A week after beginning operations in New York, ride-sharing startup Lyft Inc. is offering as much as $10,000 a month to commercial drivers to work for the service.
The move is the latest by Lyft to gain traction in the most populous city in the U.S. The San Francisco-based company, known for big pink mustaches that adorn its cars, delayed starting its mobile-application service in New York earlier this month after meeting regulatory resistance over whether it can operate without licensed commercial drivers. Lyft got the green light to go ahead on July 25 after it said it would comply with the rules.
The agreement resulted in Lyft starting New York operations with fewer than 500 drivers, which the startup is now working to rectify. According to a Lyft memo sent to drivers in New York, which was obtained by Bloomberg News and confirmed by spokeswoman Erin Simpson, the startup is guaranteeing $10,000 a month to drivers who have a license from the city’s Taxi & Limousine Commission and will work 60 hours a week for the service. Lyft is also guaranteeing $5,000 a month to those with such a license who commit to driving 40 hours a week.
“Lyft’s first few days of beta launch in New York City have received overwhelming support,” the company wrote to drivers in its memo. “In the weeks following any city launch, we work around the clock to balance high demand with more and more drivers.”
Lyft is vying with Uber Technologies Inc. for customers hailing rides from their smartphone applications. In April, Lyft raised $250 million in financing from investors led by Alibaba Holding Group Ltd. The company is using the money to promote the app with drivers and users.
Lyft gives passengers free rides for at least the first two weeks in each new city and it’s waiving a 20 percent commission that it charges drivers per trip in the 68 U.S. cities where it operates. The company has been offering $500 bonuses to drivers who commit to 10 rides in San Francisco, where its competition with Uber is the stiffest.
Uber, which has a high-end car-booking service for limos and luxury cars and has operated in New York since 2011, mainly competes with Lyft with its lower-priced car-sharing option, UberX. UberX drivers in New York have official taxi licenses.
The New York City Taxi & Limousine Commission requires commercial drivers to be tested for drugs, undergo background checks, take driving courses and have their cars inspected regularly.
The regulator said it isn’t talking with Lyft about a peer- to-peer service and doesn’t know how many commercial drivers are working in the city for the company.
“That’s not something that we would track,” said Allan Fromberg, a spokesman at the TLC.
Lyft is running a campaign in New York asking users to support a peer-to-peer service in the city.