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Lyft removed its surge cap in battle against Uber

by Todd Haselton | April 22, 2016April 22, 2016 10:15 am PST


On-demand car service and Uber competitor Lyft recently removed the cap it places on bills that customers face while riding during periods of increase demand.

Quartz recently reported on the issue after folks on the forums started noting that they were being advertised 250%, 300% and even 400% price increases in areas such as Austin, Texas and Los Angeles, California. Many of those users didn’t seem to be aware of the policy change from the previous 200% cap, though the information was made widely available to drivers in the Lyft program – including in a blog post and through emails. Oddly, Lyft decided to never alert users that they faced exorbitant fees if they rode during particularly demanding times.

The reason?

According to Quartz it all came down to competition with Uber. Drivers who work for both services would simply drive for Uber when demand was high because they could make more money. With a cap at 200% of the base fare, there wasn’t much of a reason to drive for Lyft instead. Now that the cap is increased, drivers can start to work for Lyft instead, or choose the rate that fits them best.

It’s kind of win-win and kind of lose-lose.

Drivers win because they can make more money, and riders win because there’s more of an incentive for drivers to hit the streets, thereby increasing the number of rides on the road. It’s lose-lose because drivers are going to hit the roads, creating a greater supply of rides for consumers and – if we’re lucky – keeping those surge prices from getting too high except at the most-demanding times. And riders lose at that point, too, because we’re paying more.

Todd Haselton

Todd Haselton has been writing professionally since 2006 during his undergraduate days at Lehigh University. He started out as an intern with...