Uber prices soar during holiday season as ride-sharing giant struggles to lure drivers back

Uber says it has had to raise prices at the height of the holiday season because it continues to face a shortage of drivers following the pandemic.

While the number of people who rode over the Thanksgiving holiday last week has now returned to pre-pandemic levels, thousands of former Uber drivers have decided not to get behind the wheel and work for the company.

In an effort to try to lure drivers back to the ride-sharing app, Uber has raised prices in an attempt to entice them back, but coupled with inflation, it also means that the increased cost is being passed through to the passengers.

When Uber bosses saw drivers not getting back to driving for the company as quickly as they would have liked, several changes were made to the driver app.

The company has now started showing drivers their destinations and fares in advance, in an effort to increase transparency. Previously, drivers were not shown their destination until they accepted the ride.

Another reason for the driver shortage is that many have switched to Uber Eats and started delivering food during the pandemic.

Some drivers have been hesitant to carry passengers again due to safety concerns with rideshare drivers worried about the risks, including exposure to covid and the rise in carjackings in big cities across the country.

Uber CEO Dara Khosrowshahi pointed out how when Uber saw drivers not getting back to driving for the company as quickly as they would have liked, several changes were made to the driver app.

The graph above shows how New York City taxi fares have increased over time.

Uber CEO Dara Khosrowshahi says he hasn’t seen any sign of a pullback in spending on everyday items such as carpooling for dinner.

“Our business in Chicago right now is booming,” he said while speaking in the city last week.

“Inflation is driving up prices, but a bigger factor is the shortage of Uber drivers,” he told the Chicago Tribune.

“The number of drivers has been on the rise, which is improving estimated arrival times and reducing rising prices, and inflation is encouraging more people to start driving for Uber as they look for ways to earn extra money for items as edibles,” he explained.

The company is also rolling out a program whereby passengers and drivers will be able to record their rides in hopes of increasing safety for both parties, who will be notified once the recording has started.

The recording will only be accessible if something goes wrong during a trip.

“What we’ve seen is, and it’s not a surprise, that when people are recorded, they just behave better,” Khosrowshahi said.

Uber has committed to going carbon neutral in the US, Canada and Europe by 2030 and seeks to incentivize drivers to use electric vehicles.

Drivers and temporary workers hold signs as they protest outside Uber’s headquarters in San Francisco, California, in October to announce the formation of the California Gig Workers Union.

Currently, any driver who rents a Tesla from Hertz receives an extra dollar per trip.

Uber isn’t the only company raising fares; Lyft also plans to increase its rates by 24 percent per mile and 7 percent per minute.

Last month, it was reported that Lyft rides were on average about 60 cents more expensive due to rising inflation in insurance costs for drivers.

The ride-sharing company also added a 55-cent surcharge earlier this year to help drivers combat high gas prices. This resulted in consumers paying an extra $1 for a taxi ride.

The additional costs resulted in the average cost of a trip increasing by three percent and an 18 percent increase in the service fee, according to YipitData.