After the Karnataka Government stayed its decision to ban surge pricing in the state, online cab aggregator Uber has put up a blog post explaining the need for surge pricing. In it, Bhavik Rathod, general manager at the company, says that the availability of cabs drops due to high demand, when cabs are already on trips. This increases the wait duration for a user. Rathod adds that Uber’s goal is to make sure that users get a ride within minutes even when Uber cabs are busy, and that’s possible due to surge pricing. Surge pricing is a technique used by Uber to increase fares (1.5x, 2x etc.) to provide drivers the incentive of keeping their cab running, while also making it available for the user, no matter how much the demand for one. Surge pricing profits go to drivers Uber hasn’t had a smooth run with respect to surge pricing it implemented, either in India or globally. Most recently, a user saw prices as high as 7.3x in Hyderabad making it impossible for him to get a Uber cab. Despite this, the company states that ‘nearly all’ of surge pricing profits go to the drivers as part of their fares. Rathod adds that Uber isn’t the first company to use surge pricing, giving examples of airlines and hotels which increase prices as demand drops etc. but the option to not use a cab in surge pricing is also available, in the interest of transparency. On Uber, surge pricing means you…
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