Capping surge pricing could be first in U.S.

A plan to place a cap on how much Uber, Lyft and other ride-sharing companies charge during peak demand times could be the first such regulation in the country, company officials told the Honolulu City Council Budget Committee Wednesday.

“Surge pricing” is one of the most controversial aspects of ride-sharing platforms. The ride-sharing companies argue that increasing what can be charged when demand is at its peak works to the advantage of riders by encouraging more drivers to get on the road.

But traditional taxi companies and their drivers argue that surge-pricing takes advantage of customers when they’re most vulnerable.

After a slew of supporters from both sides testified, the committee voted 4-0 to approve a new draft of Bill 35 that will now likely be up for a final vote at the full Council’s June 6 meeting.

The two key changes in the latest version:

>> Removing a requirement in the previous draft that any private transportation company driver must be certified by a physician licensed to practice in Hawaii. The driver’s company, however, must certify that he or she is physically and mentally fit to drive and does not have any medical conditions that might place a passenger at risk.

>> Eliminating a requirement that ride-sharing company drivers must put up taxi-style meters in their vehicles.

Councilwoman Kymberly Pine, whose husband is a Naval officer, said she continues to be furious over photos showing a private transportation company charging military personnel exorbitant fares when they came ashore.

“You’re taking advantage of people in desperate situations, and that’s what I’m concerned about,” Pine told a man who drives for both Uber and Lyft.

Timothy Burr, Lyft director of public policy, said nowhere in the country is there legislation that caps how much drivers can charge during busy times. Some municipalities require a cap when there is a state of emergency, but not during the regular course of doing business.

Burr said oftentimes, what the company calls dynamic pricing often occurs at night where the safety of passengers is of utmost importance. “A big part of that is making sure we can incentivize drivers to get on the road when demand is at its highest,” he said.

Lynda Kernaghan said she finds most objectionable the requirement that she place a permanent identification label on the front and back of her car, which doubles as the family vehicle she uses to take her kids to swim meets and other events. A permanent sticker will lead many to assume she’s on duty all the time, she said.

Robert Deluze, owner of Roberts Taxi, said taxi drivers who use their personal vehicles for work already live with that burden. As for the idea of pricing more during peak hours, “you guys call it price surging, I call it gouging.”

Martin also scoffed at the warning by Uber and Lyft supporters that said placing a cap on surge pricing would set a national precedent. “That’s what we do,” Martin said. “That’s the legislative body’s role is to set precedent. The issue is leveling the playing field.”

Also Wednesday, the committee voted to defer for a month Resolution 18-109, which calls on Mayor Kirk Caldwell’s administration to conduct a pilot project to look into various alternate modes of transportation, including scooters and other “dockless multimodal transportation services.”

Last week, California-­based scooter rental company Lime ceased operations after city officials warned company officials they could face fines or jail time for violating laws that prohibit the parking of vehicles on any part of street.

Council Budget Chairman Trevor Ozawa said he doesn’t think the Caldwell administration is treating Lime fairly and noted that Biki’s bike racks are allowed on sidewalks and streets.