Uber to charge premium price for high demand routes

Uber to charge premium price for high demand routes

Uber is set to roll out higher prices for some customers on high demand routes, but they deny trying to squeeze more money from richer users.

The company has started using "route-based pricing" after secretly testing the new model on trips and discovering passengers would pay more to travel some popular routes.

It'll apply to UberX customers - the app-based ride service's standard offering - and in cities which have UberPool - the cheaper carpooling service.

It's currently limited to 14 US cities. An Uber spokesman told Newshub there are no plans to introduce the pricing model outside the United States.

Earlier this month, Uber's New Zealand general manager Richard Menzies told Newsroom UberPool was likely to be introduced into the New Zealand market and would help with Auckland's congestion problems.

The company knows which routes are high demand and will draw higher prices, but the customers and drivers aren't told of the price change. Drivers won't make more money from the premium prices.

Instead, the extra money will go toward paying for promotions such as dropping the price of UberPool from US$10 to US$8. It'll mean drivers would still get paid based on the US$10 price rather than the cheaper rate.

"What we want for drivers is consistent earnings," Uber head of product Daniel Graf told Business Insider.

"If we don't have reliable and consistent earnings, what are they going to do? They're not going to drive for Uber."

But customers have complained the model hits richer users who use the UberX service in the pocket  something Mr Graf denies.

"This is not personalised. This has nothing to do with the individual," he says.

Overall, he says, it will actually make Uber's service more affordable.

"With this route-specific pricing, we can lower prices more. That's what it comes down to."

Instead of separating rich and poor, Mr Graf says it is grouping customers into "time-sensitive" UberX users and "price-sensitive" Uber Pool riders.

The company won't be using personal data to decide who pays more, Mr Graf told the Business Insider; any UberX rider on the same route at the same time will be charged the same price.

Uber has taken a major hit in profitability and popularity, losing more than US$2.8b last year and lost 500,000 customers in one week in the #DeleteUber campaign - a protest against President Donald Trump's Muslim travel ban.

The company was accused of strike breaking in New York after the New York Taxi Workers Alliance called for an hour work stoppage in protest of Mr Trump's executive order.