EXPENSIVE RIDE

In Mexico City, when air pollution goes up, Uber’s surge pricing goes crazy

Mexico is approaching the end of its six-month-long dry season, and pollution in the capital is high. On bad days, to ease the fumes, the Mexico City authorities order 20% of the cars off the road, by banning those with certain license plates. On really bad days, it’s 40%.

Today was a 40% day (link in Spanish). And people are getting really mad.

The partial vehicle ban means more people are looking for taxis and car services like Uber. But it also means there are fewer Uber drivers on the road. The inevitable law of supply and demand has pushed up the company’s infamous “surge pricing” to the kinds of levels you typically see on New Year’s eve anywhere else. Among those venting their rage (Spanish) on Twitter is a prominent soccer player, complaining that a one-hour trip cost him 1,400 pesos ($79).

In a blog post yesterday (Spanish), the company made its customary argument in favor of surge pricing: that higher prices get more drivers on the roads and thus increase supply. During a three-day pollution episode last month, it says, 100,000 more people than usual got rides, despite the shortage of cars, thanks to surge pricing.

It’s not clear if that means Uber and its drivers made more money overall. (We’ve contacted the company to ask). As another blog post explains, it has now also extended UberPool (Sp.)—the option to share a ride with other passengers and save money—to the whole city, where previously only a few neighborhoods had it.

The company is pushing UberPool heavily, saying passengers can save up to 40% per trip that way, and offering four free UberPool trips to new users. Not everyone will want to use it, though; in a city where “express kidnappings” by taxi drivers are still a concern, people are often wary of getting into a car with strangers.

Some users have demanded that Uber put a cap on its surge pricing—but the company has an argument against that, too. During a partial vehicle ban on March 17, it tried capping surge prices at 1.5 times normal levels. “In just a few minutes the market reacted as predicted in the textbooks,” wrote Sergio Sarmiento (Sp.), a political commentator; namely, supply dried up. According to the company, 30,000 people that day who looked for an Uber ride were unable to get one, as against 1,000 or so in a normal week.

Uber argues that it’s also doing the city a favor, by increasing car-sharing; the average car journey in the city carries only 1.2 people, it says. Of course, none of that is likely to mollify residents who find themselves paying three, five or even seven times the normal price to get from A to B.

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