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Rideshare Price Surging and the Effect on Passengers

Published on Jun 1, 2021 at 8:07 am in News.

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Uber and Lyft passengers are being affected by rideshare price surges and limited driver availability. The companies are looking for ways to incentivize new drivers, but have yet to resolve the issues.

The COVID-19 pandemic significantly impacted the rideshare industry in 2020 and those effects are still present in 2021. As people return to traveling and using rideshare apps, the cheap and quick rides of the past are no more. Passengers are discovering rides are more costly and not as readily available. According to the New York Times, some passengers coming from airports have found an Uber or Lyft to cost as much as their plane ticket.

Both Uber and Lyft have acknowledged the price increase, but neither has provided specific details as to what’s going on internally, other than that they are struggling to find enough drivers to meet the demand. In March, rideshare costs were up 37 percent from a year ago and April saw an increase of 40 percent. According to Lyft president John Zimmer, finding drivers is crucial: “It is something we are taking extremely seriously, but something that we’re extremely confident and I’ve already started to see significant movement on.

In regard to the surges, prices have jumped 50 percent or more in some places. While this can be an incentive for drivers, it often provokes outrage from riders—especially during holidays and large events. Price surging, however, does not seem to be enough for driver. While Uber and Lyft have spent money on extra incentives like cash bonuses, the incentives are not as effective as they were pre-pandemic.

Wendy Edelberg, director of the Hamilton Project and a senior fellow at the Brookings Institution, noted that other financial incentives, like the Pandemic Unemployment Assistance under the CARES Act, could be dissuading drivers: “We’ve given people a lot of fiscal support. We’ve allowed people to not make these transitions in desperation, to prioritize their health, to prioritize their families, so that’s going to take a bit of time.”

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