Is the Uber Planner Returning to NYC?
There are a lot of different dynamics at play right now that industry participants need to understand and track
Apologies for the newsletter hiatus - got caught up with several projects and travelling. However, the newsletter should now come back to life as we prepare to launch AutoMarketplace to the broader NYC TLC & automotive-mobility community.
Trip to Miami
Last weekend, about 3 weeks after my 2nd Pfizer vaccine shot, I decided to visit some friends in Miami, Florida. It was my first real trip outside of NY since the pandemic started, so the entire process opened up my eyes to what a “post pandemic” world may look like. When I arrived at JFK (UberX $75 ex-tip from Manhattan) at 4:30am on a Friday morning, the first thing that struck me was how busy the airport was. In fact, it was standing room only as the check-in system for both JetBlue and American Airlines was down causing chaos for a good 1-1.5 hours.
Luckily my flight, which was completely full, to Fort Lauderdale (about 45 minutes north of Miami) was only delayed for 20 minutes. When I arrived in South Florida, you could tell domestic travel was back in full swing (i.e. probably 500+ people waiting for an Uber or Lyft outside) and I had to wait about 20 minutes for my Uber to my hotel in Miami (Uber Premier $102 ex-tip).
To quickly summarize my on the ground observations, the majority of people in Miami / South Florida are currently not wearing masks outside and indoor venues are at 100% capacity with only staff, and even that is the minority of staff, wearing masks. I was in Miami for the weekend, had a nice time with friends and headed back to NYC on Sunday evening. On the roughly 45 minute trip back from Miami to Ft. Lauderdale airport (Uber Premier $123 ex-tip) I managed to have a full conversation with my driver, a 5 year Uber Miami veteran with a near 5 star rating! Below, I summarize what he told me about how much he is earning right now in Miami and what his expenses look like.
Friday to Sunday earnings: $400 to $600 per day
Weekly earnings (1 day off): ~$2,500
Monthly earnings: ~$10,000
Monthly car payment (2018 Cadillac Escalade ESV): ~$1,000
Monthly insurance: ~$110
Monthly maintenance (based on annual amount): ~$400
He also told me there was a driver shortage in Miami right now and that Uber even offered him cash bonuses to refer other drivers.
While the numbers above are phenomenal they maybe skewed higher due to several factors including, (1) a luxury car with a 5 star driver might be getting access to more lucrative trips, (2) a driver shortage and (3) Miami being in a busy tourist season (i.e. has not entered its less busy hurricane season where the driver told me business goes down about 50%). That being said, given the cost of living in Miami vs. NYC the figures are definitely noteworthy.
When I returned to NYC around midnight on Sunday I called an Uber back to Manhattan (UberX $76 ex-tip) and had a nice, lengthy conversation with the TLC driver who drove me back. He told me business over the past weekend had picked up (i.e. NYC was hotter than Miami last weekend!) and we spoke about several industry-related items in general. Before the trip concluded, the conversation naturally moved to how a friend of his (and former TLC driver) had recently moved to Nashville, Tennessee from NYC. His friend had told him while Nashville was much quieter during the week, that on the weekend he was regularly making ~$400 per day! Again, when you layer on the cost of living and doing business in Nashville, that’s really interesting vs. NYC.
While I think the elevated rideshare earnings outside NYC maybe temporary due to driver shortages it’s attracting a lot of attention. In fact, my TLC driver also mentioned he was contemplating moving out of the City, but would see how things develop over the next months. I assume he thought that if one could make good money driving outside of NYC it maybe worth the move, which makes a lot of sense. He specifically noted that if the “Planner” came back, he would likely leave NYC and the TLC industry.
The Uber Planner
The genesis of the infamous NYC Uber planner can be traced back to minimum pay rules that established a wage standard for NYC TLC drivers. After the minimum pay laws passed in late 2018, high-volume for-hire services (i.e. Uber, Lyft, Via, and at that time Juno) needed to ensure that independently contracted TLC drivers were earning the equivalent of ~$27.86 gross or $17.22 net per hour after expenses while logged into an App.
The reason why I bold/italicized “while logged into an App”, underscores why Uber (and Lyft in a similar manner) created the planner in NYC. What Uber needed to solve for was ensuring logged in NYC drivers were kept as busy as possible (i.e. high utilization rate) so Uber didn’t have to come out-of-pocket to ensure the minimum pay thresholds were being satisfied. In other words, if a driver was logged in for an hour and only got 1 trip that earned him or her gross $15, Uber would need to come out of pocket ~$12.86, to ensure the minimum pay standard was met or face a fine.
