The decision to raise fares during Toronto’s flooding has turned into a public relations battle for Uber, the San Francisco-based company behind a phone app that summons taxis.
The company, which does not own vehicles or employ drivers, increased prices last Monday for its UberBlack car service – which dispatches high-end sedans or SUVs instead of regular taxis. Torontonians, who faced subway closures and other transit failures during the storm, took to social media to criticize this policy.
“When a really bad storm hits a city, people are stranded and very upset, and you provide transportation services to the citizens of said city, you should not dramatically raise your prices at that exact moment,” wrote blogger Aron Solomon.
Billy Guernier, general manager of Uber, which boasts hundreds of drivers and limousine companies and thousands of subscribers in Toronto, responded with his own blog post explaining that Uber’s intent was not to take advantage of people, but to ensure enough cars were on the roads so their system could stay reliable.
“When demand spikes (and supply fails to keep up with it), prices go up. Higher prices encourage more drivers to come onto the system,” Mr. Guernier wrote.
It is unclear just how much the prices went up by. Many on social media sites say the prices went up by as much as 1.75 times the normal rate, but Uber refused to confirm this figure, saying only that price increases depend on demand, time travelled, distance and speed.
Mr. Solomon’s post was tweeted by numerous people. Some of them said they were deleting Uber’s app vowing never to use it again. More blog posts cropped up, some defending Uber’s right to increase prices in a free market.
Laura Babcock, a public relations expert and president of POWERGROUP Communications Inc., said although it is a company’s right to change its prices, following standard operating protocol during times of crisis can have a long-lasting damaging impact on the company’s brand.
“This is a time to say, ‘What is the broader community engagement that our business has with Toronto? Where can we be seen to be a good corporate partner with the city?’” said Ms. Babcock.
The question of whether Uber does actually have a right to impose surcharge prices is debatable. The City of Toronto has laid about 35 charges against Uber for operating without a license.
“We would not approve a surcharge,” said Scott Sullivan, acting manager of licensing enforcement at the city. “When a company comes in, they have to submit a schedule of rates when they file their license application.”
Uber, which came to Toronto in March 2012, has never applied for a license. Toronto’s municipal code states that anybody who accepts calls in any manner on behalf of drivers must be licensed. Mr. Guernier refused to comment on his company’s role as a broker.
“We disagree with the city on how we fit into the regulations. From our perspective, we do our due diligence before we come into a market and we’re comfortable that we are operating in Toronto fully legally and don’t require a license as a technology company,” said Mr. Guernier.
Uber and the City of Toronto will face each other in court in October to address the charges.