New York City’s Latest Attempt to Control Uber
In New York, a bill before the city council would restrict surge pricing to 100 percent of the normal fare.
Earlier this year, when New York City Mayor Bill de Blasio tried to cap the growth of Uber and other ridesharing companies, he was forced to back down.
The public, it seems, likes the convenient and reliable services these companies offer. And it did not help the mayor’s cause that he had no evidence to support his singling out of Uber for Manhattan’s congestion woes.
But New York City is far from done in its quest to stifle transportation start-ups.
Having tried alternately to ban, oppressively regulate, and cap these companies, it now may be looking to a new angle of attack: Uber’s pricing model.
Ridesharing companies employ dynamic pricing to allow the fares they charge to fluctuate in response to real-time changes in demand. Uber calls this “surge pricing,” and Lyft refers to it as “prime time” pricing.
Regular riders with either service have undoubtedly experienced the travails of surge pricing, when a ride can cost two or even three times what it ordinarily would.
In New York, a bill before the city council would restrict surge pricing to 100 percent of the normal fare. Policymakers are calling the practice “price gouging” and want to protect consumers from it.
Riders, however, should not fall for this.
Surge pricing is undoubtedly one of the least popular elements of rideshares’ business models, but it is also one of the most critical. That combination makes it a prime target for politicians eager to protect their favored interests—the taxis—without incurring too much wrath from the growing ranks of Uber riders.
Why is surge pricing so important? One of the aspects of rideshares that make them so convenient is that a ride is seldom more than a few minutes away. Regardless of the time of day, a rider can have a car in front of him nearly immediately.
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