UBER - New York City taxi fare hike could raise Uber prices 10% hurt trip demand

As Uber Technologies ( NYSE: UBER ) tangles with New York City over last month's hike in metered fares, investment firm Bernstein has done some math on just how much more it could cost riders.

Analyst Nikhil Devnani said that if Uber ( UBER ) passed on the cost to customers, as expected, it could result in a roughly 10% increase in rider fares in New York, while also hurting trip demand, on an absolute basis.

Devnani said that on a relative basis, however, taxis will become 23% more expensive on average, "which we believe could ultimately drive share gains for rideshare."

Last month, New York City's Taxi and Limousine Commission approved a hike in metered fares, potentially resulting in Uber ( UBER ) and Lyft ( LYFT ) increasing driver pay rates by 7% per minute and 24% per mile, respectively.

Uber ( UBER ) sued the city over the fare hike, saying it would be forced to raise the price of a ride.

In the lawsuit, Uber ( UBER ) said it would be forced to spend an additional $21M to $23M per month if the proposal went into effect, which was set to occur on December 19.

For now, the hike is on hold for rideshare companies until a hearing on January 31, 2023.

In addition, the New York City Department of Consumer and Worker Protection also proposed a minimum wage proposal for food delivery drivers in the city, slated to start in January. It would raise the minimum hourly rate to $17.87, excluding tips and rise to $23.82 by 2025.

"We see the delivery proposal as a bigger challenge than the rideshare one, because hourly earnings for delivery drivers are lower today, particularly ex-tips," Devnani added, noting it could have an impact on not only Uber ( UBER ) via its Uber Eats platform, but DoorDash ( DASH ) as well.

Uber ( UBER ) and driverless technology company Motional recently announced they will bring a robotaxi service to Las Vegas .

For further details see: