The amount that ride-sharing companies Uber Technologies (NYSE:UBER) and Lyft Inc. (NASDAQ:LYFT) charge riders throughout the day is a highly guarded secret.
Increase in fares of shared rides
However, a law in Chicago has compelling the companies to provide fare data has shown how one of the companies is trying to turn profits. The data provided indicated that over the last one year fares for pooled rides have increased significantly whereas those for single riders remain stable.
The most affected places with the fare increases for pooled rides are the low-income neighborhoods of Chicago. According to the analysis of the data, these neighborhoods are where the booking of shared rides is high. Consequently, as fares increased carpool ridership dropped significantly.
The data did not distinguish between rides operated by Lyft, Uber or those of Via. However Uber controls a large share of the ridesharing market in Chicago and it commands around 72%.
Ridesharing companies facing growing challenges in various cities
The companies have been changing fares in Chicago in a bid to limit discounts to riders as a way of convincing investors that ride-sharing is a profitable venture. However, there are some political risks coming with these changes as various cities are taking the companies to task regarding congestion in the cities, passenger rights as well as driver treatment. London revoked Uber’s license on Monday for the second time in two years regarding a “pattern of failures” on security and safety.
Following a review of the Chicago data Uber indicated that it has been making losses from the shared rides segment. At the beginning of this month, Uber CEO Dara Khosrowshahi indicated that the company was losing a lot of money because of discounts on shared pool rides. The company wants to ensure that pooled rides are available in many cities and accessible to most people. However, this is attainable through better algorithms to find more customers as well as pricing.
Although Lyft did not comment on its pricing strategy a spokesperson indicated that pooled rides have enhanced access to reliable and affordable transport.