Uber has Disrupted the Taxi Industry in Australia - Essay Writing Assessment Answers

August 21, 2017
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Essay Topic

Uber has disrupted the taxi industry in Australia. Are the reforms introduced in the ACT and NSW sufficient to compensate taxi drivers for the disruption caused by Uber? What societal changes have enabled the rise of ride-sharing businesses such as Uber? Are these reforms good for the economy? Why or why not?

 

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Solution: Uber has disrupted the taxi industry in Australia

Are the reforms introduced in the ACT and NSW sufficient to compensate taxi drivers for the disruption caused by Uber? What societal changes have enabled the rise of ride-sharing businesses such as Uber? Are these reforms good for the economy? Why or why not?

Introduction

Uber Technologies Inc. an American Multinational (MNC) transportation company that works online, having its base in San Francisco, California have transformed and revamped face of public transportation taxi services in Australia. “Uber” marks the birth of corporatization of taxi industry in Australia, which was wholly and solely maintained and governed under government ownership, since inception. The journey from birth to boom of Uber was a short and a rapid one, creating turmoil and disrupting the age-old traditional taxi service industry. It not only emerged as a competition on the face of the old taxi regime but also created a chain of reforms that has stirred up the whole system.

Uber functions through a mobile-app (application), and facilitates commuters using a smart phone to submit a trip request and the same gets reverted to Uber drivers, who use their cars to comply with the request (Rusli, E 2014 , j ,Wall Street). It is a positive package of flexibility, reliability and sustainability to its users, a promising system of transportation. The company has very well identified the key requirements of the consumers and has strategically targeted the same. The convenience of booking a ride at finger tips seemed to have done well against the primitive means. Uber’s cost-effective methods of doing business and considerable shed down of over-heads have brought about a study decline in the cost per kilometer rate (Uber Cities, 2016). It primarily aims at two factors, firstly, the company policy has encouraged users to take more rides from point-to-point than they had before. This has grown the size of point-to-point ride services in the market of Australia  as fo the consumers are attracted to enter the market either by the different features offered by the same and the low prices also attract them. Secondly, price and service differences have seen consumers switch to ridesharing from other point-to-point transport services (such as taxis), in which case the overall size of the market remains the same, but there may be benefits to society because of strong consumer gains. Uber has facilitated in reliable and cash free transactions by using integrated payment system, where by the taxi fare is directly charged to the consumers linked account. This is not only safe and reliable but also hassle- free. Resulting in maintenance of proper records, transactions, expenses and travel history. The application also has in- built rating system to be provided by both (bi- directional rating system) at the end of the ride, with five-star being the highest and one-star being the lowest. The whole concept has induced minimal refusal of the service-provider and less cancellation of the rides, with a real competitive sense which was rather missing in the taxi industry. The cars are available with less waiting time, and tracking and matching the availability of the rider with one tap on the application. The technical features provided has made it all the more competitive and unique in the market, therefore filling the gap which was created by the taxi industry (http//www//uber.mbsf.org/benefits-of-using-uber).

The above mentioned advantages given by the Uber services have jeopardized the traditional taxi industry in Australia.

The Victorian Government felt this too, as in New South Wales (NSW), Uber has legally created its territory, following a decision of regulating the same by the cabinet. They also emphasized, that after legalization of the services, and on consideration of the recommendations from an independent taskforce into the taxi industry and transport service- providers as Uber (2015, Australian Associated Press). The government has tried to compensate to the taxi industry in two phases, firstly, the state’s perpetual taxi holders to receive $20,000 per plate and it will be maximum two plates or an amount of $40,000. In the second phase, the government has further announced to slash down taxi license fees in half from $20,000 to $10,000 in this year, and the, and then halving them again in 2017, with annual license fees for hire cars also set to be reduced (Baldassare, G 2015, Start Up Daily, New South Wales (NSW) government legalizes Uber through   reforms for a “modern point to point transport industry, will compensate taxi industry”). Moreover, Uber and other cabs will have to pay levy of $1 to provide fund to taxi licensee compensation. This tax will make consumers to pay more to compensate the very industry that refused to improve and innovate.

(2015, Australian Associated Press).

No, compensation is sufficient enough to mitigate the loss which the taxi drivers have incurred. The taxi drivers follow a rigid regime, as there are fixed number licensee in a particular area, which is not increased under any circumstances, there is no point-to-point pick up, and they have to pick up as Uber. This is just like asking the drivers and their operators to have less pay and at the same juncture face cut-throat competition from hundreds of new taxis, so very unrealistic.

Whenever a new startup business swifts to the boom within a very less period of time, it’s definitely backed up by the standing requirement of the society, which was left unheard and unnoticed by the existing government system.

This very requirement has made enough space for Uber to make a special place of its own.  Uber, has created a free market and a competitive one too, because in today’s, world where one can get services on finger- tips at any time during the day or even in the night hours, with  more reliability and security, why would a consumer go for an old system of booking the same services and that too in limitations. The company is providing all the basic amenities for a consumer and has also catered to the advance requirement in the up-coming time. Uber has marked that safety for both riders and driver partners is an important issue for all operators in the point-to-point transport market. The Uber smart-phone application allows both passengers and driver partners the benefits of real-time GPS tracking, enhancing safety and transparency. Riders are able to use the Uber application to track the route of their ride before pickup as well as in-journey. Moreover, this information is stored in the application, and is provided to both driver partner and passenger on the payment receipt. The taxi industry has previously identified that fare evasion is a problem, with surveys indicating the extent of the issue. A survey conducted in 2010 in South Australia found that 81per cent of drivers surveyed had experienced fare evasion, with more than 60 per cent of those respondents having experienced fare evasion twice or more in the prior 12 months (Melanie, P 2010, Taxi Driver Survey, Victim Support Service SA). Pricing has always been a concern for the consumers, the company’s pricing policy is variable and it fluctuates with the supply and demand, which is referred as “price surging”. This doesn’t take place during a set period of time, moreover, it occurs when the demand is high and the availability of the drivers are not enough to meet the same. During such hours the base rate tends to increase or “surges”. Comparatively, Uber, was found cheaper. (Castle, J 2015, Behind the Wheels, UberX vs Taxis- which one is best?https://www.choice.com.au/transport/cars/general/ articles). These advantages of Uber have come in the right time, when there was a cultural and social shift from the old generation to new, from the slow life to fast moving life. Increase in time value of a person, a radical change in the thought process of society to be economical in every sphere, introduction of time saving approach such as JIT (just in time), shift from non-technical life style to a tech-savy generations with smart phones in every hand from cash to card, from notebooks to e-mails. The very change in a person’s mind-set and all the more the differential approach has fit in well with the hi-tech taxi services introduced by Uber (Sherman, 2014).

The recent reforms introduced are a curse to the overall economy. The taxi services in the state was not efficient enough to compete with the emerging Uber business and had required substantial  government help and has also added a burden on the consumer as well. Substantial governmental revenue is lost in the form reduced taxi licensee fees with the government ensuring further reduction the damage shall be more and deeper. With Uber eroding the market share of taxi services day by day, the revenue from taxi licensee fees is bound to reduce further. Instead of, compelling the in-house taxi services to keep up to the standard of Uber, the government is spoon feeding the former and declining its own revenue. The steady decline in revenue from taxi licensee fees is ultimately going to hamper the total revenue budget in a big way and with no further hopes of revival the situation will go from bad to worse. Uber, on the other hand is extracting and attracting consumers so rapidly that no amount of taxi reforms will save them from facing extinction (Australian Association Ltd, 2014).

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