On Tuesday Uber Technologies Inc. (NYSE:UBER) announced that it would start limiting access of drivers to the app in New York City. This complies with a regulation that aims at boosting the pay of drivers and ease congestion in Manhattan.
Uber to lock out drivers in low demand areas
The move to lock drivers out of the app in areas of low demand comes months after Lyft Inc. (NASDAQ: LYFT) also implemented similar restrictions according to the city regulation. The ride-hailing companies have opposed the unprecedented laws stating that the regulation will limit drivers from earning money. They equally say that this will cut off low-income residents in remote areas in the city not plied by regular taxis.
The city has however denied the claims. On Monday Uber said in a statement that Mayor Bill De Blasio’s TLC has been passing arbitrary and politically motivated rules that have an unintended impact on riders and drivers. Last year the Taxi and Limousine Commission of New York implemented some laws challenging how ride-hailing companies operate in the city.
Bill Heinzen the agency’s acting commissioner defended the laws on Monday indicating that they were holding the companies accountable and prevented ride-sharing companies from oversaturating the market at the disadvantage of the driver.
New law instituting changes in ride-sharing sector
The new rules limit the number of app-based for-hire cares and also set minimum pay for over 80,000 ride-sharing drivers in the city depending on how much time they use ferrying passengers. The new regulation also limits the time a driver will spend driving to and or waiting to pick a client. The ride-sharing companies will from February reduce the cruising rates from the current 41% by 5% and then later by 10%. Noncompliance will likely lead to fines or being barred from operating in the city.
Uber argues that there is no proof that the measures will ease congestion in the city. At the beginning of this year, the company agreed to the $2.75 congestion surcharge implemented to ride-sharing trips in Manhattan.