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Passengers made accusations that the ride sharing company – Uber, price-gouged customers during an explosion that rocked New York City on the 16th of September, 2016. Further speculation arose that Uber’s surge pricing was an attempt by Uber to dissuade passengers who wanted to ride home in an Uber from using the service. Passengers who frantically tried to hail an Uber were told that requests were “off the charts”.
Users who made these accusations also vented on social media via Twitter. Shortly after the explosion, Uber announced on the social network that it had suspended its “surge pricing” feature – a move that perhaps reflected guilt on Uber’s part?
Things to Note
- When the event occurred, it is quite possible drivers were hurrying to get off the roads and to the safety of their homes
- Several Uber users were trying to get rides at the same time
- These scenarios above would increase demand adversely in a situation where there is a dearth of available vehicles
- Hence necessitated Uber’s surge pricing to get more drivers on the road prior to its suspension
Reason’s Nike Gillespie provides an excellent and concise explanation of the situation and the misguided attacks on Uber.
“People who get flipped out by real-time pricing — and it happens every time there’s a big blizzard, traffic jam, or anything else — should also recognize that drivers are people too. All things being equal, they don’t want to go out during a snowstorm any more than the rest of us, and they’re not keen on picking up fares (or even being on the road) when bombs are exploding.
While customers understandably concentrate on fare hikes, it’s equally important to realize that drivers need a reason to pull an extra shift, especially in times of danger. That’s precisely what surge pricing does, by hiking compensation.”
The Real Message behind Uber’s Surge Pricing
As much as we would want to get the lowest cost for a ride, we should be able to identify situations where a rise in price should be considered fair and justified. Charging higher fares in a situation where demand exceeds supply is just basic Economics and we should not forget that Uber is a business. I think that passengers’ pending dissatisfaction with Uber’s surge pricing feature blew things out of proportion.
Surge pricing is necessary to get drivers on the road in a situation where they would rather be within the safety of their homes. However, to please passengers, Uber agreed with New York’s attorney general to curb surge pricing during natural disasters and that is exactly what the ride share giant did during the NYC explosion.
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