How Uber's rescue of SEPTA carries a big upside for the ride-hailing service

Quennel Worthy said demand had picked way up since he started driving for UberX in 2014.

When public transit is down, Uber swoops in to save the beleaguered commuter, spending millions to increase its coverage area. The app-based ride service insists its efforts to do so in Philadelphia are noble.

But experts point out that helping SEPTA while a third of its Regional Rail fleet is down is also a savvy marketing tactic that attracts new customers to Uber.

"This is a very shrewd business move on Uber's part," said economist Giacomo Santangelo, a lecturer at Fordham University. Some riders who have never considered Uber may sign

up and even stick with the online ride service once Regional Rail recovers, he said.

"Every single time a city makes an announcement, as Philadelphia did, I think [Uber] will respond in kind," he added.

Philadelphia is now the second city to be "rescued" by the on-demand fleet. On Thursday, Uber announced that it would invest $2.5 million into expanding its ride-sharing service, UberPool, through Labor Day. The move, which enables a rider to share costs with others, came in response to the removal of 120 cars from SEPTA's Regional Rail lines after inspectors found cracks in their weight-bearing beams.

Less than two months ago, Uber made a similar commitment in Washington, pledging to invest $10 million over the course of a year to widen its geographic reach and incentivize drivers to get on the road during extensive repairs to the Metro.

Uber spokesman Craig Ewer said the ride service wants to help, not take advantage of rail crises.

Uber says it already has a foothold of more than half a million active riders in the Philadelphia metro area, measured by the number of users who've ridden in the last three months. More than 12,000 active drivers – having driven within 28 days – are part of the Uber team in the area, Ewer said.

Valuations for Uber range from $62 billion to $68 billion. It has been backed by venture capital firm First Round – whose cofounder Josh Kopelman is the chair of the Philadelphia Media Network, which operates the Inquirer, Daily News and Philly.com – along with Goldman Sachs, Microsoft and others, according to CrunchBase.

Since its launch in 2010, Uber has disrupted the taxi industry, forcing cities to decide whether and how to enforce regulation and causing tension with traditional cab drivers.

Even before the announcement of the pledges in Philadelphia and Washington, both cities saw an uptick in Uber riders following cuts in rail service. In mid-March, 70 percent more people in the D.C. area signed up with Uber on a day before the train system suspended operation for a day, compared with the same time the previous week, Uber reported.

On the morning of July 6 in the Philadelphia metro area, UberPool usage was up 26 percent compared with the same time the previous week, Ewer said. He declined to give more detailed or recent numbers, but said Uber may release this data later in the summer when it can analyze long-term trends.

Quennel Worthy, 31, of Mount Airy, an Uber driver, said that when he started with UberX in 2014 in Philadelphia, "you'd sit in a car for hours and get one or two requests here or there."

Now, "almost anywhere you are in the city you get consistent rides," he said.

Uber is making strides to keep growing its Philadelphia area business.

Starting Memorial Day weekend, Uber had been offering 40 percent discounted rides to and from Regional Rail stations, in partnership with SEPTA.

Uber's investment in UberPool will go toward expanding service into SEPTA's Zone 2 and parts of Zone 3, including Jenkintown, Fort Washington and Ardsley.

Also, on July 5, Uber reached a détente with the Philadelphia Parking Authority, which agreed to let the service and its online app operate legally while the state legislature is in recess for the summer.

Eventually, Uber will build a large enough audience to be able to raise prices, said Wharton Management Professor David Hsu.

But he said there may still be enough market controls to keep Uber in check.

"There's no monopoly on getting from point A to point B," Hsu said.

As Uber's prices increase, consumers will fall back on other modes of transportation, including Uber's arch competitor, Lyft, he said.

In the meantime, Santangelo said, Uber's app will be showing up on a lot more smartphones in the Philadelphia area. "On one side, it sounds like good business," he said. "On the other side, it really does sound like a predatory bird circling its prey."

lfeiner@philly.com

215-854-5915@lauren_feiner