Honolulu supports plan to limit ‘surge pricing’ practice

HONOLULU — Honolulu leaders approved a measure Wednesday to limit prices that ride-hailing services such as Uber and Lyft can charge during peak demand, a cap that the companies say would be the first restriction of its kind in the United States.

The measure would prevent “surge pricing” if increased rates are higher than the maximum fare set by the city. Honolulu attorneys will review the measure before it goes to Mayor Kirk Caldwell, who would have 10 days to sign it into law, allow it to become law without his signature or veto it.

Uber sent emails to customers across the island of Oahu, which is where the rule would apply, urging them to oppose the rules that would impose “outdated taxi-style requirements on rideshare.”

Oahu taxi drivers have been at odds with those who drive for mobile apps that connect riders with nearby drivers. Taxi companies complain that companies such as Uber and Lyft create an unfair playing field because they face fewer restrictions.

Uber has been told the city hasn’t received any consumer complaints about surge pricing, said Tabatha Chow, the company’s senior operations manager for Hawaii. Honolulu has the highest taxi prices in the nation and Uber is 40 percent cheaper, she told council members Wednesday.

Surge pricing only happens during peak times such as rush hour, weekend nights and big events, she said, adding that fares go back down when more drivers are on the road.

Uber said in a fact sheet that surge pricing gives drivers the incentive to work in busier areas, which lowers wait times for riders and ensures reliability.

Council Chairman Ernie Martin said he wrote the measure to ensure consumers won’t pay an “unreasonable price.” He said companies will still be able to use surge pricing — or as he prefers to call it, “predatory pricing” — within limits.

The measure would set precedence nationwide, he said: “Other cities are struggling with this as well.”

The city’s Department of Customer Services would be tasked with setting the maximum price. Deputy Director Randy Leong told council members that the department opposes setting the threshold but will do so if it becomes law. It’s difficult to dictate to businesses what they may charge, he said.

Uber released a statement after the vote saying that, if implemented, the bill will limit consumer choice and put the availability of Uber service on Oahu at risk.