News Column

Uber to Test On-demand Taxi Service in Chicago

April 19, 2012

Wailin Wong

Uber, the startup that connects consumers with luxe car service, is testing a new taxi program in Chicago. Uber first landed in Chicago in September after having launched in its home city of San Francisco, as well as New York and Seattle. Late last year, the company raised $32 million in a new round of funding from investors including Goldman Sachs and Bezos Expeditions, which runs Amazon.com founder Jeff Bezos' venture capital investments. Uber has expanded to five additional cities, including Los Angeles and Paris.

With the Uber service, customers can order a private car, typically a Lincoln Town Car, using a smartphone application. Members' credit card information is stored in the company's system and the card is automatically charged at the end of the ride. The fare includes tips and tolls.

This same model will be applied to the new taxi service. However, instead of charging Uber's standard rates, the cab drivers will enter the fare that is on the meter. Customers' credit cards are automatically charged the fare plus a 20 percent fee for gratuity and service fees. At this time, payment for the Uber taxi service will be on credit cards only.

"To date, we've been all about this really high-end service and we've always said we're everyone's private driver," said Uber Chief Executive Travis Kalanick. "We're testing to see if this can be done on taxis in a high-quality fashion. We want to see if it's possible to really hit mass market."

Kalanick said the company's business in Chicago is "looking incredibly good, far outstripping where San Francisco was at the same age." Revenues from Chicago operations are growing between 30 and 40 percent from month to month, he said.

Uber zeroed in on Chicago for its taxi testing because the city has an ample supply of cabs -- 50 percent more taxis per capita than New York City, according to the company -- and relatively inexpensive fares compared with other major metropolitan areas.

Uber does not employ the drivers in its system. Instead, it signs up drivers that are already licensed and are looking for additional passengers during their off hours. Uber inspects their vehicles and vets the drivers. The company is using the same system for its taxi program, which has about 30 cab drivers signed up so far.

The lower-cost taxi service will be turned on for groups of existing Uber members in phases. The default option in the company's mobile app will still be the higher-end service. Kalanick said he expects the new taxi service to be popular in neighborhoods that don't have as many free cabs, but that the company will be adding more cabs to its program as the test gets underway.

"The key here is you want to match supply with demand, and we're going to be onboarding as quickly as possible," Kalanick said. "A lot of folks have either tried the Uber experience or maybe had friends who did, but maybe it's not the right price point for them. There's a lot of pent-up demand about getting this kind of experience."

He added that the service is compliant with local taxi regulations. In other cities, most notably Washington D.C., Uber has raised the ire of local taxi commissioners.



Source: (c) 2012 the Chicago Tribune. Distributed by MCT Information Services


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