'Surge pricing' ban will hurt Honolulu consumers

The Grassroot Institute of Hawaii urges Mayor Caldwell to reject the City Council measure

News Release from Grassroot Institute, June 7, 2018

HONOLULU, June 7, 2018 >> The Honolulu City Council yesterday approved what could be the nation’s first ban on “surge pricing” by ride-hailing companies such as Uber and Lyft, prompting the Grassroot Institute of Hawaii to warn that the real victim of this measure would be consumers.

The independent, nonpartisan policy think tank urged Mayor Kirk Caldwell to veto the measure, which generally has been cast as a pro-taxi service, anti-ride-hailing measure.

“We call on Mayor Caldwell to do the right thing and reject this proposal to restrict the freedom of consumers to choose,” said Keli’i Akina, Ph.D., president of the Grassroot Institute. “Consumers deserve to have the choice of whether to pay more for a service they need or want. The ride-hailing companies make no secret of their surge pricing, nor do they force anyone to purchase their product. Instead, they offer an option that many people find useful.”

Under surge pricing, ride-hailing drivers charge more for their services during periods of greater demand. They inform the potential customers upfront how much their rides will cost, and the consumers can choose to use the service or not.

Taxi drivers are not allowed this same freedom, as they are still regulated under decades-old regulations written before there even were ride-hailing services. Pricing for taxis is based on mileage and time, with rates set by the city.

Akina said rather than restrict the freedom of ride-hailing services — and consumers — by banning surge pricing, the better option would be to reduce the regulation of taxi drivers.

“The City Council is meddling in the market,” Akina said. “Without the benefit of surge pricing, there would be no incentive that increases supply in times of great demand. When you need to get to the airport at a busy time, or you’re looking for a ride home from a New Year’s Eve concert, you’re willing to pay a little more to get where you need to go. If this proposed ban goes into effect, that option to ordinary consumers will no longer be available.”

Akina concluded: “The City Council decided to address a problem that didn’t exist by trying to take away choice from consumers. It won’t help us, and it won’t help Honolulu. We hope Mayor Caldwell will stand up for consumers and reject this proposal.”

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