Surge pricing within the ride-hailing industry has always been a hot topic, but never more so than it is currently.
With work slowly increasing and driver numbers suspected of being lower than pre-pandemic levels, users of apps such as Uber and Bolt have seen an upturn in surge-priced journeys.
A number of industry representatives have given their take on the argument over whether surge pricing is a good or bad thing for the trade and why it actually exists.
Ride-hailing app, and the firm that introduced surge pricing, Uber, has explained the concept behind the pricing method. A spokesperson for the company told TaxiPoint “The Uber app uses dynamic pricing to respond to the levels of supply and demand at any one time.
“When a large number of people in a specific area are booking a trip at the same time and there aren’t enough available cars, fares automatically rise to encourage more drivers to go to the busy area and earn a higher fare.
“Users will always see a fare estimate in advance so they have the choice to book a car or share the trip with others. We are encouraging 20,000 new drivers to sign up in order to meet rider demand as cities get moving again.
“We are confident that we will grow our driver base as Uber is the only operator to provide all drivers with a guaranteed wage, holiday pay and a pension. Drivers work with multiple operators and deserve the same standard of work on every trip, which currently they do not get with other apps such as Bolt."
Bolt, who also use surge pricing as a fare calculation method, told TaxiPoint: “There’s been record demand for journeys since coronavirus restrictions were lifted. Drivers are free to choose when they work and what trips they take.
“Surge is a way to encourage them to go online which helps to keep waiting times low. We’re keen to provide a great service to both sides - our surge is capped at a lower level than our competitors whilst we offer great commission rates (as low as 10% for EVs) to encourage more drivers to sign up. We’re seeing this offer be welcomed - especially by the 3.5m passengers now registered - as we continue our expansion across the country.”
But are these reasons appreciated and accepted by those who use the apps to book trips? A number of social media posts would suggest not. Many disgruntled passengers have recently vented their anger and disappointment at such inflated fares.
In some cases fare quotes have reached up to 4 times their usual price, resulting in potential passengers turning to alternative companies or modes of transport.
Steve McNamara, the General Secretary of the Licensed Taxi Drivers’ Association (LTDA), has also aired his views on surge pricing and the negative impact of such a controversial pricing method.
McNamara said: “It’s called market forces, unrealistic predatory pricing has resulted in 4/5 apps competing for the same drivers who now shop around for the best prices, going to the highest bidder.
“Most of their customers only used them because they were cheap. They are still getting the same ‘convenience’ and ‘service’, but many are now screaming because they have to pay a realistic going rate.”
Steve Garelick, GMB Union’s Regional Organiser, told TaxiPoint: “Ultimately I want to see rates increase to give more parity to both private hire and taxi drivers. Private hire rates have been reduced over the years and the cost of living for both sides of the trade are not helping because hackney have been scared to increase.
“The consumer is put first rather than the driver. This model cannot continue forever.”