Uber Offers Free Rides After Surge Pricing Debacle During Siege in Sydney

I n response to what is arguably its most controversial snafu yet, Uber will offer free rides out of the central business district in Sydney starting today as a result of the aftermath of criticism for charging its passengers greater than quadruple the typical rate — in a practice known as surge pricing — while a siege was underway at the Lindt Chocolat Café at Martin Place, causing the city to be in lockdown mode.

The company is reportedly also in the process of issuing refunds to those customers who were affected by the surge pricing, which is still in effect for rides into the central business district in Sydney to “encourage drivers to get into” there.

I first reported on the practice of surge pricing by Uber back on January 4, 2014, asking if surge pricing by Uber is unfairly expensive:

To me, it is obvious that Uber could not get away with charging surge pricing at peak times if customers did not pay for it…

…especially if those customers do not have to wait out in the rain for 45 minutes hailing a cab when all the customers have to do is summon a car operated by Uber on their personal electronic devices — and the nearest available driver will be dispatched to your current location in order to ensure the quickest response.

Also, surge pricing supposedly gets more vehicles on the road when demand outpaces the number of drivers, which ultimately increases the reliability of the service offered by Uber. Getting more vehicles on the road is not as easy for a typical taxi company or a car livery service.

There is a debate as to whether or not surge pricing should apply during and after an emergency — such as a natural disaster, for example. As long as the pricing is not considered gouging, Uber should be able the charge more to cover additional costs without taking advantage of people, in my opinion.

I still have yet to be a passenger in a vehicle operated by Uber — but I rarely use taxi cabs and car services anyway.

The beleaguered private car hire company has been criticized for implementing its surge pricing during inappropriate times; as well as engaging in other controversial actions. For example, Sam Frizell wrote this article for Time magazine last month about the seven “dead-serious Uber controversies” which somehow did not “sink the company” — including sabotaging Lyft, its main competitor; poaching drivers from Lyft; disrupting established taxi services; and arrests of at least four of its drivers ranging from abductions to hitting the passenger on the head with a hammer. A rival car service — Gett — had accused Uber of “foul play” in New York. One passenger reportedly sued Uber as the result of an alleged sexual assault which occurred earlier this year.

According to this article written by Ben Grubb — who is the digital technology editor of The Sydney Morning Herald — “some users reported a minimum of $100 being charged by the app as the siege unfolded. The increase in cost is based on a computer algorithm and not determined by staff.”

Although many weblogs at BoardingArea have in the past extolled the virtues of Uber, that has not automatically been the case recently. This article at Michael W Travels… cautioned about surge pricing by Uber on Halloween and gives advice on how to deal with it; but that is of little use and comfort to those people who were attempting to escape a dangerous situation in Sydney. Only yesterday, Michael W posted this article about a woman who passed out and was allegedly charged $293.00 for a ride whose length is fewer than five miles. Ric Garrido wondered whether or not he should be afraid of Uber. “Is it immoral to be Uber?” asked this article posted at ThePointsOfLife.

Traditional taxi companies are not going down without a fight — especially in the wake of the recent public relations missteps of Uber. Seth Miller of The Wandering Aramean reported in this article that the strategy of legacy companies in New York to beat Uber are by — get this — raising rates.

As for the siege itself, it ended with gunfire once police stormed the café after the standoff lasted for 16 hours — but not before three people were dead, as two hostages and a gunman were killed.

“The gunman was identified as Man Haron Monis, 50, an Iranian-born, self-proclaimed Muslim cleric with a lengthy criminal record who had been free on bail”, according to this article written by John Bacon and Sandra Lee for USA TODAY.

The two hostages who were killed were Katrina Dawson, 38, a mother of three young children and a lawyer; and Tori Johnson, 34, who was the manager of the café.

People who used Uber to escape the area where the siege occurred encountered the surge pricing which went into effect, resulting in outrage and igniting the latest controversy.

Although it is possible that the surge pricing automatically went into effect and that it was not intentional on the part of Uber, I could not even fathom taking advantage of people in an emergency situation…

  1. Surge pricing is great.

    * It’s never a surprise. It pops up on a customer’s screen. You even have to type in the multiple to confirm it. You can’t be charged for surge pricing without acknowledging it first.

    * Most of the money goes to the driver, not to Uber. Uber takes the same 20% cut during a surge that they do on regular rides.

    * It balances requests for rides with available rides. People with a real need get rides, others are encouraged to take alternate forms of transportation or wait for the surge to end.

    * It makes more rides available. It brings drivers into the surge area, when they might not be driving at all. Take a snow storm, at regular prices you stay warm at home, at surge prices you provide service if you’re a driver. That benefits drivers and gets riders where they’re going. And when drivers enter the area, the surge ends.

    The degree of the surge depends on the imbalance between riders wanting rides and drivers available and willing to provide rides.

    I’ve paid surge pricing — arrive at New York Penn Station. 4pm on a Friday. Raining. Shift change. You won’t get a cab on the street. The cab line was about an hour long. Uber, 1.25x pricing, a few extra bucks and I was on my way to my hotel in about 3 minutes. Bam.

    THE ALTERNATIVE TO SURGE PRICING IS NOT ENOUGH RIDES AT ANY PRICE. The alternative ‘surge’ pricing is infinite. Uber adds capacity, provides a service that wouldn’t otherwise exist. So why the hate?

    Economists love surge pricing, people who don’t understand economics hate it.

    1. No hate at all pertaining to surge pricing from me, Gary; but if a company is to have surge pricing automatically applied using technology, there should at least be some manual oversight for extraneous and unusual situations — such as escaping from a siege — so as to avoid a public relations debacle.

      I have no problem with surge pricing for holidays and other normally high-volume situations with advance notice, as pointed out by you — as long as people are willing to pay for it.

  2. Thanks for the mentions! I had meant to cover the tragic situation in Sydney but I think you’ve got it covered.

    As for surge pricing, in my opinion most in favor of it are not actually paying for their rides. If I worked for a company covering my travel expenses then I wouldn’t care at all what my ride was going to cost. This is certainly a general statement that would not apply to all.

    Gary makes some great points as to why the surge is good. Makes sense generally speaking but it certainly sounds like a company taking advantage of its customers and without ethics.

    1. You are welcome, Michael W Travels; and you may have raised a good point with surge pricing being subsidized with customers spending other people’s money — such as an expense on company business.

      Gary certainly does make sense and I do not disagree with him; but that “it certainly sounds like a company taking advantage of its customers and without ethics” was part of the point of this article.

      1. On the contrary, the system automatically applies surge prior but humans intervened, ended the pricing, offered free rides instead and refunds.

        There would have been nothing wrong with using price as a matching mechanism and encouraging more drivers to provide rides. But Uber did exactly what you’re suggesting they should have done, but they’re getting manufactured grievances anyway.

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