The Rise And Rise Of Uber In Australia

Uber launched in Australia 2 years ago, in October 2012. If you haven’t heard of it, here’s a quick recap. Uber is a car ride-sharing service backed by Google – it allows you use its app to catch a ride from one of its drivers. Just about anyone with a car can be a driver – not just taxis, but also serviced cars and even ordinary people (like this). The benefit for the average person is simple. Because drivers don’t need to pay for expensive taxi licenses, Uber rides are generally cheaper than taxis (or so they claim).

This post originally appeared on the Pocketbook blog.

For taxi drivers, they get the benefit of additional jobs, when they used to just wait at the rank.

However, the taxi industry has been at loggerheads with Uber entering the market. Taxi drivers protested against the service in Perth and the Government is cracking down on Uber’s drivers in Adelaide, NSW and Victoria. Many critics cite the security concerns when anyone and any car can transport the public.

Despite similar critics in the US and in Europe, the consumer reaction has been overwhelmingly the opposite. When taxi drivers went on strike in London, Uber saw an 850 per cent jump in sign-ups. Globally, Uber’s CEO says that they are doubling revenue every six months.

So given our local industry reaction, we wanted to see how ordinary Australians are reacting.

Uber’s Market Share Grew Over 700 Per Cent Since January Last Year

First, we looked at Uber’s market share by the number of people that spent on its services vs paying for taxis electronically, from its official launch in October 2012 to December 2014. As you can see, the rise has been quite spectacular over the last calendar year.

A few important dates to keep in mind. Uber first launched as UberBlack, with only a fleet of black cars which chauffeured users around. This was able to soak up around 3 per cent of the total market pie. And then in June 2013, Uber launched UberTaxi – the service which allows taxis to become Uber cars. This then soaked up a further 2 per cent – totalling a 5 per cent share of the electronic payments market.

From January 2014 however, Uber ramped up it’s marketing efforts (see picture of price comparison table from their Feb 2014 email). UberX – their much criticised peer-to-peer service launched in March 2014, contributing to what now seems like a consistent trend of month-on-month growth, capturing 22 per cent of electronic taxi payments in December 2014.

Today, There Is About $1 Spent On Uber For Every $12 Spent On Taxis

Stats submitted from payments provider Cabfare suggests that cash payments in taxis make up around 60 per cent of total spending on taxi fares. This means electronic payments make up around 40 per cent.

Our data looks at Uber’s share of fares that are paid electronically. Based on our 22 per cent number, we project their total share of Australian taxi spending to be around 8.8 per cent – making it roughly one Uber dollar spent for every 12 taxi dollars spent in December 2014.

Huge progress, for a business that didn’t exist two years ago.

UberX, Uber’s Peer-To-Peer Service Arm, May Be Driving Prices Down

Another interesting finding is when we look at the average spending on taxis versus Uber.

The average spend per journey with taxis has kept steady over the years, while the amount spent per Uber ride has significantly reduced, and is reducing over time.

Our hunch for the probable causes is two fold:

  1. The drop happened in April 2014, the same time Uber introduced UberX in Australia, and has continued to drop as UberX gets more popular.
  2. As Uber become more ubiquitous, users are hailing rides for ever shorter trips.

One thing to note here is that the average spending of taxis in our sample is about $30. The average spending that Australian Taxi Industry Association (ATIA) reports is $22.76. One plausible explanation for this discrepancy is that the ATIA’s number includes cash transactions, which we assume tends to be smaller than the average amount paid through electronic card transactions.

Sydney Surge Pricing

During December 2014, Uber was criticised heavily for surge pricing during the Sydney Martin Place siege event. Whilst surge pricing works to incentivise and increase supply of drivers during busy periods, the untimeliness caused significant criticism. We looked at spending on taxis and Uber on December 15, 2014. The first day of the hostage crisis.

Contrary to media expectations, the price of average Uber rides for the 15th, did not exceed the increase for taxis in Sydney overall. It was in fact 0.2 per cent less. i.e. people that normally wouldn’t be taking a cab home (live further out) were and this led to a small increase in average ride spend. The size of this increase was about the same for both taxis and Uber. So it appears users were not affected by surge pricing at the end of the day .

Forecasting The Future

It is difficult to imagine similar trends won’t continue in the months and years ahead.

On the users side, clear pricing, convenience, superior and cleaner cars (allegedly), and anecdotally cheaper prices (our data supports it) will continue to make the service super compelling.

