Uber explains surge pricing ahead of NYE

Johannesburg - Internet ride-sharing app Uber has moved to explain its dynamic or ‘surge’ pricing model ahead of New Year’s Eve celebrations coming up this week.

Uber’s dynamic pricing model incentivises its partner-drivers to pick up passengers during peak periods such as New Year’s Eve by hiking fares.

However, this pricing model has caused controversy in the past.

In January this year, Fin24 reported about a fed-up father who cried foul after Uber charged his son R2 800 for a 35km trip from Clifton to Muizenberg on New Year’s Eve. The pricing worked out to be R80 per kilometre.

READ: Uber expensive ride home angers dad

“My son was not of sober mind when he accepted the price surge and was therefore not blatantly aware of the fact that he was going to have his credit card debited to the tune of R2 800,” Nicky Rebelo wrote on Facebook.

At the time, Uber users in Durban also complained of surge pricing on New Year’s Eve.

Jessica Blom was charged R800 to get from Umhlanga to Durban North, which is roughly 12km, resulting in her trip costing about R67 per kilometre.

“Feel very ripped off,” she wrote on Uber’s Facebook page in January this year. “Very unimpressed and unfortunately will not be using this service again.”

Toni Larkan also wrote on Facebook at the time: “Not such a great start to the year with Uber (Uber X), when they charge you R1 151 for a 10 minute trip from Umhlanga to Umdloti (approx 7-8km).  I am prepared to pay a premium for New Year, but to pay a premium increase 1 000% is robbery. The normal fair for Uber X for Umhlanga to Umdloti is R71.94 - disappointed and feeling robbed! I cannot recommend UBER or rate them!”

Have you been negatively affected by Uber surge pricing? Will you be using Uber during New Year's Eve? Tell us by clicking here.

Subsequently, Uber responded by saying that it had communicated its dynamic pricing to its users before New Year’s Eve in South Africa last year.

The company at the time also said its app told users when dynamic pricing was in play and further prompted customers to confirm and acknowledge the price they would pay during these periods.

Amid the controversy, Fin24 also reported in January this year that Uber was willing to refund new local passengers who experienced the company's ‘surge pricing’ model for the first time.

Uber is communicating its surge pricing model to users before New Year's Eve.

READ: Surge pricing: Uber willing to refund new users

Uber moves to explain surge pricing

And in a bid to avoid issues this year, Uber has moved to explain its dynamic pricing model.

“The Uber platform is a marketplace of riders and drivers - driver partners are all independent transportation providers who are not bound by exclusivity. Many drivers have their own businesses and because Uber doesn’t employ drivers, every driver has a choice of how he or she spends his/her time,” Uber South Africa said in a statement released earlier this month.  

“The dynamic pricing algorithm automatically increases prices to encourage more drivers to come onto the platform and to cater for the demand. When demand and supply are in line, prices quickly return to normal – and riders can continue to rely on a safe, hassle-free transportation option. During times of crisis or disaster, Uber works quickly to ensure dynamic pricing is deactivated,” said the company.

Uber, in its statement, further reiterated that it communicates its dynamic pricing “repeatedly” to users and requires confirmation from users before they start their trips during these peak periods.

To avoid being surprised by surge pricing, Uber further said that riders can obtain a fare estimate before starting their trips.

“To assist with demand during peak times such as New Year’s Eve, riders are encouraged to split fares with friends and share rides,” Uber added.

“When dynamic pricing is in effect, riders have multiple opportunities to choose, confirm and accept increased fares or opt to be notified when prices drop. Dynamic pricing allows riders to have a choice rather than having no cars available at all,” the company said.

Regardless of the controversy around its surge pricing model during last year’s New Year’s Eve celebrations, growth for the business in South Africa has still been strong.

Earlier this year, Uber said it notched up two million rides locally in the first half of this year.

At the beginning of this month, Uber added Port Elizabeth to its list of South African cities to further grow its business. Port Elizabeth has joined South African cities Johannesburg, Cape Town, Durban and Pretoria in having the service.