cardiff, and then obtaining an operators licence near by from a council with cheaper fees for drivers, such as. This has allowed people new to the industry, to obtain a licence from somewhere cheaper, and work in a busier area. For example, a Cardiff licence typically costs in excess of ￡800, where as someone can be on the road in a licenced vehicle with Newport, for less than ￡300. Perfectly legal, and above board, and to the everyday paying customer, there is nothing wrong. To the traditional Cardiff driver, this is an underhand tactic, that has allowed Uber to become strong in Cardiff by using a cheaper licences. This is also a pattern seen up and down the UK. Drivers getting licenced by a cheaper council, and then working in a busier area where there is more work, but more expensive to get licenced. From a business point of view, I can't fault it. Indeed I did the same thing myself. Costs are reduced, and turnover is maximised. Business 101 surely.

Trading for only 10 years, a global icon, and one of the most recognised brands in the world. Seems ideal. The History of Uber has been turbulent to say the least though. In almost every country they have traded in, they have come up against some legal challenge or another. The co-founder, Travis Kalanick, had to step down as CEO in 2017 in the midst of sexual scandal, and allegations of sexual harassment in the work place. In London, they have twice had to go to court to retain their operators licence after TfL refused to renew it. Twice they have won in court, but even today, it still just a temporary 18 month licence, as opposed to standard 5 year licence. York refused a licence application from Uber. Just like London, Brighton refused to renew Uber's licence, but Uber won a full licence in Court. Uber are in the middle of an employment tribunal, brought by the GMB. In July 2020 the case was heard in the Supreme Court, and at the time of writing, final ruling has not yet been made. This pattern of legal battles with regulators and employment tribunals has been repeated all over the world. With California, Ubers home state, ruling against them, and declaring Uber drivers must be classed as workers, giving them certain rights. Canada's Supreme Court has also ruled the same.

Uber are the definition of a controversial company, that have grown with mind boggling speed. Legal arguments aside though, what are Uber like to actually drive for? Having been registered with Uber for over 3 years, I feel I am well placed to answer that. As an operator goes, they are ok. There are certainly worse companies to drive for, but there are alot of better ones. When Covid-19 first appeared last year, they were the first company, and too my knowledge still the only one, to pay drivers not to work if they had to self isolate. This took away some of the anxiety for some drivers who may have worked when they weren't supposed to. They were also the first company to provide free PPE to its drivers in the form of Facemasks, wipes and spray. In the past they have hosted dinners, and coffee mornings for drivers. They have even held bowling evenings and other events for high rated drivers. So yes, Uber could be alot worse.

That is just one side of being an Uber driver, or Partner Driver as they refer to their drivers. The PPE, coffee mornings, nights out etc, are all very nice, but people don't sign up to Uber for a free coffee, or a night out. They sign up to earn money. So how is the money for an Uber driver. I mentioned earlier on, that Uber are generally cheaper than a traditional taxi. Exactly how much cheaper, will depend on a number of things, such as where in the country you are, and if the infamous Uber Surge is applied. Uber's Surge, or dynamic pricing, is Ubers way of increasing prices as demand out strips supply. It is a practice that is found in many industries, Hotels & Airlines the most common. If its going to be busy, its generally going to cost you more. Uber's surge is a bit more dynamic and can change minute by minute. The fluctuating prices annoying customers, as depending on the day, time, occasion, a ride, could cost 2 or 3 times as much as normal. For the driver, well they love it. For exactly the same reason.

So why do Uber drivers love "The Surge" so much? Aside from the obvious. As I have said Uber are usually cheap. Really cheap. Most people, do not stop to consider how much a driver is making from a ride. Those that do, just think that the traditional taxi's with their higher standard fares, are simply out to rip people off. The truth is though, that from any given normal fare, the driver is making pennies. In pre-coronavirus times, this was OK. Ubers algorithms, and pure popularity meant that a large portion of the time dead mileage (the mileage being driven between rides) was minimal. The minimal dead mileage mitigated the low fares, and most evenings, and weekends "The Surge" was activated, which boosted fares, and with it income, and made Uber a realistic option for a living. You are never going to get rich as an Uber driver, but you could put food on the table, and a roof over your head. Without these two working together, the simple fact is, Uber fares are too low for a driver to make a living.

To demonstrate this point, take a look at Uber fares compared with a local "traditional taxi" company. Diff Car, is one such company. Whilst new, and young, the pricing is more inline with a traditional taxi company, than it is with Uber.

This table shows how Diff Car's fares, and driver earnings compare to Uber over a selection of bookings we have carried out since we launched. Whilst our fares may on average be 16.73% higher than Uber's for the same journey, our Admin fee's are on average 13.9% lower than Uber's, meaning that the driver earns on average 22.5% MORE. Take a look at the the end two sections. The commission, and the earnings. Uber take 25% of all fares, meaning a driver only gets 75% of what is already a very cheap fare. Using the top fare, Maindy to City Road as an example, this particular fare would have cost an Uber rider, ￡4.80. The driver would have been paid ￡3.60. Out of which they would have had to pay ALL their own costs. Fuel, insurance, wear and tear on the vehicle etc. Speaking from experience, an Uber drivers overheads account for around 60% of turnover. Using that Maindy to City Road booking as an example, from the ￡4.80 the rider would have paid, the driver would have earnt ￡1.44 before tax. ￡1.44 for a journey, that took our driver 7 minutes to complete from pick up to drop off. If the Uber driver had been lucky enough to be dropping off at the exact same place, at the exact same time, they picked up from in Maindy, and then were lucky enough to have a pick up in the exact same spot on City Rd at the exact same time they were dropping off there, and they pattern continued, they could fit 8.57 rides the same in an hour. Earning them a respectful ￡12.34 an hour. Even pre-coronavirus, to have a whole shift like that was unlikely. Now it is simply unheard of for an hour. At best, the Uber driver may only be working at 50% of capacity, taking their hourly rate down to ￡6.17/hour. If they are lucky.

The Diff Car driver on the other hand, would have comparable overheads to the Uber driver, the difference being, after our admin fee, they would of had ￡4.90, making a profit on that one job ￡2.74. Fitting in 8.57 identical bookings in an hour, and they are making ￡23.48 per hour, flat out. Working at a more realistic one third capacity, they are still earning ￡7.82 an hour. Still very low wages, but unfortunately that is the current situation during these restrictions, and a reason why taxi drivers are hanging on by the skin of their teeth.

So who is really ripping who off in the real world? Have traditional taxi companies been ripping the passenger off all this time, or are Uber ripping their partner drivers off, but PR and spin is making it look like the old guard are the bad ones?

One good thing that appears to have come from Covid-19, is it seems to be making people look at who they are buying from, who they spend their money with. No longer is it simply a case of finding the best possible price, from the cheapest supplier. CSR is also making more of an impact, and how the companies are looking after those that work with, and for them financially. Perhaps most important though, certainly to us anyway, is how much is the man or woman on the street earning. How much are the people at the coal face, so to speak, earning. Are they earning a reasonable amount for the work they are doing, or are they being exploited and the people at the top making all the money at their expense?

Next time you pull out your phone, to order your Uber, just stop for a minute. Ask yourself, if Uber is the best option. They may be the cheapest to your pocket, but at what cost to the drivers pocket? Then close the Uber app, and open the Diff Car app instead, and get a driver who will earn a fair income for the work they do.