Uber’s price dumping in Zurich

The driver service Uber recently turned its sights on the Swiss taxi trade. The taxi radio circuits have responded with equanimity. That is dangerous, for the structural problems of the taxi trade make it easy for Uber.

Uber Black – the classic limousine service – has been active in Zurich for some time. More recently passengers in Zurich have also been able to order an UberX vehicle. This is cheaper than Uber Black and much cheaper than the local taxis: in some cases by up to forty per cent, as local media have found out in comparative testing.

Yet the Zurich taxi firms are not worried. Unlike the situation in many European cities these journeys are made not by private drivers but by fellow taxi drivers, who remove the roof sign for the journeys and charge the fare per minute defined by the US company instead of the taxi meter fare. This is legally permitted throughout Switzerland, not just in Zurich, which is why Uber also intends to start UberX in Basel shortly.

The capital-rich US company expects to penetrate the Swiss market through price dumping, because taxi fares are very high in Switzerland. However, as the cost of living and running costs are also high, there is little scope for cutting prices. The Swiss Uber boss Rasoul Jalali revealed to the media that they were currently paying the drivers up to 20 Swiss francs (about 16 euros) extra. When this cash injection no longer applies, Uber will scarcely be able to find any drivers for its cheap rides – at least that is what the taxi firms and associations hope, referring in this respect to the failure of Mytaxi in Zurich.

This calculation could backfire, though, because…

Please read the complete article in Taxi Times issue 2014, septembre. Use our special offer and subscribe Taxi Times for free until the end of 2015.