Furthermore, this is the receipt experience. You be the judge.

On the driver’s side, a taxi license costs $400,000 in NSW ($300,000 in Vic) and the average taxi drivers makes the equivalent of about $10/hr after costs. As Jacob Saulwick wrote in SMH, “Imagine needing a $400,000 licence for the right to serve someone a cup of coffee.”

In San Francisco, where Uber was founded and first launched, the Municipal Transportation agency reported that the average trips per taxi has tumbled by 65 per cent. The suspected cause – the rise of ride-sharing apps like Uber. If that’s true, then that makes “catching an Uber” more popular than “catching a taxi” in San Francisco. Certainly, some of the lingo like “Uber it” has already come to our shores via popular US tv shows. It’s hard to imagine that won’t be Sydney in a year or two.

In a future post, we’ll look deeper into the data and answer questions such as:

  1. Are Uber customers switching away from taxis, or were they never taxi commuters anyway?
  2. How many times do taxi commuters take rides and how does Uber compare?
  3. What will the be impact of Uber’s growth on the value of taxi licences?

Stay tuned.

End Notes On Our Data

  • Our data comes from the real-spending of Pocketbook users, with all data de-identified, aggregated and analysed internally to protect security and privacy of our users data. The data is not from a survey.
  • The data is not from Uber or any taxi related industry group, unless it is referenced (ie AITA).
  • The surge pricing analysis didn’t include any free rides, or cashbacks which Uber ended up providing, which would have incorrectly reduced the average.

About Pocketbook: Pocketbook is an Australian service that makes managing your spending ridiculously simple. It does this by aggregating your bank accounts, credit cards and loans, and providing a single view of your spending. Pocketbook enables people to bring their spending under control with tools such as alerts letting users know when they get charged bank fees; many users have had unfair fees overturned by the banks (example). The service lets people set spending limits and custom alerts so they always remain within budget.


Comments

    Uber will continue to gain in popularity and remain regulatory limbo until a major incident will happen forcing the Government to step in, e.g. assault of driver/passenger, accident, insurance claims, etc. etc. Will be interested to see how will Uber supporter/denier react when something like this happens

      Apparently they'll suspend the driver if he gets a sexual assault charge.
      http://www.chicagotribune.com/news/local/breaking/chi--2nd-uber-driver-charged-assaulting-passenger-20150114-story.html

      A passenger was assaulted by an Uber driver in Melbourne.

      http://mobile.abc.net.au/news/2015-01-10/uber-driver-arrested-over-alleged-assault-on-woman-in-melbourne/6010366

        Who is now a FORMER uber driver

          I believe they call that closing the stable door after the horse has bolted. Uber seems like a serial killer's wet dream to me, a veritable smorgasbord of victims waiting to be sliced and diced.

          A responsive action does not address the issue of passenger safety, which is, and still is, the main argument against Uber's illegal operation in Australia. If Uber wished to function as a legal agent in Australia then they would have sort compliance with state and national laws.

    To be honest I think the relationship between driver and passenger is more positive from the start when using Uber which means I think it's actually safer for both parties. Reasons:

    std::rant <<
    1. The price is a lot closer to what I would call reasonable most of the time. Surges excepted but in those cases its usually pretty hard to get a cab at all, like New Years.

    2. Both passenger and driver have a transparent method of providing feedback that matters easily. I mean who actual calls a cab company to make a complaint, and when you hop in the cab how do you actually know the driver has had 15 complaints?

    3. In my experience so far they don't drive like maniacs because in almost all cases it's their OWN car, not a companies car that they don't give a shit about. I can't say I have seen and Uber yet that looks like its been in 15 prangs with bumps and scrapes all over it. Stand on a street in the city for five minutes and you'll see a cab with the bumped half hanging off or something. Also I don't get any kind of motion sickness but, on numerous occasions have been given it by cabs that treat the 50 meters between red lights like a drag race flogging the car because they don't have to pay the maintenance. << std::endrant;

      I haven't used Uber (and will not until they actually decide to operate within the law in Victoria) but I agree with you in concept on points 1 and 2. The taxi complaint system is rubbish, and there are too many cases of either (1) credit card swiping in cabs or (2) EFTPOS machines being out of order.

      Actually, what I'd really like is for Uber to die and for another company (let's say Lyft, for example) which don't seem to have systemic organisational issues with abiding by their own privacy policies, sexism, and ultimately just not being fuckwits (note: mainly not talking about drivers, but rather the management) to fill the gap.

