Uber CEO: Surge Pricing Prevented You From Getting Stranded In The Snow

Travis Kalanick on Uber launch and feesBusiness InsiderUber CEO Travis Kalanick

Uber CEO Travis Kalanick continues to stand behind the on-demand car service’s surge pricing.

Surge pricing happens when there is a lot of demand, but not enough cars on the road. So Uber raises its fares to ensure it has reliable vehicles ready for those who actually need them.

“Surge pricing only kicks in in order to maximise the number of trips that happen and therefore reduce the number of people that are stranded,” Kalanick told Wired.

That’s exactly what happened over the weekend during the snowstorm in New York. Some customers ended up paying seven times the normal rate.

Uber implements surge pricing for a couple of reasons. For one, it incentivizes more drivers to be out on the road, given that they would likely rather not be driving during a storm or on special occasions like New Years Eve. Higher fares also might mean less demand from its more frugal customers.

“We did more trips because of our approach, not fewer,” Kalanick said. “We gave people more options to get around, and that is the whole frickin’ goal.”

Uber would like to give its customers a really cheap option, he says, but it’s just not possible in certain “extreme” events. He added, “I guarantee that our strategy on surge pricing is the optimal way to get as many people home as possible.”

NOW WATCH: Tech Insider videos

Want to read a more in-depth view on the trends influencing Australian business and the global economy? BI / Research is designed to help executives and industry leaders understand the major challenges and opportunities for industry, technology, strategy and the economy in the future. Sign up for free at research.businessinsider.com.au.

Tagged In