So the system Uber (and Lyft in a similar way) came up with to ensure they wouldn’t be coming out of pocket on wages was the Planner. The Planner, as can be seen in the video and image below, prioritized drivers based on (1) number of trips completed, (2) rating and (3) cancellation rate (Note: UberBlack thresholds were lower because the average earnings per Black trip is much higher so the wage standard is more easily met). Essentially, Uber wanted to ensure their core NYC driver base was highly-rated, full-time TLC drivers who often accepted trip requests vs. a mix of part-timers and full-timers. Uber could better utilize this driver base and in turn these drivers would likely benefit from increased and more stable/predictable earnings which in turn would make it easier for Uber to retain them. However, the original Uber/Lyft promise of flexibility/working whenever you wanted was redefined in NYC, which to begin with has always been a unique “rideshare” market defined by existing taxi regulations. While COVID and the now post COVID period saw Uber abandon the Planner for several reasons, one notably being a well publicized driver shortage, many are expecting it to return. So, do I expect the Planner to return?
The Return of the Planner
In my opinion, it is a matter of when, not if the Planner returns to NYC. The broad benefits of the Planner are that it essentially reverts the NYC for-hire transportation industry back to its pre-Uber/Lyft origins as a professional ground transportation market consisting of mostly full-time commercially-licensed drivers. The downside is driver flexibility suffers as the Apps demand more from drivers who want to maintain access to them. As many who read this newsletter know, NYC has always been a unique “rideshare” market, a market where low car ownership rates and population density creates a daily demand of hundreds of thousands of “taxi” trips (i.e. “taxi” includes all for-hire trips) - NYC actually might be Uber’s largest global market by revenue (think about that).
So when do I think the “when” is? The short answer is when driver supply begins to exceed passenger demand. Given enhanced unemployment benefits and lingering fears around COVID, both Uber and Lyft will likely continue to experience driver shortages over the summer. However, when both additional unemployment benefits and COVID fears begin to fall off, I expect two things to happen simultaneously in NYC - licensed TLC drivers returning to the industry AND NYC workers/residents returning as many employers begin hybrid models of in-office work and WFH. This is likely to occur after Labor Day and throughout the Fall. Assuming, the winter doesn’t see an uptick in COVID cases that shuts down the City again (hopefully not) by early 2022 NYC trip demand might begin to recover to near pre-pandemic levels. However, there is one additional dynamic, yet again unique to NYC, that has to be factored in - the cap on FHV plates (i.e. TLC plate cap).
Plate Cap May Normalize Driver Earnings Quickly
The NYC TLC currently has an FHV License Pause (aka TLC Plate Cap) in place that was instituted in 2018 and is reassessed every 6 months. The TLC “Plate Cap” came into being because there were too many for-hire cars, chasing too few riders. This had a negative impact on congestion and NYC TLC driver earnings. In a nutshell, the “plate cap” was meant to limit the supply, similar to the reasoning behind having taxi medallions, of for-hire cars to ensure the City doesn’t have excess “taxis”, which can cause increased congestion and may also deflate TLC driver earnings (i.e. decreases trips available per driver). Since the pandemic began many FHV Licenses were retired as drivers left the City and fleets struggled financially, which permanently reduced the supply of vehicles in the NYC for-hire transport market given no new vehicle licenses are being issued (ex-electric (EV) and wheelchair-accessible (WAV) vehicles).
This is interesting because it implies that passenger demand would not have to return to pre-pandemic levels in order for driver earnings to normalize again. For example, if there are 25% fewer cars (i.e. available drivers) than pre-pandemic levels then passenger demand would only need to recover ~75% for driver earnings to hypothetically match pre-pandemic levels. So what does that vehicle number look like in reality?
Based on the ~20% decreased TLC vehicle supply vs. pre-pandemic levels, I believe the Uber Planner will return sooner rather than later as driver earnings quickly normalize to pre-pandemic levels. In other words if TLC drivers are making money, others will hear about it and want to return to work / signup as well. Once Uber/Lyft have enough drivers that can satisfy demand AND which allows them to satisfy the driver minimum pay standard - the Uber Planner will likely come back as excess driver supply outstrips passenger demand (I also expect driver waiting lists to return). My guess is that this will happen either late this year or in the first half of 2022.
Let me know your thoughts. Do you think the Uber Planner is coming back? If so, when?
AutoMarketplace NYC Newsletter is written by Dawood Mian, Founder & CEO of AutoMarketplace. He covers the NYC for-hire transportation industry and related news. Search AutoMarketplace for cars, parts, tires, technicians, body shops, reviews, jobs & more. Find great deals at TLCMKT.COM (new site AutoMarketplace.io to be launched soon, sign-up to the newsletter if you are interested to learn more ahead of launch)