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Data Filed In Chicago Reveals Uber's Carpool Pricing Strategy, Reports Reuters


11/26/2019


Data Filed In Chicago Reveals Uber's Carpool Pricing Strategy, Reports Reuters
One of the closely kept secrets of ride hailing companies Uber and Lyft is how much the companies charge from customers availing their services throughout the day.
 
However revelation of that internal data by Uber because of a law in Chicago, which mandates the companies to disclose fare data, for the first time gives a glimpse of how at least one of the ride hailing companies is trying to become profitable for the first time in its operational history. .
 
According to a report published by the news agency Reuters based on analysis of such data, over the past one year, there has been a marked rise in the fares for shared rides in the city of Chicago. However the fares charged by the company for single ride has remained more or less stable,
 
Accori8dngot the Reuters report, the low-income neighborhoods of Chicago, from where most of the carpool rides of the companies are booked, primarily gets affected by the price increases for shared rides. The report noted a drop in carpool ridership while fares increased over this period.
 
There is however no differentiation the rides operated by Uber Technologies Inc, Lyft Inc or smaller ride-share rival Via has been shown in the  Chicago data. According to estimates from the data issued by Second Measure, a firm that tracks credit card expenditures, about 72 per cent of the market share in Chicago is dominated by Uber. The data reported by Reuters also does not signal whether similar fare strategies are being followed by the companies in other cities of the United States or at other places as well.
 
Additionally, discounts given to customers are also being attempted to be reduced by the fare changes in Chicago by the ride hailing companies with the aim of showing their investors that the companies can become profitable with this business model.
 
However this change in fair structure is not without its political challenges and risks because the ride hailing companies such as Uber have been held responsible for over congestion and allegations of bad driver treatment and violation of passenger rights by authorities of many cities from Chicago to London. Uber’s license to carry passengers in London was not renewed by the city’s authorities for the second time in less just over two years over a “pattern of failures” on safety and security. The Uber has said that it will contest the decision. 
 
With reference to the analysis of the data from Chicago, Uber said that its shared Pool rides segment has churned out only losses traditionally. Uber was “losing significant sums” because of the hefty discounts on the shared rides, said company’s Chief Executive Dara Khosrowshahi earlier this month.
 
“We want Pool to be available to as many people and in as many cities as possible, and to do that it has to be financially sustainable for years to come” with the help of strategies that include pricing and better algorithms so that a greater number of pool riders can be located, said an Uber spokesman.
 
(Source:www.reuters.com)