Surge pricing has always faced strong opposition from rideshare passengers for obvious reasons, so the news from Lyft this week is sure to be welcomed.
The ridesharing company has apparently been having a good think about surge pricing (called “prime-time” by Lyft), which increases passenger fares during times of high demand, and says it’s “trying to get rid of it.”
During an earnings call this week, Lyft CEO David Risher said that while surge pricing has the effect of bringing out more drivers when ride demand peaks, it also causes some passengers to avoid the service because they simply don’t want to pay — or can’t afford — the higher prices.
“[Prime-time pricing] is a bad form of price raising,” Risher said during the call in comments reported by TechCrunch. “It’s particularly bad because riders hate it with a fiery passion. And so we’re really trying to get rid of it, and because we’ve got such a good driver supply … it’s decreased significantly.”
Since the end of the pandemic, Lyft’s supply of drivers has reached new heights and so, in some locations at least, it’s in a good position to move away from surge pricing as the drivers in those places should be able to comfortably deal with busier times.
Risher added that the number of average hours its drivers are working is also higher than ever, which has led to a 35% reduction in the share of rides affected by surge pricing compared with the previous three-month period.
The flip side is that it’s led to a reduction in revenue for the company, “but it’s good for our riders, and it’s good for our overall market results,” Risher said.
So while Lyft may not be about to close down surge pricing altogether, it looks to be moving toward a setup where it kicks in much less frequently.
As Uber still operates a surge pricing system, doing away with it could help Lyft to attract new riders from its high-profile competitor, or at least further cement the loyalty of its current user base.
There are plenty of other ridesharing services available if you don’t want to climb into a car operated by the top players. Digital Trends has an article highlighting some of the best ones.