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Uber undercuts cabs with the lower-cost UberX app
Uber Technologies’ latest effort to muscle into the traditional Chicago taxicab driver’s lane seems to be paying dividends.
The company says it’s “thrilled” with early results from UberX, the lower-cost smartphone dispatch app the San Francisco-based startup launched here in April.
Since then, UberX has provided “tens of thousands of rides, covering hundreds of thousands of miles,” according to Andrew Macdonald, general manager of Uber’s Chicago operations.
UberX marks a more affordable expansion of Uber’s services in Chicago and several other major cities. The company began offering on-demand ride service in Chicago in September 2011 via UberBlack, which provides a black sedan at a base rate of $7 and per-mile fee of $3.50.
By contrast, UberX provides a driver in a Ford Fusion or Toyota Camry hybrid at a base of $3.15 plus $1.75 a mile. A trip from River North to Wrigleyville, for example, would run you about $13 with UberX and $25 with UberBlack, according to the company’s website.
For traditional Chicago taxis, passengers pay a $3.25 flag pull plus $1.80 per mile.
The cheaper-than-cabs service is the most direct aim at traditional taxi service to date. Uber is one of several ride-sharing and taxi-hailing startups — along with Hailo, Sidecar and Lyft — angling for a piece of an urban transportation market that’s long been the domain of Yellow Cab and other longtime taxi operators.
The city says it has no beef with Uber, which holds a dispatch license and is in compliance with the relevant, existing regulations, according to Jennifer Lipford, a spokeswoman with the Chicago Department of Business Affairs and Consumer Protection. The department has no record of any customer complaints or comments from the public on Uber or any of the other new ride services, she says.
Uber declined to provide specific figures on the number of rides or the revenue the company has generated. Taxi-hailing service Hailo, on its website, offered a glimpse into what appears to be a rapidly growing market, saying it has served 5 million passengers worldwide and grown to annualized sales of more than $100 million since the company’s launch in November 2011.
But Uber’s road hasn’t been entirely smooth.
Last year, several Chicago taxi and limousine companies sued Uber in federal court, alleging the ride service violated numerous local and state laws regarding public safety, consumer protection and fair practices. Uber is also the target of a class-action suit in Cook County Circuit Court that contends the company defrauded consumers. Part of the complaints involved a 20 percent “gratuity” Uber charged riders.
In Los Angeles, Uber and ride-sharing service Lyft — identified by the pink mustaches on the grills of its vehicles — last month received cease-and-desist orders from the city, which said the companies don’t have the permits or licenses to operate, according to media reports.
Asked about the suits, Uber referred to previous comments from CEO Travis Kalanick denying the allegations and emphasizing the company’s transparency with its fees.