Premium on-demand car service Uber has received a positive response ever since it launched in Delhi and Bangalore earlier this year and Hyderabad more recently. But now Uber is turning on its ‘Surge Pricing’ model in the country, starting with Delhi. We are not sure whether this will have any significant impact considering Uber currently operates only in small swathes of the city and its current pricing is already considered to relatively low considering the premium cars one gets.
Uber explains its surge pricing model saying, “When the supply of cars gets tight, we will raise the price in increments over time and conversely as supply opens up, we’ll lower the price.” So essentially at peak times like New Years, expect the tariffs to be higher than usual. Users will be notified about this rise on the app whenever surge pricing kicks in. In order to ensure there is no backlash, Uber will require customers to manually input the surge price on the app before they can order a ride.
There was a lot of hue and cry in the US, when Uber increased its tariffs on Thanksgiving and Christmas. The rates were nearly 8 times the usual post surge pricing. US blog ValleyWag published a scathing piece accusing Uber of giving into greed and putting money ahead of its customers.
To this, Uber CEO Travis Kalanick defended the company’s actions saying that this was one of the ways they encouraged drivers to work during holidays and in horrendous weather conditions. He also compared his car service to airlines who increase prices at peak times.
12/24 7am SFO to LAX 1-way/coach delta $660, same flight on 1/7 $58 – 11.3x Surge Pricing – calling FBI/FTC/BBB/Valleywag to vent grievances
— travis kalanick (@travisk) December 24, 2013