Impact of COVID-19 on the Ride-Hailing Industry

Ride sharing business has shown a stark contrast when it comes to being impacted by global Coronavirus pandemic. The sector has seen both peaks and troughs and been through it all in the past few months. In the initial days of COVID scare, people had growing skepticism about public transport, leading to a peak in the demand for personal rides like Uber, Lyft, Ola, etc.

Harry Campbell, the founder of popular ridesharing blog and podcast ‘The Rideshare Guy’ mentioned the rising revenues and demand reported by Lyft, in an interview with FOX Business. He added that the drivers had not noticed huge booms in the business of late, but have surely observed more passengers opting for Uber and Lyft over public transport to avoid high-density transit.

But the boom disappeared faster than it arrived. With COVID-19 ripping through the globe, engulfing the United States and most of Europe, the world went into an unprecedented lockdown with most corporates opting to work from home and other businesses shutting operations temporarily. Social distancing became a norm and transport across the world came to an abrupt halt.

The sudden turn of events hit the industry very bad. Uber Technologies Inc. saw a steep fall of 55% in its shares within 4 weeks. Similar pattern was seen for Lyft Inc. where the shares, after seeing an initial jump, went into free fall, plummeting over 65% in a month’s time. The worst hit was the ground force of these companies, their drivers, who were suddenly left jobless, risking their lives in the streets, with very few customers.

Amidst all the public health concerns, the ride-hailing industry was forced to react swiftly. Uber and Lyft devised plans to keep the drivers safe, offering supplies to disinfect cars and offer medical and financial assistance to those in need. But the big question is: are they doing enough?

“Sickness is not an option for me because not working is not an option. If I do get sick, I will have to continue to work or I will lose my ability to exist — it’s not just income. Before the coronavirus outbreak, I managed to pay my bills on a monthly basis, with no room for error. Here are the things at risk: paying rent, my car payment, my health insurance, and of course food. If I have to stop working without any safety net, I will lose all of these things.” — Edan A., driver and organizer with Gig Workers Rising

A survey of New York drivers conducted after the coronavirus outbreak revealed some staggering figures. Here are a few insights from The Rideshare Guy’s survey.

“It’s not just myself alone, every single driver out there has the fear of catching coronavirus, especially picking up passengers from an airport or hospital. The fear is real, the threat is there, and the company is not helping in terms of minimizing the fear.” — Henry Chen, Uber driver (NY)

The global pandemic, keeping well over a billion people inside their homes, has become a stress test for companies around the world, and India is no exception. With government mandated lockdown, the situation has gone from bad to worse. By March 13th, the ride-hailing industry had already seen a massive 50% drop in demand. With an effective total lockdown, now increased to 40 days, the drivers’ living is no better as most of them were dependent on daily wages.

The major players in the market including Uber and Ola have taken some steps to ensure the well being of drivers. Uber, for instance, has temporarily suspended accounts of affected drivers and has announced financial assistance for two weeks and would reassess the situation then. The criteria for eligibility have also been relaxed to cover most of the drivers. Assistance provided is based on the average weekly earnings over the last three months before the application was made.

As a new initiative, Uber recently announced a new service named UberMedic, where it will provide drivers for frontline healthcare workers, taking care of their transit from their homes to medical facilities. It is crucial for them to be mobile and have a reliable and efficient way of getting around. The aim is to empower hospitals and medical staff to provide optimal healthcare facilities. For the program, Uber has selected the top-rated drivers and dedicated cars on its platform. Keeping the safety of drivers and government regulations in mind, Uber has partnered with hospitals to provide drivers with Personal Protective Equipment (PPE), hand sanitizers, gloves and mask. Government has mandated air conditioning in each of these vehicles to be switched off and window rolled down as one of the safety measures. The drivers are being trained in COVID related safety protocols and the riders are being provided dedicated phone support with this service.

Despite all measures, there is a lot more that needs to be done. The gig workers seldom have any health insurance and employment benefits. The companies can play a massive role in easing the situation for them by deferring any EMI payments for vehicles, doling out future income and clearing past dues. They may even contemplate offering micro insurance for three to six months.

Uber’s CEO, Dara Khosrowshahi, under the pretext of this global pandemic, has urged the Trump administration to create a new category of workers, who are neither employees nor independent contractors. It is about time that governments across the world think about the gig economy workers more seriously and anticipate future disruptions to make sure laws are in place to help protect their basic rights.

References:

1. https://therideshareguy.com/uber-drivers-can-survive-the-coronavirus/
2. https://economictimes.indiatimes.com/small-biz/startups/newsbuzz/uber-provides-ubermedic-service-to-assist-healthcare-providers/articleshow/74923981.cms
3. https://qz.com/india/1819734/coronavirus-keeps-ola-uber-urban-company-on-toes-in-india/