We rediscovered the convenience of the taxi stand: walk right up, get in a car, and you’re on your way.
I don’t necessarily suspect direct collusion to fix prices, but I do suspect there is some kind of duopolistic optimum where both apply similar price discrimination tactics without competing too hard on price.
First, it’s kind of obvious from the start that rideshare has to treat airports at least somewhat differently because each airport has its own rules for how rideshare is supposed to work. There are specific places riders and drivers have to go for pickup, and as the article mentions there are often designated areas for rideshare drivers to wait in.
Besides that, what makes airports unique is that they have pretty consistent and concentrated demand confined to a small area - arriving flights terminals. But (especially American) airports can take up a huge area with proportionately fewer spots per sq meter for drivers to wait in - most of it is off limits or consists of some massive highway interchange where you can’t just stop and wait.
Also customers will have varying degrees of price sensitivity - some customers will be very inelastic and willing to pay a premium to just hit “confirm pickup” and not think about alternatives when prices are high, because they just want to get home. Other customers may be more flexible and willing to wait out high prices or consider alternatives like calling a relative or a taxi. Many airports are integrated with public transit, which may affect elasticity depending on the route or even the time of day. Airport customer demographics can be different too - I know people like my parents who essentially only use Uber/Lyft for airports. Then you have to consider that airport customers are likely to be more affluent (frequent travelers) and thus willing to pay more, BUT may also not be affluent and only willing to pay for rideshare at all under special circumstances like airport transit. The frequent travelers likely understand rideshare much better than the average consumer, but the people who only use rideshare at airports are probably less familiar with rideshare - this may affect things like sticker shock/anchoring.
I suspect that airport prices are higher than similar routes not just because the trips are likely to be longer, but because Uber and Lyft apply price discrimination [0] based on the factors I mentioned, simply because it results in more revenue and profit. But the inflated costs coupled with already-above-average route sizes strongly incentivize drivers to try to get airport rides. To keep the “marketplace” for rides functional while maintaining the higher margins, they have to introduce some kind of deadweight loss [1], which seems like a fair characterization of the outcome of “SFO rideshare is really expensive but there are also tons of drivers waiting around for it.” [2]
Couple the (alleged) intentional deadweight loss with all the airport logistics problems + special rules that I mentioned, and it makes rideshare at airports the confusing, janky experience it is. Or at least that’s my theory, as some guy on the internet who finds it interesting to speculate about these things.
[0] https://www.intelligenteconomist.com/uber-price-discriminati...
[1] https://en.m.wikipedia.org/wiki/Deadweight_loss
[2] Since Uber and Lyft are competing, the default expectation is that this should disincentivize arbitrarily jacking up prices and introducing deadweight loss, but keep in mind they are a duopoly serving almost exactly the same sets of users with almost exactly the same sets of employees. And, they are both highly prioritizing improving margins to make their business sustainable and attractive to investors. Winning a race to the bottom isn’t worth it to either of them, and applying similar price discrimination models helps both eke out better margins. I think that’s a true market failure which is why I find the subject interesting
