Thursday, October 31, 2013


We have a problem in Calgary. It has to do with taxis. There are barely enough to service the city and what's worse, most of them are sitting idle at our airport waiting for their turn to catch a fare. It's a weird, antiquated system in this city and the drivers are at the whim of the cab companies and their dispatchers.

Which is why I really like the business model that is Uber. Uber is a venture-funded start-up company based in San Francisco, that makes a mobile app to connect passengers with drivers of luxury vehicles for hire. The company serves many cities including San Francisco Bay, New York City, Seattle, Chicago, Boston, Toronto, Johannesburg, Berlin, London, Melbourne, Stockholm, Sydney, and many more.

Uber drivers have luxury cars such as Escalades, BMW 7 Series, and Mercedes-Benz S550 sedans. Cars are reserved by sending a text message or by using a mobile app. Using the app, customers can track their reserved car's location.

Uber's pricing is similar to metered taxis and all hiring and payment is handled exclusively through Uber. If the Uber car is going faster than 11 mph, the price is calculated on a distance basis, otherwise it's on a time basis. Prices are about 50% to 75% higher than prices charged by conventional cabs. At the end of a ride the complete fare is automatically billed to the customer's credit card. Uber has said that its high prices are the premium that the customers pay for a cab service that is not only reliable but also punctual and comfortable.

During holiday times, Uber increases its prices to "surge price" levels to reach an economic equilibrium by attracting more drivers. Uber has also uses surge pricing during extremely inclement weather. Customers receive notice when making a reservation that prices have increased.

The latest news is that Uber has its eyes set on Calgary. There are some municipal laws that have to be modified for them to be able to do business here though. I wish them luck. We definitely need the competition.

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