Monday, October 2, 2023

Uber CEO Dara Khosrowshahi speaks at the The Economic Club of Washington in Washington D.C., U.S. June 11, 2019. REUTERS/Carlos Barria

Uber CEO Dara Khosrowshahi estimated a 3-mile would ride cost $20. It was actually more than twice that.Reuters

  • The price of an Uber ride can catch you off guard — even if you’re the company’s CEO.

  • Uber CEO Dara Khosrowshahi was surprised when he learned an interviewer paid $20 for a 2.95-mile ride.

  • Uber prices have surged in recent years due to inflation and a pandemic-era driver shortage.

Many people have experienced sticker shock at an Uber’s prices before, and the company’s own chief executive is no exception.

Wired editor-at-large Steven Levy took a 2.95-mile Uber ride from downtown New York City to the West Side to meet Uber CEO Dara Khosrowshahi. When asked to estimate the cost of the ride, Khosrowshahi put it at “twenty bucks.” His estimate, as it turned out, was less than half the actual price of $51.69, including a tip for the driver.

“Oh my God. Wow,” the CEO said, upon learning the cost.

And that wasn’t the worst of it. When Levy first tried to book an Uber ride for the interview, the price was $20 higher, he said. Khosrowshahi chalked that up to surge pricing, though as Levy noted, “It’s 10 am on a sunny weekday, and it’s not like the president’s in town.”

“Everything is more expensive. Inflation has become a part of our everyday life,” Khosrowshahi responded. “With Uber, the vast majority of your fare is going to your driver. Earnings per week for our drivers are up 40, 50 percent over the past four years, because that is the cost of time and the cost of labor. I think that’s positive.”

The cost of rides from ride-hailing apps like Uber and Lyft skyrocketed 92% from 2018 to 2021, CNBC reported that year, citing data from Rakuten Intelligence. Uber fares in April 2021 were up 40% year-over-year, according to the Rakuten data. Khosrowshahi vowed at the time that prices would return “to nearly the good old days” by September 2021.

Still, earlier this year, the UCLA Labor Center found that from February 2019 to April 2022, there was an increase of 50% for median passenger fare for Uber and Lyft in New York City, while median driver pay only increased by 31% in that period.

Khosrowshahi has previously attributed some of the company’s recent growth to inflation and a shortage of drivers.

But by last August, the company reported reaching a record-high 5 million drivers worldwide, up 31% from the year prior.

“We have a very strong flow of new drivers who are signing up, coming on to earn,” Khosrowshahi said at the time. “Over 70% of them have said that inflation and what they’re seeing right now in terms of the cost of groceries, the cost of living, plays a part in that decision for them to come on to the platform.”

Some of the price increases are also attributable to the fact that Uber is no longer subsidizing rides on a quest for growth and is instead focusing on profit. It seems to be working: On Monday, Khosrowshahi announced Uber’s first ever operating profit.

Read the original article on Business Insider


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