Is Uber working towards ending surge pricing, the rise in fare when the demand for taxis shoots up? Uber has said ‘yes,’ and ‘no’ over the last week.
The Delhi government had recently banned the company from applying surge pricing that kicks in when demand outstrips supply, and this feature remains a key controversy among the many that Uber has generated in the 58 countries that it operates in..
A senior Uber executive told the National Public Radio (NPR) last week that the company considered surge pricing a market failure and was working on algorithms that would predict demand and eliminate the situation of demand-supply mismatch.
“And so the idea is if you can predict that demand, you get that information out there – and you get that supply there ready for the demand so the surge pricing never even has to happen. And I think that's one of the really cool things that machine learning's doing for Uber right now,” Jeff Schneider, engineering lead at Uber Advanced Technologies Centre told NPR. "Because now we can look at all this data, and we can start to make predictions."
“Uber is always looking for ways to better predict supply and demand in a city. But this story is not accurate: we have no plans to end dynamic pricing. While we understand that no-one likes to pay more for the same trip, it’s the only way to ensure that passengers can always get a ride when they need one,” an Uber spokesperson told a technology website.
The story and the denial can both be true at the same time. Surge pricing happens only in a situation of supply-demand mismatch. So, Uber may “not end” dynamic pricing as the statement said, but will predict the demand such that “surge pricing never even has to happen,” as Mr Schneider explained. Formally doing away with surge pricing can have a negative impact on its ability to attract drivers, who are already complaining - in the U.S. - that a series of downward fare revisions have lessened Uber's appeal.
