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Johannesburg - Ride-sharing app Uber is willing to refund new passengers who experienced the company's ‘surge pricing’ model for the first time.
Just before New Year’s Eve last week, Uber warned users of the app via email and text messages about the impending surge charges that were planned to kick-in before and after the clock struck 24:00. During surge pricing periods, Uber passengers are also prompted to type in the quoted price multiplier physically in the app before requesting a ride.
Prices escalated during New Year’s Eve by as much as 1 000% in cities such as Cape Town. Last week, Fin24 reported that a passenger paid R2 800 for a 35km trip from Clifton to Muizenberg on New Year’s Eve.
Uber implements surge pricing to motivate drivers to pick up passengers in areas where demand for the service is high.
A key reason for why Uber adopts this strategy is because it doesn’t employ drivers of the service. Drivers and owners of vehicles enter partnerships with Uber whereby Uber takes a 20% cut of fares.
But the company is willing to compromise on some surge pricing instances on certain conditions.
"In some cases where it was someone's first time that they were surged, we would give some form of discount but the discount or the refund would not exceed 20% of the fare being our commission so that we ensure that the driver would still be paid his full amount. And we would refund our full commission if it was the first time someone was coming across surge,” Alon Lits, Uber’s general manager for Johannesburg, told Fin24.
"We can understand that if you're seeing surge for the first time; it may be confusing.
"If they (the passengers) queried their amount, if they are a first-time user and if it was the first time they were surged, we would refund their trip,” Lits added.
Other passengers who experienced surge pricing in cities like Cape Town on New Year’s Eve have come forward about their experience to Fin24.
However, Fin24 readers have also come out in support of Uber’s surge pricing model by saying that passengers were forewarned about the planned escalation in fares.
Readers have also said that Uber’s surge model ensures that passengers receive a service as drivers are motivated to venture into certain destinations at certain times.
Uber’s Lits echoes this sentiment.
"We have tried to do whatever we can to ensure that the user is educated and is fully aware of the price that they're going to pay before they request the trip,” Lits told Fin24.
"It may not seem that way, but we do try and be fair and be as kind as we can be when it comes to surge. We're not trying to be unreasonable. We then ensure that the drivers are fairly compensated for their time. They (Uber drivers) see the surge multiples appear on the application and they, at the end of the day, are free to do whatever they want with their time - they're not our employees.
"And as supply frees up, as more cars come on the road, those prices come down,” Lits said.
Lits further told Fin24 that "it's not that we are sitting there and manipulating rates in the background because we are greedy. That's definitely not the case”.
Global controversy
Uber’s surge pricing has been controversial across the globe.
Following an outcry, Uber last month started offering free rides to passengers fleeing an armed siege in Sydney after earlier hiking prices upwards of Aus$100 (US$82).
AFP reported that the company issued a statement that said it "will be providing free rides out of the CBD to help Sydneysiders get home safely" and that it was "in the process of refunding rides".
