Uber and Lyft Want to Share the Wealth, Cheaply

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Ride-hailing apps are bringing back the shared ride, with improvements. Can sharing the wealth put them back in the driver’s seat?

After a pandemic-related hiatus,

Uber Technologies

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began piloting a new shared-rides program late last year. The company said Tuesday it launched the revamped program in several cities across the U.S., such as New York, Los Angeles, San Francisco and Chicago. Dubbed

Uber

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X Share, the program will expand to more cities later this summer.

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Between inflation and a labor shortage, ride-hailers are facing the challenge of appealing to a more cost-conscious consumer while also attracting more income-hungry drivers. Uber’s new shared-rides program will save riders some money. But its best benefits could be to drivers. Accommodating two riders in one car is a clever way to handle an imbalance between riders and drivers without having to subsidize higher driver pay. It may also lure more drivers back to ride-hailing, offering them less wait times for work and more income per ride.

Lyft

returned its own shared-rides option to the market last July in Philadelphia and Miami. Last month, the company added several additional cities, including San Francisco, Las Vegas and Denver. Lyft says shared rides were historically very popular with its riders, accounting for about 30% of rideshare rides in markets where they were available. A shared ride will always cost the rider less than the same standard ride, the company said.

A recent Oppenheimer survey found that 34% of former Uber drivers said they would consider coming back to the platform if shared rides returned. That is a somewhat surprising result: Historically, drivers complained of having to backtrack to pick up shared passengers and of waiting long times for a second rider with one already onboard. Riders were also previously able to game the system by requesting rides they knew others wouldn’t want to match, thereby locking in both lower prices and private rides.

Uber’s revamped shared offering should in theory prevent these issues: The platform will offer a small discount when riders request a shared ride, but the bulk of the passenger discount (up to 20% off the total fare) now comes only if the ride is matched with a co-rider along the way. Uber also says it will match only riders heading in the same direction to prevent delays.

Shared rides have the ability to boost drivers’ earnings, with two passengers paying fares and tips at once on lower gas usage. Uber says its drivers can opt out of shared trips at any time and can cancel, earning them a cancellation fee, if a rider doesn’t arrive within two minutes.

When it comes to drivers, ride-hailers need all the help they can get. Last month, Lyft’s shares fell nearly 30% in one day after the company said it would need to invest more in driver supply. Uber says its own driver base is at a postpandemic high, thanks to previous investments. It isn’t exactly a love fest, though: Oppenheimer found 45% of former Uber drivers polled said they had no intention of driving for Uber ever again.

With shared rides, ride-hailers have to hope everybody wins.

After enduring the pandemic, rideshare companies such as Uber and Lyft are now facing a new world of high inflation, driver shortages and dwindling passenger numbers. WSJ’s George Downs explains what they are doing to try to survive. Illustration: George Downs

Write to Laura Forman at [email protected]

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