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As life in California has gained back some level of normalcy following over a year of lockdowns because of the coronavirus pandemic, people are starting to feel comfortable to use ride-hailing apps again. However, the customers of companies like Uber and Lyft may be shocked when they see the prices. Fares have reportedly skyrocketed recently — sometimes triple what they normally are,— and experts say the cost bumps will most likely be around for the next few months.
Customer spending on Uber and Lyft increased 30% from Feb. to Mar. Uber reportedly said that total monthly bookings, including food delivery and passenger service, reached an all-time high in March.
One woman’s Facebook post cited by ABC7 said she paid $28 for an Uber ride from Fullerton to John Wayne Airport. Her return trip from the airport to Fullerton cost her $109, though. Ygal Arounian, a financial analyst, blames the high prices on a surge in ride demand and a shortage of rideshare drivers.
As the pandemic restrictions ease, more people get vaccinated, and feel comfortable going, the demand for these types of rides increases. But simultaneously, Uber and Lyft are actually facing a driver shortage — a limited amount of rides available mean costlier rides.
According to Arounian, “drivers are still getting unemployment benefits and they’re still living off their stimulus checks, and that hasn’t put as much pressure on people to go back and drive.”
A spokesperson for Lyft acknowledged the rise in prices and says the company is working to attract more drivers to the platform. “We’re … providing incentives to drivers, who are busier and earning more than they were even before the pandemic,” the spokesperson reportedly said.
Both Uber and Lyft are currently offering cash incentives to entice drivers back on the road. Uber announced it will distribute a $250 million “stimulus” fund over the next few months to both new and returning drivers in the form of temporary incentives and guarantees. Another perk: Uber partnered with Walgreens to make it easier for drivers to get vaccinated. Lyft, on the other hand, is offering bonuses of up to $800 for referring former drivers back to the app. The company is also reportedly covering the cost of rental cars and offering extra cash to drivers when a trip lasts longer than nine minutes.
Moreover, Uber recently revoked their driver privileges to see destinations before accepting rides and setting their own pricing, claiming it was hurting their business. The company had given these as a way to avoid reclassifying its workers as employees under AB5. It had argued that AB5 didn’t apply to Uber drivers because they aren’t core to their business and that drivers really are independent because they’re “free from the control and direction” of the companies. In an attempt to prove its independence argument, Uber gave California drivers more control.
Nicole Moore, a Lyft driver and organizer with Los Angeles-based Rideshare Drivers United, told Market Watch that drivers she knows are not “taking crappy rides” because they don’t want to risk contracting COVID-19 for little compensation.
Analysts expect more rideshare drivers will be drawn back to their cars and the prices should settle down by June or July. Arounian reportedly said that because demand for drivers is already taking off, so is the amount they’re getting paid per mile. “The cost of the ride is going up. They’ll get more per ride in the near-term, and Uber and Lyft are saying, ‘Hey, come on and we’ll give you even extra bonuses,’ he said.”