Phoenix Sky Harbor International one of the he largest commercial U.S. airports, serving some 44 million passengers annually. Phoenix airport officials say ride-hailing operators (Uber and Lyft) represented just 9.3% of the commercial business when they began at Sky Harbor in June 2016 but now represent 70 percent of the commercial traffic.

Phoenix is raising the fee of $2.66 per curbside pickup at Sky Harbor to $4 on Feb. 1. It also will create a drop-off fee of $4. The fees to the ride-hailing companies would gradually increase to $4.25 in 2021, $4.50 in 2022, $4.75 in 2023 and $5 in 2024. Taxis, meanwhile, would pay $1.75 per ride. What accounts for that huge gap, according to airport officials, is the fact that ride-share drivers cause more traffic, use more curb space, require more airport resources, including staff, and necessitate special technology.

1.Estimate the annual number of Uber and Lyft rides to and from the airport based on the provided details.

2.Assuming the price elasticity of -2 and the average cost of ride to/from the airport being $20 plus the fee, estimate the annual loss of revenue for Uber and Lyft (jointly).