WHEN GOV. CHARLIE BAKER signed a bill in the summer of 2016 banning Uber and Lyft from charging surge prices during a state of emergency, it seemed like a sensible policy.
The ride-hailing companies had taken flak for several years over their policy of charging more during storms, because of the way the company lets prices “surge” when demand is high. The winter of 2015-2016 saw unprecedented blizzards in Massachusetts. Insanely high prices that resulted in a public outcry led Uber to voluntarily cap prices during a state of emergency – a state that until then had been declared mostly during weather events. The provision was part of a broader package of new rules established to regulate ride-hailing companies.
Fast forward four years, and Massachusetts has now been in a state of emergency for more than six months, due to COVID-19, for a reason that has little to do with transportation.
A supplemental budget bill that Baker introduced Wednesday would lift the surge pricing ban and allow ride-hailing companies to use surge pricing during a state of emergency, with the approval of the Department of Public Utilities, which regulates the industry.
The proposal comes as riders have reported struggling to get an Uber during the pandemic. The Boston Globe reported in July that riders were facing long waits to call a car. Uber at the time blamed a shortage of drivers, due to the pandemic, but also the lack of surge pricing. Surge pricing limits demand by raising prices while also incentivizing drivers to drive at times when demand is high.
Massachusetts is one of two states in the country that does not allow any form of surge pricing during the pandemic.
According to data provided by Uber, before COVID-19 hit, wait times for cars were similar in Boston, New York City, and Philadelphia. Now, wait times average nine minutes longer in Boston. Riders who request a ride in Boston are 40 percent less likely to complete their trip than riders in New York and Philadelphia – either because there are no cars available or because either the rider or driver cancels the trip due to a long wait. When a rider requests a trip in Boston, the chance that there is no car available is five times higher than in the other two cities. A Boston rider is less likely to complete a trip than riders in all 20 of the largest US cities.
The difficulty in getting ride-hailing cars comes as some riders are likely turning to these services because they are nervous about getting onto a crowded train or bus.
Uber spokesperson Alix Anfang said, “Surge pricing ensures that riders – especially essential workers who need to get around – have access to affordable and reliable transportation options.”
A statement from Lyft said, “We support Governor Baker’s proposed change because it would help improve wait times and driver earnings throughout the Commonwealth, while also bringing Massachusetts closer into alignment with approaches taken by other states on the issue.”
TechNet, a trade association of technology company executives, wrote a letter to Baker in June asking him to lift the ban on surge pricing. Technet Northeast executive director Christina Fisher wrote in the letter that the ban was designed to address weather emergencies that lasted for days, “before an unprecedented, prolonged emergency like the COVID pandemic was even contemplated.”
Fisher wrote that the ban on surge pricing has harmed drivers’ earnings while contributing to a shortage of available cars. She said 57 percent of riders requesting rides to Boston area hospitals have not been able to get a trip – and those who are able to get rides are seeing a 320 percent increase in wait times. In the long-term, she warned, “If people still feel uncomfortable riding public transportation and also cannot rely on TNCs, they might be pushed to buy a personal vehicle and never use public transportation as a regular option again which would only serve to worsen the region’s significant pre-COVID traffic challenges.”
Baker introduced a similar provision in his July 2019 bill to enhance public safety requirements for ride-hailing companies, but the Legislature has not taken up that bill. The Massachusetts House passed a similar provision lifting the ban on surge pricing during an emergency in its transportation financing bill, but the Senate has not taken that bill up.
Transportation Committee House Chair William Straus and Senate Chair Joseph Boncore did not return calls for comment on the proposal on Thursday.