Honolulu is set to become the first city in the U.S. to limit fares that ride-hailing businesses are able to charge when there is a spike in demand. This came following vote by the city council on Wednesday.
Companies that specialize in ride-hailing including Uber and Lyft use a model called surge pricing where the fare for a ride goes up when factors such as bad weather or rush hour traffic increase demand for their services.
The practice may be limited in the largest city in Hawaii in the near future after the City Council of Honolulu approved by a 6-3 vote requiring city officials to place a cap on surge pricing by those companies involved in ride-hailing.
For the proposal to become law it still must be signed by the Honolulu Mayor Kirk Caldwell and his administration appears as if they oppose that measure.
The Department of Customer Service for the city said the measure was opposed by the administration because customers of ride-hailing businesses already know the fare they will have to pay, which when taxi cabs are involved that is not the case.
Uber said as well that the riders are aware of the fare upfront. If this measure is take effect, it restricts innovation, limits choice and may jeopardize the availability of the service by Uber on the island, said the company in its statement.
This measure is a solution that is searching for a problem as the company was told by the City there has not been any consumer complaints over the pricing model Uber uses, said the senior operations manager at Uber.
Last month, officials from both Uber as well as Lyft told members of the city council that capping fares would be the first limitation of its kind anywhere in the U.S.
Ride-hailing companies have run into many obstacles thrown up by city lawmakers worldwide. Many of the problems arise after the local taxi services are affected by Uber and Lyft and that creates friction amongst drivers and the taxi associations often protest or attempt to have limitations put on the ride-hailing companies.