Having heard plenty recently about the crazy fares Uber has been charging for rides in the U.S., it was certainly a bit of a relief to see that the prices shown to me on the app for short-distance rides in the San Jose and San Francisco area during my most recent trip weren't all that crazy. That being said, a bit of conversation with my Uber drivers did reveal quite some shocking information.
For instance, did you know that Uber only gives drivers 50% of the fare? So my US$14, 15-minute ride only ended up netting my driver US$7. Thankfully it was in Downtown San Jose, which meant that he didn't have to drive around long to find another customer. My driver did mention that there was once he had to drive someone up to Sacramento. For that ride, he only got around US$50-60 and he didn't even manage to find another customer on the way back.
Another driver I spoke to corroborated the 50% cut Uber takes but mentioned it could get even higher at times, stating that she was really only driving Uber and Lyft now to help pay for gas.
Thankfully, we most likely won't see this sort of outrageous fares in Singapore, partly due thanks to how small our island is. Despite that, it's almost a certainty that you've experienced some major fare hikes by this point. People have been complaining that their usual commutes to the office might have increased by almost 100% during peak periods, thanks to a lack of drivers around.
And that's part of the reason why Uber's fares have shot through the roof. With major labour shortages in the gig economy, it's even cheaper to take a normal cab from the airport in New York now, rather than an Uber. If that sounds familiar, it's because it is.
How many of us have been opening the Grab app to check prices, only to exit in shock and try Comfort DelGro's app instead lately? I'm a stalwart Grab supporter, with Platinum status and plenty of money spent on the app every month, but recently, I've had no choice but to check GoJek and Comfort's prices instead, because they're so much more reasonable than Grab's. Grab could be trying to get my S$30, while GoJek's showing me a S$12 fare. It's certainly a no-brainer which one I'd go for.
But more than just a lack of drivers, the bigger issue is that Uber (and other sorts of ride-hailing services like Grab) just isn't sustainable. In order to get market share, Uber priced their rides cheaply, pushing out other players and normal taxis and burning through investment money like there was no tomorrow. Well, there's only so long Uber can subsidise their rides, and it looks like it's coming to an end.
Similarly, we're looking at Grab report loss after loss, although the most recent reports do shine a beam of hope for Grab. In Q1 2022, the company reported a net loss of $435 million compared to a net loss of $1.1 billion in Q4 2021, While it's still a substantial amount, keep in mind that Uber burned through many more billions and have still yet to announce a profit.
With the company looking to finally reach profitability, the days of cheap rides from Grab might just be coming to an end soon.