The ride-hail market’s smallest player has emerged as the biggest winner under the city’s new regulations:
In New York City, by dispatched trips
Source: Taxi and Limousine Commission
The past couple of months have been deflating for the city’s hired-car industry, but not for Via. The Manhattan-based pooled-ride service, the smallest of the city’s app-based operators, appears to have actually benefited from the recent regulatory shocks.
Uber and Lyft raised their fares at the beginning of last month to cover a pay increase mandated by the city’s new minimum-wage regulations for app-based drivers. Via, which functions as a shuttle service with dynamic routes designed to pick up the most passengers, kept its fares where they were. Alone among ride-hail services, its drivers already earned better than minimum wage.
Also in February, the state slapped a congestion surcharge onto cabs and app-based vehicles, adding $2.50 to every taxi ride and $2.75 to each ride-hail trip below 96th Street in Manhattan. Via got hit as well—but with a 75-cent per rider fee, the surcharge for pooled rides.
According to Lyft, its price increase has led to a drop-off in ride requests (Uber declined to comment). The Independent Drivers Guild, which represents app-based drivers, said members are complaining of slower business and a total absence of tips in Manhattan’s congestion zone.
Taxi and Limousine Commission data show a slight seasonal increase in the total number of yellow-cab trips in February compared to January, but it was about half the size of the increase that occurred in the previous year and could be partially due to more drivers being on the road in February.
A person familiar with yellow taxi data said some cabs were seeing an average drop in trips of as much as 15% in February. Via, however, reports that its business has been up 15% in the weeks since the new rules went into effect. “We’ve definitely seen a bump,” said Daniel Ramot, co-founder and chief executive.
App-based service Juno, which has a slightly larger share of the market than Via, did not respond to a request for comment. Industry sources say parent company Gett is trying to sell Juno, which it bought for $200 million in 2017.
For Ramot, the increase in dispatched trips helps confirm the basic premise of Via’s business model, which he and co-founder Oren Shoval set out to prove in 2012: that they could create an economical form of public transportation—a sort of dynamic, on-demand bus system—that would reduce congestion while expanding access to rides by making efficient use of increasingly overwhelmed roadways.
Via’s model, which has customers walk a block or two to the pickup point and from the drop-off, works only if the company’s algorithms keep vehicles full. “To do this well you have to have the right number of vehicles on the road to match the demand,” Ramot said. “And you have to create routes that maximize your ability to fill the seats—which you need if you’re going to run a really efficient public transportation service.”
Via did not have to raise its fares, which already were lower than those charged by Uber and Lyft, because the minimum-wage rules are based on utilization rates, which represent the amount of time per hour that a vehicle is carrying a passenger rather than cruising for one.
The more trips per hour—the higher the utilization rate—the less of the fare the service has to fork over to drivers to ensure they are earning minimum wage. Drivers also are spending less time clogging streets looking for passengers.
Via has a utilization rate of 70%, which doesn’t even take into account that most of the time its vehicles are carrying more than one passenger. Uber and Lyft, meanwhile, are at 58% utilization, according to a TLC-commissioned industry economics report during the summer.
Via drivers earned an average of $22.94 per hour, after expenses, while Uber and Lyft drivers made less than $15, the report said. The TLC now requires that drivers earn at least $17.22 after expenses, equaling the state’s hourly minimum of $15 once payroll taxes and paid leave are factored in.
One aim of the city’s rule is to encourage app-based companies to make their operations more efficient, rather than flooding the streets with vehicles, regardless of whether drivers can make a living, just to give customers shorter wait times. “Our mission in some sense is starting to align with what regulators and cities and states care about,” Ramot said. “And, yes, that gives us an advantage.”
The advantage is not limited to Via’s business in New York, Chicago and Washington, where the company has been profitable in neighborhoods in which it has been operating longest. When Ramot and Shoval launched the company in 2012, they were former Israel Defense Forces scientists with doctorates in neuroscience and systems biology, respectively. They had developed algorithms for a dynamic system that resembled a souped-up version of the sherut minivan shuttles in Israel, and they tried to license the software to public transportation agencies around the country.
Unable even to land a meeting, they built the service themselves, launching Via on the Upper East Side in 2013 with a flat $4 fare per rider that soon rose to $5. By 2017, armed with a successful track record and more advanced algorithms based on massive amounts of data, they went looking for deals again. They scored a series of high-profile public-private partnerships, starting with French transportation company Keolis.
German automotive giant Daimler invested $250 million in the company and began producing the seven-seat Mercedes Metris vans that Via now leases, through a third party, to individual drivers as well as to cities as part of its contracts. By the end of last year, Via had 50 partnerships including ones in Berlin, Los Angeles, Singapore and Tokyo. By the end of this year, it expects to have 200.
Some observers say that despite its achievements, Via is still proving itself.
- How Via benefits from new regulations that hurt Uber and Lyft.