Our member drivers enjoy driving you around; they love meeting new people and sharing stories. In February 2016, however, Uber unilaterally, and without any kind of consultation with drivers, cut fares by 15% in Perth and 20% in Queensland. As a rider, this means a great deal for you right? Wrong! Before I can explain why though, I need to explain what this means for drivers…
Let’s look at an example fare to start off with. Taking an average ride of 8kM, taking 16 minutes, and which costs the rider $15.60; the driver receives $11.06 after Uber’s commission and GST. Optimistically, a driver could possibly complete 3 such trips in an hour, plus at least an additional 1/3 as many kM without a paying rider in the car (on the way to a pickup, or waiting for a job). So, based on these numbers a driver takes home $33.18 for 32kM of driving.
The ATO says it costs $0.66 per kM to run a vehicle, which amounts to $21.12 for the 32kM travelled, which thus means a driver earns $12.06 pre-tax income per hour – well below minimum wage.
This is, as I mentioned, an optimistic scenario. Often, we drive for a considerable period without getting a job or get sent jobs that are 15-20 minutes away, and when we get there a rider simply wants to go around the corner for a minimum fare, which effectively means we are subsidising your ride. In reality, most drivers now report pre-tax income of between $5 and $10 per hour.
These low fares are unsustainable for drivers and in many cases, it simply isn’t worth working for such little money. But of course, many drivers have taken out finance on vehicles based on their earning expectations from the previous rates of pay, which means they are now committed to driving just to pay their lease or loan.
So, other than hopefully having a moral objection to the exploitation of your driver, how does this affect you as a rider?
Well, You may have noticed a lack of water and mints lately, but most importantly, because so many drivers are turning off during slow periods and being more strategic about how and when they choose to drive, there has been a lot more (and bigger) surges, meaning that the cheaper prices are actually resulting in riders paying more on many occasions.
Whilst drivers, of course, love picking up a juicy surge fair, we know that it’s not economically viable for riders in the same way that crazy low fares are not economically viable for drivers.
We would like to see the same fare structure across Australia, matching the rates in Sydney, which are the only sustainable rates in the country currently. This would get drivers back on the road and earning a fair rate of pay, and reduce the instances of surge to all but the busiest times.
Uber says the price drop will encourage more riders to sign up and draw them away from using public transport.
Only slightly, possibly, and not nearly enough to justify the price cut for drivers. Drivers can obviously only complete a certain number of trips per hour, so there is only a very, very marginal increase in an individual driver’s activity.
In reality, the 20% cut comes straight off the bottom line for drivers, basically meaning that drivers lose 40% of their take home pay, see: here for more details.
Uber guaranteed hourly earnings (but still deducted their 20% fee) for only a few hours during busy periods (eg: late Friday and Saturday nights) and only for the first month after the price cut. See here how that $30 breaks down.
There are no longer any guaranteed hourly rates for drivers in Queensland and Western Australia. Guarantees in Victoria are due to end in the last week of April.
In a nutshell: More surges and less availability.
Many drivers have had to stop driving and seek other employment, cut down to part time work, or now choose only to work on busy nights when there is Surge Pricing. This means that there are fewer drivers on the road, which, due to rider demand, creates bigger and more consistent Surge Pricing for riders during busy periods. During these times, riders tend to pay even more than they did before the price drop.
Another consequence of the price cuts is that drivers are forced to be more picky about accepting pick up requests from long distances away. Many drivers will no longer accept pick up requests from locations more than 10 minutes away. It’s just not economically viable to travel that far for a possible small fare.
Uber have set no time limit or other constraints for the ‘trial’. Similar price cut ‘trials’ have occurred in over 80 cities world wide and only a handful have reverted to normal pricing.
The RSDAA has met with Uber to discuss all the issues that the low prices are causing for drivers and riders. We hope they listen.
Please email firstname.lastname@example.org to tell them to pay their drivers fairly or reach them on Twitter at @Uber_Australia
If you’re still in the pub/still getting dressed/still sitting on the toilet/still finishing your dessert, don’t book (Yes, these are actual situations!). Check progress on the app and be ready to get in the car when we pull up.
Ensure that you are where the app says you are; check the address and don’t just rely on the pin.
If you stand at a taxi rank, bus stop/lane, clear way, or another place where a driver can’t legally stop, they probably won’t. Try a side street or somewhere easily accessible.
Answer your phone it if it rings. See where your driver has stopped on the app, they may be around the corner if they can’t stop where you requested. They’ll likely try to call you in busy areas, so listen out.
Whether it’s legal or not, we don’t want to cut our night short because you spilled your beer, and you don’t want a cleaning fee.
Again, we don’t want to have to clean up after you and have our car smell of pizza all night. Finish up before you book.
Don’t put your feet on the seats, don’t be rude, don’t open the glovebox. Always wear a shirt and shoes.
We’re usually happy to change the radio station or let you put your down music on. We want you to have fun, but beating out Justin Bieber at 150dB and dancing like it’s a club is distracting and unsafe.
If you want more than one, perhaps offer your driver $1 a bottle. If you’re on a very short trip, have the courtesy not to take the water.
Your driver may not mind, but don’t be offended if they won’t, our time is more valuable at peak times than the amount we get for waiting.
That way we can get going straight away.
Reward your driver for the service that is provided (not the price – Uber sets that) – clean, polite, safe, and efficient service is 5 stars.
Put your seatbelt on, don’t distract your driver, don’t ask them to stop somewhere dangerous or illegal.