NYC already has plenty of taxis. I would expect Uber to only really be used there either as a) a luxury black car service, or b) a convenient taxi dispatch service. It sounds like you're talking about them as if they're purely the latter. Surely they're acting as both? They could also be c) a cheaper alternative to cabs (as UberX), which is what UberX actually is here in SF, but I don't know if UberX exists everywhere or operates the same way everywhere (laws regarding car services are likely to not be that different everywhere, but UberX exists in a much more grey area that I can very much believe doesn't work everywhere; plus, it doesn't make as much sense when there's already enough taxis to go around).
As a luxury black car service, everything I've already said stands.
Ax a taxi dispatch service, I wouldn't expect really anything I know about Uber to apply. But I wouldn't expect surge pricing to apply either, because when Uber acts as a taxi dispatch service, you're still just paying the regular taxi fare (with the caveat that Uber guarantees a 20% (I think) tip instead of leaving it up to the passenger). And if surge pricing doesn't apply, then neither does the claim that drivers cancel when surge pricing is going up.
As far as I'm aware, the main reason for a taxi to cancel is because of laws requiring that taxis can't say no to a street fare, even if they're being dispatched to pick up someone else. This is the same reason why it can take a while to get a taxi to show up when calling the dispatcher directly, and using Uber to request a pickup shouldn't alter that at all. Of course, I could be misinformed about how that law works, but that's my understanding of it. (And of course the taxi driver could have other personal reasons for canceling, but surge pricing isn't one of them).
On this note, the $4 for canceling fee actually makes some sense, if we assume Uber was unable to successfully recruit enough cab drivers with the model of Uber being paid a flat fee for each ride. Uber still benefits by having taxi dispatch services in its app, because that means it becomes the one-stop app for people who need car-based transportation, and once you have them in the app you might convince them to go with the real Uber services. And the $4 cancellation penalty encourages drivers to not cancel, which in the absence of a rating system (which I don't believe Uber has for taxis, nor could it really enforce due to e.g. taxis being driven by someone other than the owner) is the only real way to incentivize drivers to not cancel.
NYC may have plenty of taxis, but in the outer boroughs it can be hard to find one when you need one.
I don't know it would be fair to call them a "luxury" black car service -- there are plenty of black car services in NYC already, very few of them could be called "luxury". The black car services are basically just pre-negotiated taxis. Uber lets them pick up bookings when they don't have one scheduled.
They actually just enabled UberX this week in NYC -- it's been a disaster. A lot of the taxi and black car drivers are boycotting Uber because UberX undercuts their prices (which are largely regulated by the city, so they can't cut prices in response), and they can still get plenty of fares without Uber. So it's been quite hard to get a car via Uber in NYC this week.
Do these black car services cost more than a taxi? That's pretty much my basic definition of a luxury car service; if you can get equivalent behavior (i.e. transportation from point A to point B) at a cheaper price by using a taxi, then it's a luxury. But if it's not necessarily cheaper to use a taxi, then I would agree it's not necessarily a luxury service.
Uber (the black car option) in SF is significantly more expensive than a taxi (or UberX, which is cheaper than a taxi, even at low surges). My belief was the Uber black car service was roughly equivalent everywhere. Are you saying an Uber black car in NYC is not actually necessarily more expensive?
I am surprised to hear they enabled UberX in NYC. I would expect it to be a disaster, just as you said. Originally UberX was either an appeal to being green (due to hybrids), or simply a cheaper alternative to Uber, but it started out intentionally more expensive than taxis (they even raised the price at one point, citing the fact that it was unintentionally cheaper than taxis for some rides). But they've since changed course, turning UberX into the cheapest service they can. I'm not really sure what their goal is with that, but I can't imagine it makes taxi companies happy. So I assumed they were only doing it in cities where they didn't rely on taxis to fill rides. But as per your earlier comments, it sounds like being a taxi dispatch service is a big part of Uber's NYC offerings, and it's pretty obvious that UberX would interfere with that. And given the large number of cabs already in NYC, it's hard to argue that customers will eschew cabs in favor of UberX, when UberX is the brand new service and cabs are the existing regulated service that already fills their needs.
My best guess here is that Uber's CEO is intentionally trying to replace taxis with the UberX service, because that's the only thing that really explains introducing UberX into a market like NYC. But that seems rather foolish to me. It certainly works in SF where the cabs are so scarce, but I can't imagine it working in NYC, or e.g. London (where AIUI cab drivers have to pass an extremely rigorous knowledge test, a test that UberX drivers would presumably fail quite horribly, so passengers are already used to cab drivers knowing how to get places that UberX wouldn't know).
In NYC, the difference between a black car and a taxi is guaranteed booking (e.g. you can schedule a black car and they'll actually show up). Generally yes, it is more expensive than a taxi, but it's a pre-negotiated rate.
I'm still not sure how UberX works in NYC from a legal perspective (though I'm sure Uber has an army of lawyers who figured out some loophole).
As a luxury black car service, everything I've already said stands.
Ax a taxi dispatch service, I wouldn't expect really anything I know about Uber to apply. But I wouldn't expect surge pricing to apply either, because when Uber acts as a taxi dispatch service, you're still just paying the regular taxi fare (with the caveat that Uber guarantees a 20% (I think) tip instead of leaving it up to the passenger). And if surge pricing doesn't apply, then neither does the claim that drivers cancel when surge pricing is going up.
As far as I'm aware, the main reason for a taxi to cancel is because of laws requiring that taxis can't say no to a street fare, even if they're being dispatched to pick up someone else. This is the same reason why it can take a while to get a taxi to show up when calling the dispatcher directly, and using Uber to request a pickup shouldn't alter that at all. Of course, I could be misinformed about how that law works, but that's my understanding of it. (And of course the taxi driver could have other personal reasons for canceling, but surge pricing isn't one of them).
On this note, the $4 for canceling fee actually makes some sense, if we assume Uber was unable to successfully recruit enough cab drivers with the model of Uber being paid a flat fee for each ride. Uber still benefits by having taxi dispatch services in its app, because that means it becomes the one-stop app for people who need car-based transportation, and once you have them in the app you might convince them to go with the real Uber services. And the $4 cancellation penalty encourages drivers to not cancel, which in the absence of a rating system (which I don't believe Uber has for taxis, nor could it really enforce due to e.g. taxis being driven by someone other than the owner) is the only real way to incentivize drivers to not cancel.