      The taxi industry (not drivers - the industry) needs competition, and the phone-based payment, ordering, and rating systems associated with Uber-like companies are great. Now if only they would adhere to driver requirements and accept that they are not 'ride-sharing' (which only Uber seems unable to see) then it could be great.

      Note: once again, talking about Victoria. I have been made aware that in QLD and WA, Uber requires (and maybe even checks) that drivers do have the necessary additions to their driver's licence to be able to take paying passengers. Whether Uber is overall operating legally in WA and QLD I couldn't say. They clearly are not in NSW or Vic.

      Note 2: Uber is digging their own grave in Australia - it is only a matter of time before they are treated as organised crime, or incrementally increased fines ending in jail time are applied to drivers.

      Last edited 16/01/15 3:51 pm

        Disagree with Note 2. I was reading just yesterday that QLD Transport was going to stop trying to police it because it was making little impact, and widely unpopular with the public.

        Also currently the $1700 dollar fines are making no impact as Uber pays it on behalf of the driver and their are no demerit point etc.

          I think that QLD Transport are making a big, big mistake in their decision. Not because I think that Uber-like services shouldn't exist, but because by choosing not to police it QLD Transport is giving up their avenue of influence over it. (The problem essentially being your second note: the fines are ineffective).

          If QLD Transport wants to allow Uber and Uber-like services, they should be changing the regulation which makes Uber-like services illegal. Better yet, they should be taking on the aspects of the law are valuable, scrapping those which are not, and making the fines incremental so that drivers lose their licenses or cars if they choose to illegally operate as hire cars (and treat Uber as either organised crime, or facilitating crime unless they comply with revised laws).

          Specifically talking about Uber: in what other industry would we consider it acceptable behaviour for a company to facilitate people breaking the law, and then pay their fines for them when they were caught?

          Last edited 16/01/15 9:15 pm

            That goes right to the heart of it. The public in general either doesn't care or doesn't mind, and that same public pay for the policing of it.

            I mean aren't there bigger issues to deal with in the interest of public safety other than trying to protect people from a service they are paying to use?

              PS. Personal responsibility at the end of the day. Don't like it, feel unsafe, don't use it.

                I think I understand your point, and indeed if the relevant part of Transport QLD isn't going to police appropriate licensing of drivers, car safety, etc then they should do us all a favour and save tax dollars by moving on.

                My counter-arguments your point are:
                Ensuring appropriate registration, background checks and vehicle safety are public safety issues. There are other ones too, but these are valid ones that warrant attention.
                Transport services for the public are a classic area where regulation is useful, because that regulation is the foundation of trust that allows the service to operate. If people can't know that the car they are getting into isn't driven by a serial rapist out on parole, then there isn't a good basis of trust for getting into the car. One could argue that because Uber says it does police background checks, people can trust Uber drivers (vs another competing company which claims to do police background checks). However, the reality is that what is in Uber's interest is maintaining the minimum necessary appearance of trustworthyness for people to use them. There are numerous examples of people becoming Uber drivers (outside Australia: I don't know of anyone trying to find out inside Australia) by simply lying about their criminal record.
                People can argue that a rating system addresses that, but a rating system can only address what has already happened. Since Uber removes drivers who are charged with assault on passengers, the rating isn't a protection there. It may be protection against bad drivers, in the sense of dangerous, stinky, or creepy, but it isn't protection against a serious offence because the serious offence terminates the Uber driver's operation (so says Uber).
                As other services begin to exist, the usefulness of these ratings also decreases because ratings are diluted across multiple competing systems. If a driver gets the boot from one service, they can simply shift to another unless there is an underlying system to maintain parity of ratings or background checks between services.

                Personal responsibility is fine and all, but personal responsibility is really only useful when someone has the information to be able to make an informed decision. Having minimum requirements for drivers by law provides the information to make a decision: users can know that they drivers have appropriate insurance to cover the passenger and their belongings if an accident occurs, that the driver is of adequate character (e.g. police background check) and is an adequate driver (requiring special licence conditions).

                There are, it seems, many aspects of transport law which are the result of lobbying by special interests leading to protectionistic rules. Those need to go. However, the laws which exist to maintain safety and user confidence in the system - that's what is worth maintaining.

                  It's interesting that there seems to be more people actively being vocal about protecting the world from people driving cars that don't work for a cab company than there is people saying cabs need to be better for both the driver, and the passenger.

