Industry Research

Uber Impact Study Reveals Wide Range of Opinions

Posted on February 21, 2016 by Tom Halligan - Also by this author

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The rapid and global growth of Uber quickly muscling in on the private transportation industry — legally and illegally — is the most disruptive force to ever affect traditional limousine companies, taxis and black car services.

However, reactions to Uber, the leader among transportation network companies (TNCs), is mixed. Opinions from individual operators are all over the map. At the extreme ends, operators assert that Uber is the Dark Force that will kill off the entire industry, while others shrug and don’t see any harm to their businesses. Between those two polar opposite viewpoints stand most operators who are trying to sort out this new competitive world of technology-based, on-demand seamless transportation services.

Given the wide-range of operator opinions, LCT commissioned a survey, conducted by Bobit Business Media research, in December 2015 to take the collective pulse of the industry to find out where operators stand on TNCs and related issues. Respondents included a cross-section of large, medium and small operators with 64.6% reporting fleet size from one to 10 vehicles.

The results of our exclusive survey, “LCT Magazine Industry Uber Impact Study,” are presented in this article complete with charts and graphs that provide the industry its first true analysis about the effects of TNCs.

The survey results are presented in categories gleaned from respondents’ answers to an array of diverse questions addressing specific TNCs, as well as ancillary results stemming from on-demand technology and subsequent competitive and financial effects.

TNCs and Your Business
Looking at the big picture, when asked what effect TNCs have had on operations, the results were mixed: 35% of respondents cited “mostly negative” viewpoints; 32.5% had a “mixed” response; 16% reported no effect on their business; 9.2% “can’t tell” at this point; and 7.4% cited a “mostly positive” experience.

However, when asked questions about their attitude toward the spread of mobile on-demand reservation apps, 84% responded that advancing technologies are inevitable and our industry needs to adapt, and are a positive development that will drive more people to use chauffeured transportation. About 25% responded that “it’s the beginning of the end of the livery business as we know it.”

Underscoring the majority opinion, almost 70% agree that corporate customers could benefit from mobile on-demand app technology, and 73% believe their retail business can benefit from the technology.

Financial Effects of TNCs
No other issue surrounding the spread of TNCs has created more discussion — and angst — among operators than TNCs’ financial effects on their businesses. The survey results give the industry its first hard look at revenue lost. About 23% reported no loss of business; 39% said less than 10%; 18% reported 10% to 20%, and 20% reported a loss of more than 20% of business.

Operators who lost business to TNCs overwhelmingly reported (almost 90%) a decrease in airport runs and evening/nights out and weekend business. Realizing the impact of TNCs on that portion of their business, 74% of operators indicated that they believe mobile-app technology can help their retail business while 26% said it could not.

To counter market pressures from TNCs, some operators have changed their pricing structure, but most (66%) have not. Those who did reported using more flat rates and few hourly rates (24%), while others lowered rates across the board, introduced tier pricing, or added surge pricing.

Further, when operators were asked if they varied/adjusted their fleets due to TNC competition, 63% said no, but 25% said they have bought or plan to buy newer, more expensive vehicles to distinguish their operation from TNCs. 12% reported they plan to buy cheaper vehicles to lower their overhead.

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