Honolulu Limits Surge Pricing for Uber and Lyft
Officials in Honolulu passed legislation on Wednesday that would put a cap on the amount ride-sharing companies like Uber and Lyft can charge during so-called "surge pricing," or high-demand periods with increased prices.
The lawmakers say this pricing limitation is the first of its kind in the US.
The legislation would not allow the ride-sharing startups to charge surge prices that are higher than the maximum fare set by the city. Within that limit, the companies will still be able to charge surge pricing. The measure now goes to the desk of Honolulu Mayor Kirk Caldwell to sign into law.
The idea behind the surge pricing model is to help manage the demand for rides with the supply of drivers, the companies say. “When demand for rides is greater than the number of drivers on the road, passengers may pay an extra percentage on top of the base ride amount,” Lyft explained to the AP. The additional price percentage is added to the ride total and is calculated before the addition of other fees, Lyft says.
Honolulu lawmakers called the practice "predatory pricing" and said the measure is to help protect the city's passengers against an "unreasonable price" for a ride.
Uber said in a statement after the vote that the legislation would limit customers' choices and could threaten the availability of Ubers on the island of Oahu.
Critics of the measure also said that ride-sharing passengers have an opportunity to review the surge prices before accepting the ride.
It's not the first time that Uber has been under scrutiny for its surge pricing methods. In May, the state of Massachusetts put Uber's operational license under review after the company charged customers surge pricing during a state of emergency declared for a nor’easter in the state earlier in 2018.