RideAustin, the capital’s homegrown nonprofit, announced earlier this month that it’s lowering prices to compete with the two ridesharing giants. The departure of Uber and Lyft last year spurred RideAustin’s creation, but now the dynamic duo is back. The ridesharing services started operating on Memorial Day, the same day Governor Greg Abbott signed into law a bill overriding the city’s ordinance with a statewide regulatory framework. RideAustin has seen a steep drop in business since then, reporting “dramatic decreases in demand” in a recent Facebook post. The ridesharing service said it gave 62 percent fewer rides the first week of June than it did the week before Uber and Lyft returned.
Most Austinites are familiar with the backstory of the city’s ongoing ridesharing saga. In a political battle that made national headlines, Uber and Lyft spent $8.2 million—the most expensive campaign in Austin history—to persuade voters to back Proposition 1, an ordinance that would have repealed the city’s ridesharing rules, which included a fingerprint requirement for drivers, among other regulations. Austinites rejected Prop 1 in a referendum vote last May. Uber and Lyft, having warned that they would not operate under the city’s rules, promptly closed up shop.
In a post on Medium written one week after Uber and Lyft came back, RideAustin’s CEO Andy Tryba and COO Marisa Goldenberg speculated that “super-price sensitive folks” accounted for the sudden drop . Up until its announcement that it would cut rates, RideAustin was charging a few more cents per minute than the cheaper apps, including Uber and Lyft. Now, its 99 cents a mile and 20 cents a minute rate is the lowest in Austin by a narrow margin (Uber and Lyft both charge $1 a mile and 20 cents a minute). But it’s not clear that lower rates attract more customers in the ridesharing market. One academic study of Uber’s surge pricing found users would be willing to pay significantly more for rides, a phenomena that’s also been observed locally, suggesting that tech reliability and consistency are more important to most riders than prices.
Behind much of the turmoil in Austin’s ridesharing market has been a decidedly non-market force: city government. After all, it was the city council’s insistence that no compromise with Uber and Lyft was possible on the fingerprinting issue that prompted the companies to push for a referendum vote in the first place. To his credit, Mayor Adler tried to broker an agreement between city Council and the ridesharing giants that would have made fingerprinting voluntary but also encouraged drivers to do it anyway. But city Council balked, defeating the compromise measure in an 8-2 vote last February. That failure triggered the Prop 1 vote, which was, perhaps, not instructive about what most ridesharing users want. A mere 48,673 Austinites voted against it—enough to defeat the measure but not nearly enough to gauge the market. Although Uber and Lyft’s Prop 1 campaign may have been misguided and heavy-handed, the narrative pushed by the city—that Austin residents deeply cared about fingerprint background checks—has been undermined by the number of riders who seem to have returned to still fingerprint-less Uber and Lyft in recent weeks.
Throughout this ordeal, the city’s political players became entwined in the ridesharing market—not just as regulators, but also as players. The same day Uber and Lyft went dark last May, Mayor Steve Adler’s office outlined seven things the city was doing to address transportation in their absence. The list included things like, “working to help TNCs [ridesharing companies] that operate in Austin to be successful,” and “exploring a local nonprofit TNC with Austin entrepreneurs,” a reference to what would become RideAustin.
The most ambitious idea was the mayor’s so-called Thumbs Up program, a kind of municipal tech startup to create what Adler called a “third-party, cross-platform badge validator,” based on various safety measures like fingerprinting and background checks. The idea was to allow any peer-to-peer vendor, from Uber to Airbnb, to display the badge on its app to show that a driver or homeowner had passed a given safety test. Adler told the American-Statesman it was, “potentially a real value addition to that sharing economy.” It was this sort of program the mayor had in mind when he told City Lab last May that Austin was “innovating too quickly for Uber and Lyft.”