Uber's surge pricing has shocked the company's CEO Dara Khosrowshahi. During an interview, a journalist took an Uber from downtown Manhattan to meet with Mr Khosrowshahi on the West Side, and the fare for the short 2.95-mile trip was an astonishing $51.69, including the tip. When shown the fare, the Uber CEO exclaimed, "Oh my God. Wow" as he had guessed the cost to be around $20.
The journalist, Wired editor-at-large of Steven Levy, pointed out that just five minutes earlier, the fare was $20 higher due to "surge pricing". He revealed their conversation that took place in May in a story published on Tuesday. "A surge makes no sense," the journalist told Mr Kosrowshahi. "It's 10 am on a sunny weekday, and it's not like the president's in town."
Mr Khosrowshahi, meanwhile, defended the higher prices, citing inflation and increased rates for time and labour. "Everything is more expensive. Inflation has become a part of our everyday life," Mr Khosrowshahi said during the interview.
However, Forbes reported earlier this year that Uber's prices in the US rose at four times the rate of inflation from 2018 to 2022, with fares increasing by 83 per cent over nearly four years.
In the past, Mr Khosrowshahi attributed the high prices to a driver shortage during the pandemic, but Uber's driver numbers had reached a record high of five million in August 2022, according to the company's Q2 2022 earnings report. Despite the higher prices, Uber recorded a significant profit of $394 million in the second quarter of the current year, a remarkable improvement from the $2.6 billion loss in the same period last year. It marked their first profitable quarter since the company's inception in 2009.
Uber's revenue also rose by 14 per cent year-over-year to $9.2 billion, with total transactions on its app growing by 16 per cent from the previous year, amounting to $33.6 billion. However, despite the positive figures, Uber's stock fell by nearly 6 per cent on the same day.
The company also announced that its CFO, Nelson Chai, will be leaving the company on January 5, 2024, and the search for his replacement is currently underway. Chai had led Uber's initial public offering in 2019 and oversaw the acquisition of Postmates for $2.65 billion in an all-stock deal in 2020.