                  Haven't seen anyone argue that the cab 'experience' is better than the Uber 'experience' for either the driver or the passenger perspectives. Money and safety aside I'd still take a Uber every day of the week simply to sit in a clean car with a person who doesn't drive like a maniac.

                  PS. And doesn't just say 'Where to?' and then continue their conversation on the phone to their friends for the next 20 minutes. I've had that happen on quite a few occasions particular on the way to and from the airport for work.

                  Last edited 16/01/15 10:51 pm

                  @dashals
                  Oh, the cab experience needs to be improved for both driver and passenger. I enjoyed a relevant segment on The Checkout (the clip is here, just scroll to 'All Hail Taxis'). There are big problems with the taxi industry.

                  If the Uber CEO wasn't such a fuckwit, and their rhetoric wasn't so predictable, Uber would probably get less criticism than it does. Also, if Uber didn't flagrantly ignore the law and instead used accredited drivers and became an unlimited vehicle hire-car service then the argument would be very different.

                  In summary: the taxi industry needs a big shake-up. Uber-like services are likely to be a part of this, which is great, and regulation needs to be reviewed to make sure that the safety aspects are retained whereas the taxi-protectionistic aspects are removed. However, the actions of Uber as a company with respect to law, to their own privacy policies, and so on (i.e. not the drivers) means Uber is about as bad a champion as one could find.

                  In summary: taxi services need a shake-up, but Uber's attitude towards the law (i.e. we'll ignore it) means that they have painted a target on their face and handed everyone shotguns. This unfortunately means the (valid) discussion of what Uber-like companies are doing right is competing with how companies that ignore the law should be dealt with.

                  So your saying the CAB industry needs to be challenged (which I can't ever recall it being challenged before now) but it can only be done by a company that doesn't encourage to people to break the protectionist laws that have stopped anyone from trying for the last 50 years.

                  That's why the protectionist laws have worked so well. You need deep pockets, low morals, and a lot of balls to take them on.

                  I don't think Uber will be the primary cab of the future but I do think it's deep pockets, and ruthlessness will mean it can stay around long enough to shake the whole industry up from being a two company system where both are equally as shit into a system with multiple competing companies actually trying to deliver a good service because they have to retain customers. As opposed to now where there's only two options and they are both shit taxicab companies with terrible service.

                  @dashals
                  I am saying the cab industry needs to be challenged, but not by an organisation who think the appropriate means of operating when they don't like the laws is to ignore the laws. There are means by which Uber can operate legally (in Victoria at least), which involve getting drivers accredited, using vehicles and insurance which meet the minimum requirements, and becoming a licensed hire-car operator (which according to a quote from the head of the Taxi Services Commisioner in this article would be about $40k). None of these strike me as particularly unreasonable, but there might be more behind the scenes.

                  In Victoria, partial taxi deregulation was already underway prior to Uber even really getting started in Australia at all. It is pretty clear with the appearance of Uber and Lyft that the current Taxi model is no longer particularly optimal and does need a shake-up, and increased regulatory changes will be valuable for that. I agree, though, that it is hard for chickenshit legislators to make any changes when Taxi companies are donating decent sums of cash and have a direct line to all the taxi drivers out there.

                  I'm not trying to argue that the cab experience is better than the Uber experience. It may be much poorer than the Uber experience, but that isn't the point. It is like comparing my preference for my local pharmacy, and an illegally operating mail-order pharmaceutical company (kind of; as usual, analogies don't work all that well).

                  All the articles I have read regarding Uber come across as if Uber has made no effort at all to try to comply with local laws. Some quotes from the above article:

                  "I'm surprised because I would've thought that if they wanted some assistance from the Taxi Services Commission to ensure that what they're doing operates within the law or meets the fundamental imperative we've got, which is the safety of passengers, they would sit down with the Taxi Services Commissioner and explain it."

                  Mr Samuel said he wasn't about being anti-competitive, having formerly been the head of the Australian Competition and Consumer Commission.

                  Note again that I'm talking about Victoria because that is where the information above applies.

      I don't suppose it ever occurred to you that the taxi driver might be driving quickly to save you money, as taxi fares are both distance AND time based.

    This doesn't sound right.

    Uber is not available in most areas, most of the time, at least in Melbourne. I liked it but the availability and the low value of Uber Black make me use taxis (which, at least in Melbourne, now have a similar app). One thing that shocked me was that they sent out an invite to the passengers to be their drivers. WTF?

