The Problem with University Uber Initiatives

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When USC announced a partnership with Uber to augment the university’s campus cruiser program, students were excited. Ride sharing services had already become an integral part of the college experience in Los Angeles, and many students were already familiar with Uber when the USC program launched. Inefficient public transportation and sizable distances make a car essential for getting around LA, and ride sharing services like Uber and Lyft have been a tremendous help by providing students with viable option for mobility.

In Los Angeles, Uber has several tiers of service, ranging from uberPOOL (a shared ride service) to Uber Lux (a personal luxury car). While the more expensive rides like Lux, Select, and Black maintain a flat rate no matter the hour, UberX services engage in a controversial practice called “surge pricing,” which multiplies a fare depending on the supply and demand of rides. This practice has already resulted in some amusing headlines and public backlash, but Uber continues to defend surge pricing as the fairest way to ensure rides are equally available.

Surges can make an affordable fares unaffordable, so user’s relying on ride sharing services have a right to be frustrated. UberPOOL was introduced as a solution to this problem by picking up multiple passengers with one car. Since an UberPOOL’s fare is split between each customer, the company is able to maintain a fixed fee like it does with its higher tier services.

The UberX and UberPOOL fleet are the same however. If UberPOOL demand goes up, there are fewer available UberX cars, resulting in an increased chance of surge multipliers. USC’s Uber service uses the UberPOOL system to give students free rides within a specified area around the school. What this means for drivers is frequent, short rides that stay in one part of town. Discussing this subject with drivers who have participated in the program, I often heard that they found short USC trips tedious and uneconomic. The focus of this piece, however, is not the downsides for the driver, but the issues for non-USC Uber customers in the program’s area of availability.

As noted above, UberPOOL decreases the availability of UberX. When USC Uber is available from 7PM-2AM, UberX/UberPOOL cars in the area experience a sharp rise in pickups. This activity is not a game changer for students using USC Uber because the trips are all free, but for students or local residents trying to leave the USC area, the increased demand is problematic. When I was a student living in around USC, I noticed that UberX was almost always surging when USC Uber was available. The rise in local UberPOOL activity meant seeing multipliers like 1.7x, 2.0x, and 2.5x frequently, discouraging me –as well as my friends– from using UberX.

For non-student residents of University Park, the surge pricing likely makes UberX unaffordable during the service’s most popular hours. There are solutions like using alternative ride companies during peak hours, but these solutions do not mean Uber should ignore the surge problem in college areas. With Uber’s rapid growth, more universities are likely to experiment with similar partnerships. While Uber is free to ignore this issue, the company would be wise to develop a solution. The taxi industry continues to fight ride sharing services any way possible, and situations that disenfranchise potential Uber customers can only fuel the taxi lobby’s battle.

One thought on “The Problem with University Uber Initiatives

  1. This is a really interesting post, it has an unique point of view. Although I do see you point, one question I have to ask is how much are these surge prices affecting Uber demand? If it isn’t affecting how many riders are taking Uber during peak hours, then the company might just choose to ignore it without heavy financial consequences. As you mentioned in your article, Uber should definitely choose to address this issue. Now that other services are mimicking Uber’s model, it won’t be long before the next “Uber” comes up and takes their customers away. Despite this potential risk, it does seem as though Uber will still be prominent in the future because it is still one of the most competitive options.

    An example of an industry that has rising prices yet still reminds competitive is the fast fashion industry. Many “fast fashion” retailers such as Forever 21, H&M, Zara have began to move toward higher priced clothing. Even though they have begun to raise their prices, all of these stores are still more of the affordable options compared to other brands. Therefore, customers will still come back to shop at these place. The same with Uber, it is still one of the most affordable and convenient options compared to taxis, buses and subways. Due to this fact, college students and others will still use Uber for their transportation. At the end of the day though, I still agree with you. Uber should find a way to address this is in order to really stand out and crush potential competitors.

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