If you plan to use an Uber to get around Toronto during the Pan Am Games, you may have to pay more than anticipated. In fact, the ride-share service could cost you the same as a taxi if surge pricing takes effect.
Experts say it’s possible that Uber’s “surge pricing” may come into effect during the Pan Am Games. While frequent users may be more prepared for the price hike, the possibility of elevated fares is something Uber newbies should keep in mind when deciding how to get around.
“Certainly if there is a lot of demand for services [during Pan Am], the surge pricing will come into effect,” says William Mitchell, a professor of strategic management at Rotman School of Management.
Users often tout Uber as the cheaper, more convenient alternative to your standard cab. But its dynamic pricing model has been known to significantly boost regular fares when demand spikes. The ride-hailing app uses an algorithm that inflates prices in high-demand areas in order to lure more drivers where they’re needed the most.
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Surge pricing recently came into the spotlight in Toronto after a subway system shutdown in the busy downtown core left thousands stranded resulting in Uber fares rocketing to up to 5 times the normal rate. Mitchell says he doubts that fares will be as high during Pan Am, but “you never know.”
Recent reports suggest that the number of Pan Am tickets sold and the rate of hotel bookings in the city in the lead-up to the games is lower than officials expected. This could mean that venues will be oversaturated with Uber drivers who also overestimated the degree of “Panamania,” which would keep surge prices to a minimum.
Uber does inform users when surge pricing is in effect before they agree to the fare. Same goes for UberX, the cheaper Uber service which uses unregulated drivers and vehicles.
“Ultimately, people always have a choice about whether they want to get into an Uber car or not,” says Sunil Johal, a policy director at the Mowat Centre in Ontario.
If your estimated UberX fare ends up being five times more than normal, a plain vanilla city-regulated taxi may be a more economical choice if you don’t mind waiting a little longer for your ride to show up. For example, an Uber from Pan Am Park in Toronto to Union Station will cost you $12-$13 at most without surge pricing, compared to a $15-$17 cab fare (including tip) during rush hour. With a 1.5x surge in effect, however, your Uber would cost you $18-$19.
Of course, public transit, while crowded, is your cheapest bet. Alternatively, if you’re determined to Uber your way around, you can use Surge Protector, an app that tells you where to go to avoid astronomical Uber fees. In some cases, just walking a block or two away from a high-demand area could save you several dollars.
Uber has been in the news lately for its clash with the regulated taxi industry in Canadian cities. Here are a few frequently asked questions about Uber to help you make sense of it all.
How do Uber services and taxi services differ?
UberX, UberXL and UberSelect are all various levels of service offered by Uber. The drivers are not required to have commercial driving licenses. They are regular people who have signed up to be partners with Uber and use their personal cars to ferry passengers they find via the app in order to make some extra cash. UberBlack is their original service and its drivers must have commercial licenses. All Uber drivers are screened and must pass background checks and have personal car insurance. Taxi drivers, on the other hand, must acquire expensive commercial vehicle licenses and permits from the city and are given specific training. Taxis are usually dispatched from brokers, who collect fees, which is why cab fares are usually higher than the cost of an Uber. Fares for taxis are regulated, whereas Uber’s fares are usually much lower and change depending on demand.
What is the conflict between Uber and taxis?
Taxi drivers believe that Uber drivers are bypassing commercial vehicle bylaws. Uber, on the other hand, says that it is simply an app connecting drivers to passengers and is not a taxi service, meaning the bylaws don’t apply to them. Many cities are cracking down on Uber. It was just announced in Toronto that authorities may start fining UberX drivers without commercial licenses.
Are UberX drivers insured?
Drivers who sign up with Uber must have personal car insurance. Uber promises that they’re also covered by $5 million liability insurance through the company. But experts say that if an accident occurs while using your vehicle for a commercial purpose, personal insurance could be voided entirely.