Chariot for Women, a new ridesharing service that is only available for—you guessed it—women, is gaining attention before its launch on April 19. Some argue that a service that only allows women and children customers is illegal, but I will leave that question to lawyers. Besides, there are many economic reasons to doubt the sustainability of Chariot for Women’s current model.
“[Chariot for Women] could be successful if women are willing to pay a premium to ride with an all-female service.”
Sexual assault allegations have plagued Uber since its inception, but they have gained more attention with BuzzFeed’s recent release of Uber passenger complaint data. The release was only a query search for certain terms, and Uber clarified that there were five reported rapes and “fewer than” 170 sexual assault claims between December 2012 and August 2015. Note that there were 15 reported rapes in taxis last year in New York City alone.
Though these alleged (and sometimes proven) assaults should be a major concern for passengers, Uber executives, and policymakers alike, the reality that ridesharing is much safer than many previously existing options—namely taxis—needs to be kept in mind.
The main problem with taxis is that trips are fairly anonymous, particularly when passengers pay with cash. But this danger is corrected with ridesharing. Not only are payments taken care of electronically, but both parties’ identities are verified and riders and drivers have the option to leave feedback after a trip. Since rideshare companies track the locations of both parties through the duration of a trip, a person who commits a crime while driving or riding with Uber or Lyft must want to get caught.
Chariot for Women takes these safety precautions a step further by making drivers answer different security questions before they can sign on to the app and drive. Passengers and drivers are both given a code word to make verifying the correct car and person more secure. And though other ridesharing firms complete standard background checks, Chariot for Women makes its drivers go through a more comprehensive process.
By attempting to further address safety concerns, Chariot for Women’s founder Michael Pelletz may have hit on an untapped market of drivers. While 19 percent of total Uber drivers are women (a figure that increases to 29 percent for new drivers), only one percent of New York City taxi drivers are female. What remains to be seen is if women have disproportionately avoided driving for ridesharing companies and especially taxis because of safety concerns or other factors that come with the general nature of for-hire driving.
Chariot for Women’s proposed pricing structure in Boston (the only city available on its website) is in line with Uber’s and Lyft’s prices in the city. While starting out with competitive prices is a smart business decision, there is little reason to believe that Chariot for Women’s prices will remain low. With rates about equal to those of other main ridesharing companies, how can Chariot for Women become profitable with access to only half of the driver and passenger base of its competitors?
Additionally, two percent of every Chariot for Women fare will go to a women-based charity of the passenger’s choice. While this feature may end up being popular with Chariot for Women’s customers, it is an additional cost that will end up increasing fares.
Another major problem with Chariot for Women is that there is no dynamic pricing. In other words, features such as Uber’s “Surge” and Lyft’s “Prime Time” pricing will not apply to Chariot for Women.
Dynamic pricing leads to higher fares in times when the supply of drivers is below the demand for rides. This example of applied economics both encourages more drivers to get on the road and discourages passengers from requesting rides. Matching supply with demand leads to a system where people can quickly get a driver regardless of the time of day or weather.
Since getting a good night’s sleep is generally preferable to working, the incentive for extra earnings makes ridesharing a reliable way for partiers to get home after a night out. If Uber’s experience is any indicator, this is likely the main time when demand for a service such as Chariots for Women would peak, but there will not be enough drivers to make it a consistent option.
While there is little reason to believe that ridesharing is a so-called natural monopoly, and there are multiple cases that prove that competing ridesharing services can coexist in a city, this may not hold for a service that artificially constrains its user base to such a large degree. A female-only service will become a larger problem if Chariot for Women later tries to expand its service through an UberPOOL- or LyftLine-style option, which allow passengers who are traveling in the same direction to share a ride and save money. These true ridesharing options are catching on in some cities, but more passengers are needed for accepting shared rides to make financial sense for drivers.
It is unlikely that Chariot for Women will be able to operate at the low price points offered by Uber and Lyft, but the service could be successful if women are willing to pay a premium to ride with an all-female service. As with anything else, constraining the ridesharing market and adding additional services will lead to higher costs. Whether Chariot for Women is worth the cost is a question that women will decide.
This piece originally appeared at Forbes
This piece originally appeared in Forbes