Artificial IntelligenceCryptocurrencyMetaverseCybersecurityTech Forward

Uber and Lyft Have Absolutely Gutted L.A.’s Taxi Industry

April 17, 2016, 8:49 PM UTC


CEO: Travis Kalanick
40 Under 40 rank: 13 Outsourcing at its finest: Uber's app blends the convenience of online ordering with the luxury of having a personal driver. With the Uber app, users can order a driver-for-hire to taxi them from point A to point B. Riders who sign up pre-enter their payment information, so the ride itself is cashless and easy to split between other users. Plus, riders can track their driver's progress via GPS on their smart phone, ensuring a reliable pickup. Vehicles come in a variety of styles, from economy to mid-range sedans to SUVs to upscale rides. Uber is now available in 18 countries and 24 U.S. cities, and it's growing.
Photograph by John R. Coughlin — CNNMoney

The L.A. Times reports that in the three years since ridesharing services Uber and Lyft became available in the city, overall trips by conventional taxi have fallen by nearly 30%. Trips dropped from 8.4 million in 2012 to a little over 6 million in 2015. The biggest declines were in tourist destinations and entertainment centers including Hollywood and downtown.

The Times says that the impact on taxi drivers has been severe, largely because rental costs for taxis and equipment have remained unchanged even as the number of fares has fallen. A manager for LA Checker Cab tells the Times that drivers’ take home pay has declined from $800 a week to between $400 and $500 a week.

Get Data Sheet, Fortune’s technology newsletter.

Taxi trips have increased in two areas. Trips at LAX airport have gone up by 41%, while more taxis are also servicing South L.A., which drivers had avoided because it was perceived as dangerous, and trips there were shorter and less lucrative.

The airport holdout might not continue, though, as Los Angeles has recently agreed to allow Uber and Lyft to provide services there. Because taxi rates are set by city regulators, taxi companies can’t adjust their rates to compete with ride-hailing companies.

The L.A. numbers track with broader national trends, with cities like New York, San Francisco and Las Vegas also showing declines in taxi trips.

For more on Uber, watch our video.

Some of this, certainly, is thanks to the convenience factor of Uber and Lyft’s smartphone hailing systems, and quite likely better customer service. But some of the shift, as the Times report makes clear, is simply because the new ride-hailing services are cheaper—and that’s because they pay drivers less.