    Where did they get the stats? The source seems to be a blog of a startup that manages payments, while Uber counts esoteric stuff like "eyeballs" and "signups".

      when i tried using it. i saw 1 black car on my phone.

      So this whole article is based on the data in the graph "Uber vs Electronic Taxi Transactions" which was derived from only the users in Pocketbook? Seriously? You don't even mention how big that sample size is.
      That data is then used to extrapolate the $1 out of $12?
      I think you need to go back to square one to get more valid data. See if you can get a bank or credit card company to give you those stats to get a larger sample size than just pocketbook users.

    The receipt experience is undoubtedly better with Uber,

    However looking at the image provided, we see that when this is -not- a 'first ride', the bill is $5.30 less, or 11% cheaper than the taxi, however the taxi fate is actually almost 15% longer in duration, and covers again almost 15% additional distance.

    Just an observation.

    Nice dodgy price comparison.

    - 4 months apart
    - 9:30pm versus 7pm
    - $20 discount code used versus full price

    $43 vs $48 is hardly an amazing difference considering how the Uber ride was in less traffic.

    I hope UBER is paying you well to keep pushing their product against the ethics and legalities of their service.

    Uber is great, I'm using it at least once a week now, UberX is so much cheaper than a cab, even with price surging. I also used it while on Holiday in the USA recently as well and it was so much better than getting a cab around LA. I'll continue to use it over taxi's at any opportunity I get, especially to and from the airport. No more $3-5 additional charges that always seem to be tacked on to the meter when coming home from the airport. Not to mention, the close 20% plus that cab drivers like to charge for using a card to pay.

      Why hello, sockpuppet. You're late.

        Yeah this from a guy that admits he's never used the service and won't. Righto mate.

          If they decide to move inside the law I'll give it a shot. Maybe.

          Last edited 23/01/15 3:49 pm

      20%? Taxi credit card surcharges have been capped at 5% (down from the previous cap of 10%) in Victoria for nearly a year now, and in NSW since last month. Don't know what they are elsewhere in the country, but I'd wager they don't reach 20%. Uber shill here I think.

      That $3-5 'additional charge' is a pickup fee the airport charges, not a mystical 'let's rip you off' charge by the taxi companies. Uber is required to pay this charge as well, but they don't because they're breaking the law.

        I'm talking about getting out a cab at my house and the meter reading 23.50, I opt to pay via card and the driver 'calculates' the additional fee for using a card and the price now being $27. I ask him why its so much 'oh fee for using card'. Rather than argue with him, I just want out of the cab so pay it. This kind of thing has happened more than once.

        I'm in no way involved with Uber, I just like the service over taxi's. I get one each and every time I use the app with minimum wait times, (usually under 10 minutes). For me being able to get in a car, get a ride home, open the door and get out, and have my card charged is 100 times better than using a cab. It's just personal preference.

        It's also an easy way to get around in other cities that have uber. LA , NY and SF specifically.

        Last edited 23/01/15 10:45 am

    As much as I hate taxis and taxi drivers, I can't ever imagine using Uber because it requires me to call for a ride. I'm much more hands on than that and will always look for a taxi rather than stand around like a knob waiting for a vehicle to come and get me.

      you use an app and it tells you how far away the uber is (you can even see it on a map), as opposed to waiting around on the street and hoping a taxi will drive by or booking one over the phone

    Uber drivers don't have the correct insurance on their vehicles to legally operate. If you are in an accident as the result of an Uber driver, their insurance won't cover you.

    Love Uber. Cheaper, every single driver I have had has been more friendly than any Taxi driver I've ever had, cars are cleaner and driving less erratic. I'd never get another taxi again if I could. The rating system means no bad customers and drivers go out of their way to secure that good review.

      +1 I recently found out that customers get a rating too and my last uber ride the driver told me I have a 5 star rating, so I googled it and it turns out, in some places drivers will look to pick up higher rated customers first as they know there will be no issues. Unfortunately uber seems to have patched a little trick you could do with the JS console in your browser to see your rating, but you can always ask the driver.

    As has been pointed out Uber drivers are actually Un- Insured as private insurance does NOT allow for commercial transactions (yes not even if you give a mate a few 4s for petrol). Uber drivers are NOT vetted for skills. experience etc. Police checks are not done.
    It is illegal in Australia to transport without the appropriate licence period!
    The passengers and Drivers are at risk of no backup in an accident $ms in compensation claims against them from their own pockets if they damage anyone/thing,
    You are NOT safe,
    You are breaking the law.
    You are taking a very big risk

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