Uber: ‘It’s here to stay’

Taxi. (Nissan via AP Images)
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Uber's use of surge pricing may be controversial, but it isn't going anywhere.

This weekend, Uber, the taxi app that enables riders to "hail" taxis on their smartphones, sent a text message to its New York City drivers urging them to be on hand this coming New Year's Eve. The message, obtained by Capital, reads:

"UBER MSG: New Year's Eve is coming up! Remember, New Year's is Uber's biggest night of the year. Mark your calendar for big $$$ and more surge fares up to 8X!!"

(In response to one driver who asked in response to that first text whether surge pricing was going to go away after negative media coverage last week, the company wrote, "Thanks for this - We're not going to stop surge pricing because of a few news articles : ) It's here to stay.")

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Surge pricing refers to Uber's market-driven policy of jacking up prices during periods of unusually high demand.

"For the uninitiated, surge pricing helps maximize the number of Uber cars on the system during times of extreme demand, maximizing the chance that there will be a car available when you need one," reads Uber's blog post explaining the policy.

During the recent snowstorm in New York City, "Uber raised its prices to as much as seven times a normal fare, charging customers $35 per mile with a minimum of $175 per trip," according to the Times. "In other words, if you wanted to go a block, you would have to pay $175."

That's an awful lot of money, as several news accounts noted at the time.

Uber sent over the following comment: "Surge pricing can help encourage drivers to come on to the system during periods of high demand, when demand for rides is outstripping the number of cars on the system. All pricing is clearly and repeatedly communicated to users within the app and as soon as demand falls or supply increases sufficiently, prices return to normal. By maximizing the number of users who can get rides when they are looking for them, surge pricing helps ensure the reliability that Uber users count on."