PEAK PRICING: Would banning taxi and private hire surge pricing help drivers and customers?
The idea of banning surge pricing in the taxi and private hire sector has been raised in Parliament. But what would happen if such a ban were introduced, and would it actually benefit passengers or drivers?
Surge pricing is a system used by many private hire firms, particularly through apps like Uber. It increases fares during times of high demand, such as rush hour or bad weather.
The logic behind this is simple: when more passengers are looking for rides and fewer drivers are available, prices go up to encourage more drivers to work and to balance out the supply and demand.
For customers, this can mean paying significantly more during peak times, while for drivers, it’s an opportunity to earn higher fares. This flexibility is what separates private hire vehicles from Hackney carriages, which must stick to a regulated, metered fare set by local authorities.
Recently, an MP asked whether the Government will consider banning surge pricing. While such a move may seem appealing to passengers, it’s unlikely to have much effect in the private hire market. The reason? Private hire pricing is not regulated in the same way as taxis, allowing companies to set fares as they see fit. A ban on surge pricing could mean private hire operators simply adjust their base fares to compensate for the lost revenue.
For Hackney carriages, which operate under a strict metered fare system, the discussion is slightly different. Any changes to their pricing structure would require approval from local councils. But these drivers already use a form of peak pricing, where fares increase slightly during busy times.
Would passengers benefit if surge pricing was banned across the board? Overall, perhaps not. It’s possible that fares would simply increase during off-peak times to balance out the loss. A peak-time tariff, similar to the one used by taxis, could be introduced and seen as acceptable instead. But this would likely lead to an overall rise in fares, making off-peak journeys more expensive.
In short, a ban on surge pricing could lead to fewer benefits than expected for both drivers and passengers. The flexibility of the current system might be lost, potentially leading to higher prices across the board. Whether the Government will take further steps remains to be seen.
